Industry News

Digital retailers bring monthly payment offers to the web

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Some tech companies are bringing a new layer of precision to online car deals with platforms that offer consumers accurate monthly payments before they come to the store.

This is a crucial step forward from the payment-estimate calculators that have become commonplace on many dealer sites, where shoppers can play around with down payments, loan lengths and annual percentage rates to get ballpark figures that could be way off once they actually sit down with salespeople.

The ability to deliver monthly payment offers to online shoppers with penny-level accuracy adds an increased level of transparency to car buying at a time when consumers are expecting seamless transactions online. While this feature offers convenience to consumers, it comes with a stream of challenges for software providers such as CDK Global and Cox Automotive.

The companies say they have to navigate a complicated matrix of variables for each buyer, including creditworthiness, down payments, incentives and trade-ins, plus taxes and fees that can differ by state.

Mistake equals doom

Any kink in those numbers can spell doom if a consumer expects to pay one price initially but is presented with a higher number in the store.

“The challenge for us has been if we want to show the same payment online that we show in the store, we have to account for every single one of those factors. We have to ensure that every single one of those factors is penny-level accurate,” Michael Eggerling, CDK’s product marketing manager, told Automotive News. “Any little miscue with any one of those is going to make the whole deal fall apart.”

CDK’s online Connected Store is able to present exact monthly payments when a dealer is using the company’s desking tool. CDK launched the platform’s pilot program during the 2016 National Automobile Dealers Association convention in Las Vegas, before a general release in October.

If a store isn’t using a CDK desking solution, it can still use Connected Store but will lose that pinpoint accuracy. Despite this, Eggerling said the quotes should be respectable because the platform still uses its desking calculation engine to build deals while pulling in bank rates, fees and the automaker’s incentive offers.

CDK is careful when it rolls out Connected Store at a dealership. If a lead goes through the Connected Store and gets an offer of $350.19 but the desking solution says $349, CDK won’t turn the platform on until the online offer matches what the in-store desking application says.

One of the biggest challenges in providing monthly payments comes from taxes and fees, which CDK had to collect for every ZIP+4 code in the country to accurately gauge each shopper’s location.

CDK has found that shoppers are spending more time in the Connected Store than on other areas of dealerships sites and providing stores with streams of personal information, including names, addresses, credit information and trade-in details to calculate payments. Eggerling believes this shows that consumers trust dealerships, which have battled unseemly reputations for years.

“That’s going to be a long journey to change that perception. It’s going to be hard,” he said. “This is one area where they can take advantage of some of the new tools out there to start building trust and changing their perception.”

Cox umbrella

Cox Automotive’s Digital Retailing solution brings a combination of its brands together to help consumers structure deals online and settle on accurate monthly payments.

Dealertrack is tied to the lender ecosystem, for instance, which provides the nuts and bolts behind the retailing process so that shoppers can get their credit pulled.

“We’re talking about banking regulations, communicating with multiple lenders. All of those pieces need to work cogently together for you to have this,” Andy MacLeay, director of digital marketing for Cox’s Dealer.com, told Automotive News.

The integration of online messaging portal MakeMyDeal allows consumers to negotiate the terms of a deal. Dealership employees can make counteroffers via the messaging tool on vehicle price, adjust financing terms, update the value of the trade and change the amount of the cash down to reach a desired monthly payment.

Dealer.com, meanwhile, is the user interface that provides the backdrop for these tools. MacLeay said offering this capability online is one thing, but digital retailers also have to “intelligently drive people to this transactional process.”

“People are thinking, “If I build it, they will come,’” MacLeay said. “You still need to help [consumers] get there. You still need to have advertising campaigns that drive to this transaction. That’s another piece that a lot of people overlook. How do you market to people to get them to begin to transact online?”