NAVIGATING the automotive industry and its challenges, headwinds and opportunities can be difficult in the best of times, so it should come as no surprise that many dealers can lose focus on automotive finance and this carries unintended consequences into the dealership.

Let’s be real about rate sensitivity. 

One such area of concern is rate sensitivity which is a challenge that we will continue to face for as long as interest charges on borrowed money exist. This is especially true when we account for the following statements:

• Dealer finance centres on convenience and service, which typically attracts a price premium
• As a consequence, the value proposition of dealer finance doesn’t centre on rate, but on service delivery and business manager expertise.

In our last article in this management series, we spoke of the changes in Flex Commission and touched on how particular skill sets were lost with business managers leaving the industry. One of these skill sets, and perhaps the most important one, was the ability to sell finance. 

We can begin to see why overcoming rate sensitivity is a struggle for many business managers when we consider the few years of incredibly low cash and swap rates, new cohorts of business managers who have never been exposed to higher interest rates nor exposed to the sales skills training typically provided by insurance companies which is no longer being taught. 

Perhaps another challenge, to further complicate things for business managers, is the fear of selling in a segment that carries greater financial risk than most consumer products. It’s understandable, and warranted, that business managers tread carefully with a product that can have severe financial implications if sold incorrectly. 

So how do we sell finance again?

We can achieve great customer, dealer, and financier outcomes when we place the customer at the centre of the entire purchase experience. It’s no secret that the most successful dealerships almost always have robust sales and service processes that embrace customer centricity in all aspects. 

The question therefore becomes; how can we achieve a customer-centric mindset when selling finance in the dealership, in a way that we can sell more finance? 

One way that you won’t achieve this is by assuming that price is the only consideration a customer will have when choosing finance options. This is a common mistake made by many business managers. Where we see business managers selling on price alone it often leads to lower finance penetration and low gross margin contribution in finance and insurance departments. 

A 2023 study by RF&I Global* into the car finance market found that an easy application process, trust in the finance representative, likelihood of approval, and faster approval times were some of the top purchase drivers of a car loan for consumers that were surveyed. 

This was irrespective of whether the customer financed the vehicle through a dealer, bank, or broker. These specific purchase drivers are the core of the typical dealer finance product and yet we still see low finance penetration outcomes. 

Evange Epa

How do we move out of Selling on Price?

Many of the programs that we deliver through Angle Edge focus on the sales aspect of finance, whilst also navigating regulatory requirements and ensuring customer-centricity. The programs ensure that business managers have an: 

• Understanding of the basics of ‘finance,’ people, and influence (often neglected by many new business managers). 
• Understanding of what customers value in financial products (and how customers interpret value).
• Understanding of how to adapt value propositions to align with different customer buying types.
• Understanding that the strongest sales outcomes are process driven and that a tangible finance process will deliver greater finance penetration outcomes. 
• Ability to achieve synergy between sales, strong credit-quality and robust finance processes; and more.

Having training and development programs that focus on the sales aspect of finance is nothing new. It is, however, severely underutilised and we see the consequences of this when we observe finance penetration declining across the board. Through Angle Edge, we aim to help increase business manager conversion (with a high quote rate). 

* RFI Global, Australian Auto Finance Program 2022-23

Evange Epa is the national business performance manager of Angle Auto Finance

This is the second of a series of articles that investigates some of the auto finance sector’s challenges, trends, and innovations.

This series of management workshop articles prepared by automotive financier Angle Auto for GoAutoNews Premium draws on the expertise that resides in the financier’s Angle Edge dealer development program and other Angle Auto initiatives. 

Angle says its workshops are designed to add value to its dealer clients and to the industry at large. 

It is published to assist retailers to tackle challenges and embrace coming changes in auto showrooms.