Providers & Administrators, 1st Qtr 2019

20 P A 1ST QTR 2019 Duncan put forth the example of econtracting a practical process but one that can breed complications and frustration for dealers who are partnered with multiple providers and lead sources He noted that Safe Guard has a dedicated team of experts who are sent to dealerships to address this very problem helping them find the most efficient ways to streamline the process and keep it as simple as possible For dealerships with underperforming F I departments their penetrations will go up with digital retailing Basically its like being in this big old room and theres eight doors and we dont know whether that customers coming in through Autotrader who by the way is going to have a Click to Buy button Duncan said Or theyre coming in through the dealer website over there and they got Roadster and theyre going to click to buy or theyre coming in through the Ford configurator and oh by the way theyve got a click to buy button over there or theyre coming in through TrueCar or KBB or Edmunds and theyre all going to have a click to buy button However Duncan cautioned locking into one technology for digital retail functions is not the dealers best way to go even if it appears to be the simplest They should be equipped to make the sale no matter where the customer is coming from the products they are interested in or the platform they want to use It is going to be a mess for a while Duncan noted and its going to take time and education for things to settle down into a modus operandi everyone can agree on DOWCs Are Picking Up Steam Gruber moved the discussion to dealer owned warranty companies and non controlled foreign corporations the former of which has grown more popular since the Trump administrations tax reform package went into effect in 2018 Duncan cautioned that there is no one size fits all approach with some dealers seeing a benefit to a DOWC while others would see losses He expressed concern for dealers who select structures with tax deferments built in noting that if the business isnt actually growing those tax payments will come due much sooner than anticipated Succession plans among other financial concerns could be adversely affected Do you want to be retired and on a golf course in Naples but still having to operate a business office somewhere because youve got 10 year contracts that still have to run out and somebodys gotta pay the taxes Duncan asked I just think that because NCFCs suddenly fell out of favor for tax reasons DOWCs have gone from a niche business to all of a sudden being the best solution sitting in front of a dealer And I would tell the dealer Just take a step back Obviously DOWCs have their own merits But if they were the greatest solution ever why werent you looking at it the first time around Hetland agreed noting that while that structure can certainly work for some dealers anyone considering moving to a DOWC should think first about whether they are seeking a long or shortterm solution with particular care paid to the dealers estate As providers and administrators we must always be looking at the liability If you have sales personnel that are representing you be it the independent base employee base whatever the case might be and I get calls from our dealers saying Hey Ive been told I can go into this and never have to pay any taxes we know thats not right he said We know that theres got to be something in there to make the dealer understand that there is a day of reckoning where they have to pay taxes But the liability that comes with us through this is if were presenting it and were providing it and that representation is out there you dont have to pay any taxes Hetland added My fear as an industry and as providers is theyre going to come back to us and say Your people represented you and said Id never have to pay any taxes Now Ive got a big tax burden Now you ante up and pay A Savvier Approach During the panels question and answer session an attendee returned to the topic of evolving in vehicle technology He wondered whether customers who spend more time getting acquainted with advanced infotainment and safety systems would be less likely to have any patience for an F I presentation Thats where weve got to be more savvy said Hetland who pointed out that as the landscape changes dealers and providers are going to need to be more creative with how F I products are presented and explained Experimenting with the timing of the presentations is one approach as is playing with such components as the length of demonstration videos Hetland also suggested tying the F I pitch more organically into the process The customer who opts for a high tech vehicle and options should know there is a way to protect them from unexpected repair or replacement costs Duncan said that might require all involved parties to rethink their roles Springing everything there is to know about protection products on a customer including the cost when they have been by their salespersons side since they arrived is still typical Its also antithetical to a transparent experience Duncan believes the industry has to commit to making more information available online At what point are we going to let go Duncan asked