OEM Vendors: Considerations

F&I and point of sale exemption:

Is the Point of Sale Finance Exemption available to an Agency dealer vehicle sale?

Under the NCCP regulations, “It only applies where the introducer deals directly with the credit provider/lessor and facilitates finance of the vendor’s products or services.”

But the vehicle is sold by the Agency is NOT the vendor’s product.

Therefore, the dealer will need to align with a broker and work under their ACL or get an ACL themselves.

Another alternative is for the OEM’s captive finance company to employ the F&I staff at the dealer and work under their ACL.

Importantly, if the customer is financing the purchase online with the OEM captive finance or the F&I staff are employed by the captive, why would the dealer get a commission at all?

Showrooms:

Unintended consequences will occur for the dealership footprint given showroom traffic will fall by 50 percent as intra-brand shopping vanishes and the time in showrooms should drop by 50 percent as there is no transacting/negotiation taking place. We also should be asking why dealerships need to open seven days a week.

Dealers could run these businesses by appointment like high-end jewelry stores. Dealers should also consider closing Sundays to save Sunday loading and possibly even mid-week. This would mean a five-day roster rather than seven days, and reduced headcount by 30 percent as a minimum in these scenarios.

Administration:

Administration nightmare – from what we have seen from the agency models, the dealer is still doing 100 percent of the sale admin for half the gross profit. This is preposterous as the agent is acting as the vendor with none of the benefits. I see this as a real cost-shifting issue by the OEM which is unsustainable in the long run.

Do we think agencies should be in separate entities to avoid issues across the rest of the businesses the dealer group operates? Do they need a dealer license or is the OEM the dealer license holder?