The recent regulatory changes the FCA have imposed now prevent dealerships from offering a lower – or ‘discounted’ – APR when a customer is armed with an alternative offer or quote from a competitor.
It is therefore understandable why dealerships may be concerned about the adverse effect that this lack of flexibility, or ability to negotiate with the customer, could potentially have on their finance penetration going forward.
Previously, reducing the APR for the customer resulted in the dealership receiving a lower level of income. By removing the temptation to discount the rate from frontline sales and F&I staff, we expect dealerships who make adjustments to see the following…
1. More robust sales and finance processes
Dealers will address any weaknesses in their sales teams and sales processes – which may have previously resulted in a salesperson taking the easier option of simply quoting a lower APR.
2. Increased earnings per transaction
Dealers will experience an increase in the level of income they earn per transaction, as a result of not being able to reduce APRs.
3. Improved F+I performance
We predict there will be an improvement in dealerships’ overall F+I performance as a result of being able to focus on improving other profit opportunities. We will continue working closely with our dealer partners to support them in this area.
DSG has a range of solutions that will help increase vehicle and finance sales in dealer showrooms and online. Please get in touch to find out more.
