But a leading financier has told GoAutoNews Premium that franchised car dealerships play too important a role in their communities to be allowed to slip away and his company is going to do all in its power to ensure dealerships retain or even grow their relevance to their communities.

Jon Moodie, CEO of Allied Credit, in this third instalment of his recent exclusive interview with GoAutoNews Premium, said that dealers should be focusing on how they can increase their relevance and value to customers of the future. 

“As an industry, we need to be asking what does that future role look like?” questioned Mr Moodie.

Jon Moodie

Mr Moodie said that dealers needed to look at, and then improve, the roles that feed off the facilities and skills that reside in the dealership to the point that they become indispensable to their buyers and their OEMs in such a way that they can afford to more profitably deliver those services.

“From our point of view at Allied Credit, dealers have a lot of advantages and points of difference in the market. And we want to work together with our dealer partners to identify all the opportunities that are out there and leverage them,” he said.

“It is very easy to look at everything that’s happening as a threat to the dealer and I acknowledge dealers might feel they’re under siege. So, while dealers are making more money than ever before, challenges including the clouds of agency models, electric cars and brokers ‘pinching’ their finance business; can potentially be worrisome.

“But there are some great opportunities out there and the dealer model is very resilient. We just have to be innovative and we can’t sit still.

“There are certain things I think that dealers could do now,” Mr Moodie added. 

“Number one is they really have to get the digital offering right because, particularly in finance, dealers are getting sniped by all sorts of brokers with very fancy software out in the market.

“These brokers are just driftnet fishing on the internet to find customers for finance before they go and buy their car. 

“While this competition exists, when a customer goes on to the average dealer website today, to start researching the car, they have to dig through several layers of the website to get to anything about finance. Buyers almost have to accidentally trip over the details about the finance offers or deliberately go and search for it to find it.

“Today, when they are searching for that car, brokers with very savvy IT systems will start bombarding them through Facebook and /or other messages about the finance. 

“This results in dealers losing quite a lot of finance business to brokers by virtue of the fact that buyers’ finance experience on dealer websites can, frankly, be quite poor. And, as a financier, we are partly responsible for that.  I’m not going to lay all the blame at the feet of the OEMs or dealers; the financiers have a part to play in this as well. 

“So, at Allied Credit, we are committed to providing as good an online digital finance experience on dealers’ websites as we can; and for our OEM partners as well. 

“We’re also making sure that if a customer doesn’t want to engage fully digitally for finance, because it’s a complex product sometimes, that there are people that they can talk to. We can direct them to the business manager if that’s what the dealer wants, or we can handle it on their behalf and then send it to the business manager. 

“We want to have avenues for all different customer types, whereas often the slick technology platforms are really only able to  do the easy stuff.

“There is no reason at all why a dealer can’t lock up the finance for a customer really early on digitally.”

Mr Moodie said that monthly payments should be front and centre on dealer websites.

“When the customer is configuring their car, and it says it’s $50,000 for that configuration, it should say right next to it ‘from $600 a month’. Click here. So, the customer goes well okay, that’s pretty good. And then when they get in there, they see that it’s five years, they need to be this sort of credit quality and they need this deposit; or they can put in their own terms, and it might wind up at $650 a month, or maybe $550. 

“At that stage, you’ve got them working through on your site. Then when it says to apply here and get instant approval, or pre-approval; they say: ‘Well, I’m already here. And, I can do it sitting in my lounge room’. 

“The offer of finance and/or the ability to apply is not on 99 per cent of dealer websites today. However, Allied Credit is investing money to provide the tools to help dealers do that.

“Another opportunity is for dealers to focus on getting really high-quality relationship people, not salespeople, but relationship people, like the Apple expert, the sort of model where you actually convince people to buy from you as opposed to selling them something.

“One significant issue I see with some dealerships at the moment is that customers are going in knowing more about the product than the salesperson. And, because they’ve researched for hours and hours and hours online, looked everything up, and they’ve found all the potential niggles with the car, or that particular model, they know how everything works.

