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Unpacking The Dealership Finance Experience

This is the third piece in our series of AFI articles, exploring different aspects of consumer automotive finance.

  • Click here to read the first piece, which explored the finance purchasing customer journey
  • Click here to read the second one, which looked at the how the channel by which finance is sold is changing

As we’ve talked about throughout our AFI articles, dealerships play an increasingly vital role in the sale of automotive finance. This third and final article therefore explores some of the factors impacting the dealership finance experience, and provides some tips around how it might be optimised going forward.

While some consumers will have chosen a lender prior to entering a dealership, their spontaneous counterparts have done limited research, and are much more impressionable. Indeed, almost half of consumers had not decided upon a lender before walking onto the forecourt. This highlights the opportunity for the dealership experience to influence a large segment of the consumer base.

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Dealerships are clearly recognising this, with more than three quarters of the customers purchasing from mainstream OEMs reporting that they were offered finance as part of the vehicle purchase. While the intention is there, we can however see varying levels of success; Nissan and Volkswagen stand out though as doing the best job of converting prospective finance customers.

Despite generally seeing a level of success, there are still indications that the dealership finance experience can be improved, with one in four customers left dissatisfied with their experience. Importantly here, many dealerships don’t introduce finance until late in the sales conversation (i.e. once the vehicle purchase decision has been made), meaning that it can potentially feel like an add-on, instead of an integral part of the vehicle purchase conversation.

Overall, consumers who reported having positive experiences with dealerships felt this stemmed from dealing with knowledgeable, helpful staff who were able to deliver a competitive product through an efficient process. On the other hand, negative experiences came down to interactions with pushy staff who weren’t transparent about the details of the finance, particularly when it comes to the competitiveness of the interest rates on offer, and the existence of additional or hidden fees.

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Given the concerns about fees, it’s no surprise that cost also emerged as an important driver for consumers choosing not to organise finance at the dealership. These consumers are shopping around for the best price, typically claiming either a better deal or better interest rate with another lender.

Evaluating the dealership finance experience, three areas emerge as having potential to improve outcomes and ultimately help optimise finance conversion rates:

  1. Sales staff should consider introducing financing options earlier in the sales process, especially to the more impressionable spontaneous segments who might not yet have seriously thought about how they’re paying for their purchase
  2. Consumers expect an efficient process when it comes to sorting out automotive finance – sales processes need to be streamlined, with staff trained so they are knowledgeably able to answer any questions the customer may have
  3. Cost remains key – dealerships need to ensure that they understand customer needs, and can align their offers with this (i.e. monthly cost that fits their budget, sharp interest rate, low balloon payment, etc).

The 2022 AFI report is now available for purchase here. If you've got questions, or would like more information, you can click here to get in touch with our team of auto experts. Otherwise, feel free to add a comment below - we'd love to hear from you!

Topics: Market Research Automotive Research Thought Leadership Research technology automotive trends vfacts automotive news