Ash Zaki, COO of Mercedes-Benz of San Francisco, demonstrates MBFS’s new iPad-compatible tools. Behind him is Chip Kirby, an MBFS dealer rep.

Ash Zaki, COO of Mercedes-Benz of San Francisco, demonstrates MBFS’s new iPad-compatible tools. Behind him is Chip Kirby, an MBFS dealer rep.

Ash Zaki isn’t sold on the idea of consumers buying solely online. No, his vision of the future dealership is one in which the showroom and the online experience are fused together. The bridge to that future, he believes, could be the Apple iPad, which is why he’s excited about the quickly evolving mobile strategy undertaken by his captive lender.

Zaki is chief operating officer of Mercedes-Benz of San Francisco, which sits underneath the Bayshore Freeway connecting Oakland and San Francisco. The 50-year-old operation was one of 40 dealerships selected by Mercedes-Benz Financial Services (MBFS) last May to pilot its iPad-compatible MB Advantage software. It was again selected in February as the launching pad for the finance company’s newest mobile offering: an iPad-compatible F&I presentation tool that aims to connect the F&I process to the showroom.

“I think this tablet technology is exactly what will marry the showroom and online experience,” says Zaki. “It was just a matter of time before it was integrated into the automotive vertical.”

Rolled out in late February to dealers who signed up to carry MBFS’s line of F&I products, the presentation tool takes aim at that small window of time customers spend in the showroom before transitioning into F&I. As of now, the mobile F&I
presentation piece is nothing more than an interactive F&I brochure,
using icon-dressed buttons to help customers delve deeper into the
company’s aftermarket vehicle protection products.

Officials at MBFS, however, are quick to note that this is not the second coming of the F&I kiosk, a decades-old concept that was supposed to mark the end of the F&I manager. Instead, they describe the tool as the entry point to a whole new set of dealer tools.

“We don’t prescribe any process to our dealers. We just want to give them the utmost level of flexibility,” said Andreas Hinrichs, vice president of marketing at MBFS. “We are simply saying, ‘We’ll provide you the device, we’ll provide you the mobility that comes with the device and we want you, the dealer, to figure out the best way of doing business with it.’”

Dealer-Led Technology

In February, Hinrichs served as a panelist during the American Financial Services Association’s Vehicle Finance Conference in San Francisco, where he and Dietmar Exler, head of MBFS, touted the company’s mobile strategy during separate panel discussions. And although other companies talked about their interest in the mobile realm, it’s clear MBFS is in the driver’s seat.

“In our case, we decided to drive the bus,” Hinrichs said during the conference’s “Evolution of the F&I Office” panel.

The finance arm’s mobile strategy was launched in October 2009 behind an iPhone app that allowed customers to wirelessly manage their MBFS accounts. It took a mere 15 months for the app to attract approximately $15 million in consumer lease and loan payments, or about 25,000 payments. That’s when the company knew it was on to something.

That “something” became a little clearer when MBFS officials caught wind last February — around the time it was preparing to release the smartphone version of its consumer app — of Apple’s plan to launch the iPad. Hinrichs says the thought of Apple entering the tablet category changed everything.

“When we became aware of Apple’s impending [iPad] announcement, it really sparked our curiosity,” Hinrichs says. “We thought it could create a new device category that would be very applicable to our business.”

Figuring the iPad would open the door to a slew of new tablet devices, the company decided to move away from its device-dependent strategy to one that was built around its dealer point-of-sale system, the aforementioned MB Advantage. The company’s software team knew it was the right decision when they got their hands on an iPad simulator four months before the device’s launch.

Hinrichs says the work that went into making MB Advantage compatible with Apple’s iPad and Safari browser means the road is paved for newer solutions down the road. “It is a device-independent strategy,” he says. “Whatever tablet PC you want to use, you can use.”

As Apple began rolling out the iPad last May, MBFS kicked off a six-month pilot program for its new mobile tool at 40 dealerships, becoming one of the first companies in the world to take the consumer-oriented iPad and give it a business application. Each regional manager was given 10 iPads, which were then distributed to dealer relations managers like Chip Kirby. He was asked to select two dealerships from his Northern California area to run the new tool through its paces, and Mercedes-Benz of San Francisco was one of them.

