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E-Contracting Delivers on its Promise

June 2007, F&I and Showroom - Feature

by Joan Shim - Also by this author

Since the introduction of e-contracting years back, the technology has been touted as the next big thing to revolutionize automotive finance. However, the industry has been waiting to see its impact, with its adoption slow so far.

It’s been a rare situation where no one has wanted to be first out of the gate; dealers have been waiting for more lenders to implement it and lenders have been waiting on dealers. The fact that e-contracting changes the workflow and necessitates employee training also has been a deterrent. But things are finally looking up.

“E-contracting is really gaining momentum quickly,” says Alan Lehmann, vice president of finance solutions for DealerTrack. Both lenders and dealers are getting comfortable with the process, says Lehmann, who expects the momentum to build, especially as e-contracting becomes increasingly a part of dealers’ daily practice of delivering vehicles.

At ABC Nissan in Phoenix, the seventh largest Nissan store in the world, e-contracting is more than just a daily practice; it has become a “way of life,” as the dealership motto states. Jay Carley, Jr., executive manager, made it a mandatory practice when he saw the tremendous gains — financially and otherwise — it brought to the dealership. It took some effort at first, but the initial investment has paid off, resulting in millions of dollars more in the bank and a jump in CSI.

The Learning Curve

Any new technology implementation comes with growing pains. Nissan Motor Acceptance Corp. (NMAC), which was an early adopter of retail e-contracting and is now seeing a 36-percent penetration, has seen many dealers make the transition to electronic. Joe Bielinski, NMAC’s senior manager of contract processing, explains why dealers are tentative about making the leap.

“E-contracting changes the entire F&I workflow process in how we do business,” he says. “Some dealers have been doing it the same way for years and are reluctant to see changes in the workflow.”

However, once dealers try a few e-contracting deals and become comfortable with the process, they never look back, Bielinski says. The number of Nissan dealers using e-contracting was 509 in March 2007, up from 381 dealers in March 2006.

ABC Nissan also took some time to get comfortable with e-contracting before it was incorporated into the finance workflow. The dealership, which sells about 500 new and used vehicles monthly, started e-contracting last summer, but didn’t do more than 10 e-contracts a month for a few months. It was a big adjustment for the employees.

“It’s harder,” Carley says. “You have to spend more time with the customer, a little more one-on-one time because of how the contracts are signed. You have to be compliant on everything you do, and everything is fully disclosed.”

When Carley made e-contracting mandatory, particularly by altering F&I pay plans, the finance team had greater motivation to learn the system quickly.

“We changed their pay plans so that if they don’t e-contract or are under a certain percent of e-contracts, it can actually hurt their pay,” Carley explains.

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