There’s an App for That
Speaking during a panel discussion at the American Financial Services Association (AFSA)’s 2015 Vehicle Finance Conference, TrueCar cofounder Jim Nguyen wondered why auto finance sources hadn’t taken advantage of advancements in technology to engage consumers directly.
“Why can’t we have a LendingTree-type environment so [car buyers] can see all [their] options?” he asked the room full of auto finance execs.
About 10 months after the TrueCar exec posed his question, a startup with the financial backing of Daimler AG was opening its doors in Irvine, Calif., to build such an experience. The first version of the fintech tool was silently released in early 2016 with little to no marketing. The goal then was to perfect the platform. But with the foundation of the platform ready and an eight-figure marketing budget in tow, AutoGravity now wants every vehicle shopper in America to know its name.
“We are a very different startup from what you see out there in the automotive startup world. We are not proclaiming that dealers are obsolete and the lenders will go the way of the dinosaur. We are saying the opposite,” says Andreas Hinrichs, cofounder and CEO of AutoGravity. “We’re saying that dealers play a very important role [and] lenders bring a lot of efficiency and scale to the process. What the automotive finance industry is lacking is a comprehensive digital experience for the customer and a digital delivery channel for the dealer.”
Filling a Void
Hinrichs was coming off a nearly 20-year career with Daimler Financial Services when he and AutoGravity COO Nicholas Stellman, another Daimler Financial Services veteran, founded the fintech firm in October 2015. The firm’s 50-person crew counts other veterans of the auto finance industry, but Hinrichs says the company sought out associates with varying levels of work experience in order to have multiple perspectives working on the platform. Dealer feedback, he adds, has also been critical.
The platform was designed to allow car shoppers to secure vehicle financing or a lease on their mobile device before they visit the dealership. It’s currently available for download throughout the country but financing is limited to California. That will change shortly, Hinrichs says.
The executive stresses that the goal isn’t to usurp the dealer or disrupt the established dealer-to-lender process. He simply hopes the platform will become the “digital glue” between dealers and finance sources, while facilitating more sales and originations in the process.
“AutoGravity serves customers who submit a credit inquiry, who [gain] personalized offers from indirect lenders,” said Serge Vartanov, CMO of AutoGravity. “The lenders and the offers that you see on the AutoGravity platform are the same that the dealers work with.”
Vartanov describes the process as empowering for car buyers in that it allows them to secure financing through a device they’re intimately familiar with: their smartphone. For dealers, the platform delivers ready-to-buy consumers straight to their showrooms.
AutoGravity is available on iOS, Android, and as a web application. However, the main focus lies in mobile — where the company sees 90% of its traffic. Although the mobile versions of AutoGravity’s platform include certain features not available through the web version, all versions of AutoGravity follow the same four-step process for securing financing.
Launch the app and the platform, which contains every vehicle make, model and trim, prompts buyers to select a vehicle so they can see their financing needs. Buyers can then estimate their monthly payment using the tool’s car loan calculator, which allows them to adjust the price, term and down payment. The app then displays the closest available dealers and their contact information.
To ensure every dealership in the United States is represented, Hinrichs says the company built its own proprietary database. He adds that buyers can connect with the dealership before submitting a credit inquiry to confirm that a specific model and trim is in its inventory. For partnered dealers, the system displays inventory in real time.
Partnered dealers can also integrate their CRM with the platform so they can be notified when an approved customer is ready to transact. If the dealership isn’t partnered with AutoGravity, the platform will notify the store that there is an approved buyer ready to purchase if it chooses to partner with AutoGravity.
“We decided to include every single dealer in AutoGravity. So regardless if the dealer is signed up with us or not, we are sending them business,” Hinrichs says.
As for the solution’s financing process, mobile users simply scan their driver’s license to populate the credit application. Buyers using the web version must complete the application manually. Shoppers can also link their LinkedIn accounts to the platform to automatically populate the employment section of the credit application.
Once the credit application is submitted, AutoGravity presents four different offers. From start to finish, the process, on average, takes less than 10 minutes, AutoGravity states. And for every booked deal, AutoGravity receives a cut of the profit. This amount, according to officials, varies from deal to deal. Hinrichs emphasizes, however, that even with the company’s cut, dealers should expect to see healthy profits. And since consumers arrive with financing in hand, they’ll spend less time in the F&I office, he adds. For the F&I manager, that means more time spent on selling product.
“We’re focusing on indirect lending options, which still includes economics for the dealership,” he says. “And we’re offering fair deals, we’re offering transparency, but we’re not cutting out the economics of the dealer. Quite the contrary.”
Partnering With Dealers
This past November, AutoGravity launched the first dealer-branded version of its app through a partnership with California-based Fletcher Jones Auto Group. Aside from the Fletcher Jones branding, the app differs in that it only displays vehicles the group has in inventory. Reception so far, Hinrichs says, has been positive, although the dealer group did not respond to requests for comment.
“What we have jointly developed with them is an app called Fletcher Jones Drive that utilizes AutoGravity technology and the same process, but now caters to the captive audience that this dealer has,” Hinrichs says. “So we have now taken the AutoGravity technology and created a private label version for Fletcher Jones.”
AutoGravity isn’t looking to partner with other dealer groups to the same extent as Fletcher Jones. But Hinrichs says he’s open to the idea if the right dealer group comes along.
The company is aware that consumers may not keep the app on their mobile device after the initial download. It also realizes that consumers may use the app to simply shop the rate at nonpartner dealerships, similar to what happens with TrueCar price quotes. Company officials, however, are confident that won’t be the case with their solution.
For one, Vartanov says, vehicle financing is different than price quotes in that most car buyers want to avoid having their credit pulled multiple times if they have already secured financing. He adds that the app also presents the same offers a dealership would be able to secure, so there wouldn't be much of a benefit for shoppers to shop around.
According to data the company has collected so far, most car shoppers use the AutoGravity app as a reference guide. So whether it’s a car they see on TV or a car they see on the street, data shows that consumers are using the app multiple times to check rates and payments they qualify for on various vehicles.
If there’s one thing that has surprised Hinrichs so far, it’s the lack of dealer pushback — and not for lack of engagement.
“We have a dedicated dealer sales team, and what we have found is dealers are very open to the new digital frontier,” he adds. “They feel it’s high time to engage digital customers on their terms.”
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