By Ray Birch
ONTARIO, Calif.—The auto buying model is transforming, not only in the migration to online shopping and purchases, but in how dealers and automakers are integrating their offerings, and credit unions that don’t recognize and respond to the shift are going to lose loans, asserts one automotive industry expert.
Aleks Bogoeski, VP of strategic alliances at CU Direct, urged credit unions to become highly digital with their car-shopping solutions and fast in their loan decisioning, and to realize that for many younger consumers, if a solution can’t be held in one’s hand, the solution doesn’t exist.
“The big focus in the movement has been on Millennials, and they've only grown up knowing a phone. So, if what you are offering in the way of auto shopping is not on their phone, they are not going to look at it,” said Bogoeski. “It has to be mobile to satisfy their needs and their wants for instantaneous data.”
Bogoeski spoke to CUToday.info about the fast evolution in sophisticated online car shopping solutions and auto decisioning, and called on CUs to pay attention to new players such as Carvana and Fair, as well as to how dealers and automakers are becoming more digital in their own consumer interactions.
Dealer, Automaker Integration
For example, Bogoeski pointed to how dealer websites and the carmakers’ sites are beginning to be integrated.
“I've been a big proponent of digital retailing for several years now,” said Bogoeski. “I think we are at a time now when the dealer and automaker websites are starting to work in unison. So, consumers will be able to start on one site, say the carmaker’s site, and then finish on the dealers’ site. You will have a fully digital experience, and the buyer can complete the entire process on their phone. If they want to finish with an omni-channel approach at the dealership, they can do that as well. We're going to have a lot of different options for consumers to enter and finish the car shopping/car buying process, and credit unions need to be part of this. We are at a tipping point. We'll be hearing a lot more about this over the next couple years.”
Emphasizing the importance of credit unions working closely with dealerships to make sure they are inserted into this new car buying process, Bogoeski said he believes CUs are now “batting in the third inning.”
“Digital retailing, and its overall acceptance, is still somewhat early in the game,” said Bogoeski. “But credit unions need to be prepared to participate in these digital channels more, and that also means faster turnaround time for loan decisioning—more automation on their side. We are partnering with credit unions to help them advance here. For example, at CU Direct one of our jobs is to help credit unions participate at the point-of-sale, wherever that may be—whether it's online or at the dealership.”
Exploring Partnerships
Bogoeski said it’s time credit unions not only look to partner more closely with dealers and even automakers, but also look for opportunities to work with the online car shopping sites such as Carvana and Fair.
“More consumers use these online channels and have a great experience and they tell a friend and then their friend tells a friend…and once consumers get over the anxiety of buying a car totally online or on their phone, this moves more mainstream,” he said.
What will ultimately emerge from the shift to digital car buying is consumers will begin to expect smoother and faster turnaround when they go to buy a car, Bogoeski said. The days when shoppers put up with the long process of buying a car at the dealership, including the back-and-forth between the salesperson and the buyer, are numbered, he said.
Aleks Bogoeski
“It’s getting to be more about self-service and eliminating all the friction,” he said. “The shift to digital car buying is completely changing people's outlook on buying a car. Once you taste a better thing, then your expectations for the next time are raised. If someone goes from a three-hour experience to a 30-minute experience, the next time they buy a car they are going to want the process to be 30 minutes or less. The bar just keeps getting raised which each passing day and with each jump in technology and process improvement.”
Lead, Fast Follow, Or…
As with any major shift in retailing, there will be leaders, fast followers, and those who are left behind, he reminded.
“Ultimately, dealers need to embrace this and be willing to change to make it happen,” said Bogoeski. “So, I think you're going to have dealers who are going to provide that great process and then there are the ones who will lag and lose out over time.”
The same can be said for CUs.
“The decisioning aspect is becoming so much more important, because no one is going to wait online for a credit union to respond back in a half an hour, it’s going to have to be in seconds, really,” he said. “I don’t think credit unions have really seen the impact of this yet, and at CU Direct we want to make them aware of this change. I think credit unions are in a good position, they have a lot of the technology, but the importance of speed of decisioning needs to filter down to all credit unions, especially the smaller ones.”