Embracing a digital workflow, especially for buy-here pay-here dealers, can help independents face an ultra-competitive environment that includes digital giants and megastores. 

Tim Yalich, head of automotive strategy at Wolters Kluwer, focuses on providing technology platforms and services for loan origination work for auto purchases.

Yalich said the dealer customers he works with face the same environment as most dealers.

“They have a lot of challenges,” he said. “Finding inventory is a challenge, certainly. But access to capital is probably the second biggest one.

“Dealers need to focus on staying relevant in the business and being able to compete with a lot of tough factors out there and tough competition from the larger enterprises and groups.”

Yalich said the biggest problem in the used-car space is that “the back-end or back-office procedures are usually neglected.”

There is a need and demand for complete digital workflow from end to end, he said,

Until recently, anything digital was used only until the vehicle purchase, then everything that followed was still paper based because of compliance risks etc.

Now, the goal is to make everything digital to streamline the workflow, while also making it secure and trusted, Yalich said. 

Current trends that Yalich sees is the smaller buy-here, pay-here dealers are looking to shrink some of their portfolios and sell assets to increase their capital.

“It seems like there is a need to turn cash faster or make capital available quicker,” Yalich said, “In the paper-based environment, that’s cumbersome and slow sometimes.”

Bigger companies like Byrider, CarMax, Carvana and Vroom have taken digitization all the way to financing.

“It seems that a lot of independents are the ones coming up behind on trends and changes, particularly in the digital area,” Yalich said.

The biggest concern for independents is the cost of the initial investment and finding the right vendor, Yalich said.

But during a recent survey, Wolters Kluwer found dealers had a lack of awareness of the capabilities available to them and the benefits.

“It’s not just the benefits to the dealers that matter, it’s the benefits to their partners,’ Yalich said.

For example, using digital tools to work with lenders – such as passing custodial ownership of a loan portfolio to them with ease, with a high amount of accuracy and strong data to make it easier for them – just becomes a better environment,” Yalich said.

A big hurdle for a lender considering to partner with an independent is getting the information in the portfolio to make a good decision.

With digital, the lender gets better visibility to make a quicker, easier and more effective decision, Yalich said.

The companies and independents that leverage these types of digital tools, will find efficiencies to operate their back office, allowing them to recognize opportunities for growth.

“As competition grows, the back office is the area that becomes critical, because of those efficiencies,” Yalich said.

It helps dealers to manage the portfolios they have, while also helping them to go to secondary markets much faster and easier.