eContracting promises to revolutionize the F&I office, but the question is when will this promise be delivered? Captive finance sources are on the move with pilot programs, but there will be more to report in the next few years. With dealers content with the way they do things now, there is no rush to get eContracting out there, and companies are taking their time to get it right.


Although the technology is there, many other factors prevent eContracting from making a huge impact on the industry right now. Software needs to be implemented that reduces contract errors, thus preventing slow contract acceptance and customer re-signs. Also found to be problematic is the data access debate. If eContracting software is not seamlessly integrated to whatever DMS provider the F&I department works with, dual entry will be required, increasing the chance for errors.


One technological advance that is still progressing is the move to a paperless dealership. Although the electronic contract does provide a step toward this, there are still other customer forms required by law that need to go electronic.


Financing sources are continuing to work out those kinks as the popularity of eContracting increases in the industry.


“I think the concept is really starting to grab hold in the industry. Dealers are much more aware of eContracting and how it’s going to benefit them. I think the anticipation is building. I am seeing the industry starting to get excited about the concept,” said Todd White, eContracting program manager for Ford Credit. “I think the finance sources all see this as the future and are doing what they can to get on board.”


A Slow and Steady Approach


Most captive finance sources are still in pilot mode with dealerships and are constantly making improvements to their products based on the feedback those dealerships provide.


“There have been solutions out there that have had their challenges and we’ve been working hard in pilot mode with our solutions. Our focus is getting it right, not getting it out there quickly,” said Brad Rogers, vice president of sales and marketing for RouteOne. Started in 2002 by four of the largest captive companies — GMAC, Chrysler, Ford and Toyota — the collaborative effort is working toward the industry’s eContracting future. It also recently added Mercedes-Benz in August.


GMAC’s approach is to offer eContracting as dealers demonstrate demand for it. The company is currently in pilot with RouteOne, having contributed human and financial resources to the development of the eContracting project. “eContracting is a developing trend at this point,” said Michael Stoller, GMAC spokesperson.


Chrysler Financial has been in pilot mode for about a year and a half, and has more than 300 dealers in its program in 20 states. The company has taken the time to ensure its eContracting solution works well for every dealer rather than rushing a solution that may be difficult to adopt. The company continues to make changes to accommodate dealer needs and make eContracting more streamlined and easier to use.


“We continue to see increased dealer adoption and we’re on target to have a national presence in the middle part of November,” said Chrysler’s Stephen Luyckx, senior manager of Credit Strategies.


Ford Credit’s pilot program for eContracting began last summer in three dealerships in Grand Rapids, Mich. It expects to add 12 more dealerships in the Detroit area and Northern Indiana. Its eContracting program is scheduled to go national by the first quarter of 2009. Currently the company is collecting feedback from dealers.


Toyota Financial Services is also taking the time to perfect its technology. Currently in pilot mode with two Michigan dealerships, Suburban Toyota and Meade Lexus, the company plans to add four Texas dealerships in November and two California dealerships by January. “We are constantly evaluating and improving the technology behind our eContracting, and we will offer it more widely as soon as we are completely satisfied that it provides our dealers and customers a fast and seamless experience,” said Justin Leach, Toyota Financial spokesperson.


“Anytime you introduce something new in the F&I world, where people are used to doing things a certain way, it gets to be kind of a dinosaur approach,” said Ray Borg, Suburban Toyota. “I think there’s still a little bit of fear from the F&I people because it’s a new technology.”


According to DealerTrack, the holdup in eContracting lies in getting lenders going with the technology side of things and deploying eContracting state by state. There was more of a holdup two years ago than there is now. “The lenders wanted more dealers and the dealers wanted more lenders. I think we’re beginning to break that cycle,” said Alan Lehmann, vice president of marketing for DealerTrack.


Despite slow adoption, eContracting is expanding to dealers nationwide. According to J.D. Power and Associates’ 2006 Consumer Financing Satisfaction Study, released last December, 75 percent of dealers who used eContracting expected to use the technology more within the year. While the current penetration of eContracting is very small, this proportion is likely to increase, the report said.


Giving Dealerships the Right Tools


eContracting will be an evolution for the dealership and the way it is set up, transferring much responsibility to the F&I department. Tools required for this transition are already hitting the market that aim to take dealerships toward the electronic deal jacket, a critical step toward the change.


DealerTrack, which has processed more than 350,000 eContracts to date, is helping the move to a paperless dealership with its DealWatch product. “DealWatch is one of the major products that we’ve launched in the recent past to really move toward the goal of 100-percent electronic deal jacket and deal process,” said Strati Papageorge, director of Management Solutions. “Eventually, all of those documents will be generated electronically. So the only thing that’s going to need to be paper-based is whatever is necessary by law to give to the customer.”


Dealers agree, and say this change is long overdue.


“It seems to be pretty primitive to still overnight paperwork, wait until a lender looks at the paperwork, catches a mistake and sends it back to the dealership,” said Suburban Toyota’s Borg.


Chrysler Financial is currently in its development stage of making all required forms electronic. This will put contracts on the company’s books within a matter of minutes, from the time the F&I manager submits the contract for validation to the time the customer signs the contract. This full process will cut down the contract acceptance time from around five or six days to minutes.


It has a tool to move its dealers toward eContracting. Last year, it rolled out Aut- Origination, which validates contract data at the point of sale. “Bad data quicker is still bad data,” said Kelly Mankin, vice president of marketing, who also believes the solution is preparing dealers for the move to eContracting.


AutOrigination catches errors at the point of sale, eliminating charge-backs. Once a contract is approved through Aut- Origination, Chrysler Financial guarantees that it will buy the contract. “We have virtual 100-percent adoption in stores where the dealer service provider (DSP) allows Aut- Origination to work,” said Mankin.


Dealers also see the value. “From a finance point of view, eContracting greatly reduces the amount of funding errors,” said Andrea Forteleoni, finance manager at Bill Seidles Nissan in Miami. “eContracting doesn’t let you do anything unless you follow the procedures step by step. From that point of view, it’s obviously an extreme benefit.”


One of the things Chrysler understood when developing its eContracting product was that dealers need to move at their own pace and need the flexibility of being able to use their own “old way of doing things.”


Integrating its eContracting solution with major DSPs, Chrysler allows F&I managers to use the program while working with the dealership’s existing processes. “Working within a dealership’s existing F&I modules guarantees pretty rapid adoption of our product and pretty high satisfaction of it,” reported Mankin.


What the Future Holds


Mankin said eContracting is still three to five years away. “There are multiple players out there positioning various products who will realize success, but to differing degrees and among different dealerships. But I think this has the potential to be literally industry changing.”


RouteOne’s Rogers agreed: “We think eContracting is going to be measured in years, certainly not months.”


GMAC’s Stoller added, “I think everyone is excited about eContracting. It’s not going to be an overnight process, but I think it’s going to be the wave of the future.”


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Kelli Wood

Kelli Wood


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