I read an  article recently published in the US centred upon the role of transparency in enhancing motor (or rather auto) dealer profitability over the last year. It got me thinking, to what extent have the circumstances of the last year influenced profitability and has transparency been one of them? I welcome feedback from the dealer community on this issue.

The call for greater transparency for consumers in car buying and financing has been increasing in recent years. Both regulatory and social changes have contributed to this call for change to de-mystify the entire process. The suggestion from the US is that transparency has been increasing and it has been positive for the bottom line.

With consumers unable to visit showrooms and check out the car in detail, dealers reacted by leveraging every tool at their disposal to provide information. Videos of all angles of a used car with dealers happily highlighting any areas of minor damage. In part, it could be argued that this was to minimise the risk of people returning a vehicle for distance selling reasons. Indeed, this would be an astute approach, but the added benefit was that such transparency engendered trust.

Video transparency has had other benefits. Dealers asked consumers to reciprocate in providing accurate imagery for their part-exchanges, highlighting any damage. Again, this deepened the bond of trust, led to more accurate valuations and improved the quality of dialogue. It also helped to provide a springboard for discussion about other added-value services such as Smart insurance.

Overall, the quality of this transparency did not impair sales; it enhanced the processes for dealers and customers. While there was a genuine concern that the required move to distance-selling would result in a high level of vehicle returns, the broader picture is that this did not happen in any significant volume. Instead, feedback and reviews have been very positive – customers and dealers are beginning to trust each other much more.

The US experience also points to pricing transparency; overall, customers did not rush to find a cheaper deal elsewhere when given definitive pricing information. Instead, armed with a complete picture of the car and pricing and the ability to make a buying decision at their leisure, customers made their buying decision centred on confidence and trust. The article also references the positive penetration and profit benefits of transparency in F&I.

The F&I landscape in the USA is different to the UK and the ban on discretionary commission that came in during the last year. Nevertheless, none of us should ignore the benefits of transparency that have been seen, nor should it be feared. It seems that putting information in plain sight is an opportunity, not a threat.

The reality is that the ‘genie is out of the box.’ Consumers will want to maintain the transparency trend. Then again, if, as it seems, it enhances dealer profitability, then it is a tremendous win-win position.

All feedback on your experiences welcome.

Karl Werner, Managing Director

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