“I knew the dealership and Ash, in particular, would embrace the technology,” Kirby says. “If you look around this dealership, you’ll see flat-panel screens hanging throughout the showroom and that every desk has a computer. That level of technology is not typical.”

The ability to send inspection sheets directly from the iPad to a printer was “the last piece of the puzzle,” according to Chip Kirby, a dealer relations manager for Mercedes-Benz Financial Services.

The ability to send inspection sheets directly from the iPad to a printer was “the last piece of the puzzle,” according to Chip Kirby, a dealer relations manager for Mercedes-Benz Financial Services.

The company’s six-month pilot phase of its mobile tool ended last October. Zaki’s team put several features to the test, including one that allowed front-end staff to execute tasks such as starting loan applications, checking for financing options and grounding lease-return vehicles. Since leasing represents 60 to 70 percent of the store’s business, the store proved to be the perfect testing ground.

The dealership’s staff led demonstrations of the mobile tool during a media event held at the store the day before the start of the 2011 NADA Conference and Expo in February. Staffers showed off the solution’s lease-return functionality, which guides users through five screens and a series of questions and check-offs before asking the customer to provide an acceptance signature right onto the iPad.

The presentation ended with staffers wirelessly printing out copies of the inspection sheets — a feature that wasn’t available during the pilot program. That functionality became available last November when Apple released its iOS 4.2 Software update.

“That was the last piece of the puzzle,” Kirby says. “Without it, you would ground the vehicle and then tell customers you had to walk over to a desktop computer to do everything you were trying to avoid. Wireless printing, along with the signature capability, really did take the mobile initiative to the next level.”[PAGEBREAK]

Downturn Presents Opportunities

Aside from demonstrating the mobile MB Advantage system, the media event at Mercedes-Benz of San Francisco also marked the unveiling of the company’s new F&I tool — which arrived about five months after the company sent iPads to all 355 U.S. Mercedes-Benz dealers. Kirby, who spent nine of his 24-year industry career in retail, believes MBFS is on the verge of redefining the dealership experience.

“I don’t know if it’s going to take six months or five years, but I see things moving toward an environment where every sales and finance representative is equipped with an iPad-like device,” he says. “This will be an environment where you can sit with a client and say, ‘Here are the products we think you need.’ And if the client isn’t interested, you simply flick the products off the screen and out of the equation instead of having to change the numbers, recalculate everything, reprint the contract and put it in front of the customer.”

For his part, Zaki has already taken steps toward that future. Like most dealerships, Zaki’s new-to-used sales ratio swung more toward pre-owned during the downturn. But the drop in new sales didn’t stop him from making investments in his store’s digital infrastructure.

“I’m a tech guy in car salesman’s clothing, so I like technology,” says Zaki, who also spent time in the semiconductor industry. “What you may not know about me is that I helped build what I believe was the first automotive multimedia Website back in 1995. And I can tell you, not much has changed since then in terms of achieving our ultimate goal of combining Website technology with the showroom experience. The iPad, however, does change things.”

Zaki also is looking at some additional handheld devices that will allow his service advisors to take payments in the service drive. He’s even exploring the possibility of allowing customers to use their mobile devices to pay for repairs before they pick up their vehicle.

As for the new F&I tool, Zaki says he’s still ironing out the details on how the presentation tool will fit into his front-end processes, but he sees the possibilities.

“As this gets more defined and the speed of calculations increases, I can see us reaching a point in the showroom where we’re moving from simply talking about features and benefits of the car itself to discussing what the customer’s lease payments will be,” Zaki says. “So, I’m looking forward to seeing how the F&I functionality evolves.”

That evolution might not be too far off. Mercedes-Benz’s captive finance arm completed in January the rollout of a new electronic validation tool for dealers. Company officials say that marked the company’s first step toward e-contracting under its eStrategy initiative. Add in the pilot program MBFS is kicking off this month to test a new connection that DealerTrack’s Aftermarket Network is creating between Mercedes-Benz dealers and the companies underwriting its F&I products, and it’s not hard to imagine a day in the near future when dealerships will be able to use a tablet to electronically rate and contract F&I products from the showroom.

“This is just the beginning,” Hinrichs says. “With what we’ve developed, you can take the iPad right up to the car, punch in the last eight digits of its VIN and pull up all eligible finance and lease programs related to that vehicle. This is where it becomes very powerful, because now you can transfer the customer’s desire for the vehicle into the F&I process.”