“There is nothing that will reduce your confidence in a salesperson more than when you know more about the cars than they do or when you ask them questions, and they tell you an answer that you know is wrong. 

“I think part of getting the right people is really making sure they love cars, and they know the cars inside out so that no customer can come in and know more than they do. This is becoming harder and harder every day because the technology in these things is stunning.

“With the introduction of EVs, the technology and features are in a completely different field than salespeople are used to. The terminology of an electric car is completely foreign to an internal combustion engine salesperson or dealer. The knowledge is all new. It’s all new to the dealership and it’s all new to the customers. It all has to be learned.

“At Allied Credit, we are educating ourselves on that. We’re also making sure that we educate our dealers’ finance staff so that they are really well trained in the products and knowledge.

“Equally, we are working with OEMs and dealers to try and create products that are difficult for brokers and others to replicate like the bundling of other services and guaranteed future value. 

“So, we’re committed to the dealer model. We are very conscious that some dealers might be feeling a little bit under siege, but we think there’s a huge future for them and it’s our strategy to work with them, and partner with them, to increase their relevance to the customers of the future. 

“In addition to those opportunities, there are things that dealers should stop doing as it hurts their business. I have never understood why dealers deal with car buying services, for example.

“Car buying services simply get in there, take away the dealer’s relationship with a customer and probably remove their ability to finance the car in a lot of cases. Why would you even entertain that?”

Referring to finance penetration, Mr Moodie said: “We’ve got to get better at it. 

“We know that finance penetration has been badly impacted during COVID. Because of the wait time that customers have for the cars, they have so much more time to worry about finance and find the most competitive solution they can over that three-month period. 

“Dealers are not necessarily able to grab and hold buyers’ attention from a finance perspective in the way that they would like to be able to.

“And that’s where, if you have a guaranteed future value (GFV) product or you’re bundling up service contracts or other things, it’s something that another financier or the bank cannot do. We’ve got to try and find as many advantages that the dealer has and present these and put them in front of the customers in a way that can’t be replicated elsewhere.

“The key is offering something that can’t be copied. That’s always the Holy Grail. GFV is one thing; it’s hard to copy. Bundling up services is another.

“At Allied Credit, we will be helping by investing in digital with our partners to make sure the customer experience is top-notch. We’ll also be assisting by ensuring that the finance staff are trained and any sales staff, who need training on the financial products, receive that. It’s important they have in-depth and knowledgeable conversations with their customers to help them enjoy a good experience.

“Our plan is to do this on a dealer-by-dealer basis and potentially groups as well. We already have some digital training modules available and we will be expanding that. We will include regular compliance training as well to ensure business managers are fully aware of their obligations.”

Mr Moodie said: “All of the industry needs to do this together to make sure the franchise dealer industry remains relevant. And that includes the OEMs as well. OEMs are investing in this to make sure that their customer experience from a product point of view is top-notch. It needs all of us to do it together. 

“We don’t want to be commoditised as an industry. You don’t want to see everyone buying everything online where it doesn’t matter about the customer experience, the brand, the relationship, or anything like that. There is no value in a commoditised industry.”

Mr Moodie said he believes the growing EV market would actually create a great opportunity for dealers in the right locations to become a destination for existing and potential customers. 

“If you invest in some decent fast-charging infrastructure, along with a coffee lounge with Wi-Fi where drivers can work or relax while they charge, you’ll drive showroom and service traffic, as well as a potential revenue source – although you might offer free charging to your own customers while others can pay. Potential customers spending time on your premises is gold.

“We must maintain the dealership industry’s points of difference in the community. A lot of dealers are very important within their various communities, particularly in the regions and rural areas. But even in metro areas where they are big employers. I believe there’s recognition of the community aspect out there. 

“I think that the community values of the retail auto industry are something that we should be proud of, we should value it more highly and do more to make it prosper in the long term,” Mr Moodie concluded.

By John Mellor