It’s a tough time for traditionally run businesses. For car dealerships especially, car sales in Singapore have been decreasing moderately over the past few years, a trend that is influenced by a paradigm shift in consumer behaviour.
Many young adults in Singapore grew up during a time of rapid digitalisation, which significantly democratised access to information. With varied sources of information on hand, customers today can better make informed decisions on their purchases and who they buy it from. This is most visible in the retail sector which is facing huge challenges in overcoming rising competition from overseas and online rivals.
The auto market faces a more difficult task due to the nature of the goods involved. Unlike other segments like e-commerce and FMCG, automotive customers are buying big ticket items that come with heavy financial commitments, so they’d naturally be more discerning when making a purchase.
To distinguish themselves in today’s market, car dealers will need to first focus on customer experience. They need to get with the times and leverage on the digital tools available out there to create one that’s seamless and qualitative.
Expanding inventories and helping them grow digitally
One way for dealers to draw in more customers is to ensure that they have an inventory of cars that people want to buy.
I’ve worked with car dealers for many years and, from my experience, keeping inventories well-stocked – while also obtaining financing via auto loans – is their biggest obstacle. This isn’t only the case for their business expansion, but for even just keeping themselves afloat when faced with cash flow issues.
Many dealerships struggle with finding the right mix of new and used inventories, especially the latter as it depreciates more rapidly. On top of that, getting the right financing options from banks when buying cars from other dealers can be very difficult. The approval process can be burdensome and lengthy, and it can make a big impact on their business, as every second wasted means a car’s value is being depreciated or intended purchase being lost to other interested buyers.
It’s true that the financial services sector is undergoing a digital transformation but we’re mostly seeing this in more consumerist areas such as e-wallets and cashless payments. The B2B segment hasn’t really kept pace. This is especially for used car dealers who can truly benefit from using technology that improves access to capital, while relieving worries about stocking cars to instead focus on the people driving them.
Fortunately, more industry players are warming up to the idea of a digital stock financing solution that’s tailored specifically to dealerships. At its core, this tech solution helps dealers manage existing financial commitments i.e. vehicles currently under financing and overall cash flow availability. This is done by aggregating the range of lenders and helping dealers make informed decisions on the financing options available.
However, there are more specialised platforms. These are ones that go beyond helping dealers source the best financing to also helping them to source and fund new and used vehicles on both physical and digital auctions. One example would be what’s provided in the UK by Secure Trust Bank’s V12 Vehicle Finance digital facility.
Reduce paperwork; spend more time with customers
No matter what business you’re in, keeping your back-end running tends to take a big chunk of your daily operation’s time – especially if most of your documentation is still in paper form.
A study by the International Data Corporation found that over 20 percent of employee productivity losses were caused by paper-based documentation issues that businesses go through. If you’re a car dealer, wouldn’t the time spent on paperwork be better allocated to customer-facing areas instead?
Internally, dealers digitising their paperwork lessens their need to monitor their stock turnaround manually, to organise documents in rows of filing cabinets and of course, the tediousness of sifting through them manually and It also helps remove unnecessary clutter and reduce the risk of missing documentation. Additionally, their business could save costs as they won’t need to spend so much time and money on managing papers. Their cash flow issues are also resolved as they could take advantage of immediate funds transfers vs the traditional cheques issuance method.
Digitising the Loans Origination Process
Digitisation can also benefit dealers when dealing with customers, especially those opting to finance their cars. Typically, the loan origination process is lengthy due to its reliance on physical documentation. Although much of the information is captured by computers linked to a dealer management system, the details captured would then be printed, faxed or enveloped before being sent to the lender via post. The paper trail ends up being long and adds to the complexity of the process and raises the risks of error.
In contrast, a digital loan origination management system would allow for a more direct digital capture of applicant information via scanners or mobile devices. The information would then be digitally combined and sent to the lender securely for processing.
This alternative helps to counter the usual gripes consumers tend to have when spending too much time at dealerships to finance transactions. Indeed, a report by Cox noted that more than half of the time spent at dealerships during the purchase process is on negotiating or doing paperwork, which resulted in significant customer dissatisfaction over the time taken..
Giving what customers really want
We now live in a digital first environment; one in which technology is catalysing efforts to overcome long standing physical hurdles in businesses that now must operate in a customer-first environment.
Dealers now need to do what they can to cut down on inefficiencies that have been holding their businesses back. By going digital, they can save time and improve operational productivity to give their customers a more valuable experience.
Helen Neo is CEO and Co-founder of Genie Financial Services