Regular readers know that, from FMCC to Spartefinanz Abteilung, I am a captive finance booster. See here, for example. So, I was disappointed to see this omission from the BMW Centenary coverage in Automotive News.
I was employee number six behind, if memory serves, Kevin Westfall, David Paul, Mark Mundahl, Bob Devine, and John Dick. David is quoted in this ancient interview. Take a bow, gentlemen. Kudos also to the professional staff supplied by Bank One.
It’s worth noting the structure of this partnership. BMW had hired PWC to administer an RFP. Of many strong entries, Bank One was the only partner willing to use our computer systems. They were aware of our intention ultimately to bring the enterprise in-house, and control of the systems was key. This planned migration from a service provider to insourcing is the same structure Kevin employed for AutoNation Financial Services, and one I would still recommend today.
I was asked recently to describe the role of Bank One as a service provider for the startup BMW Finance. Having served as CIO for BMW Finance, my glib response was that we supplied the systems and they supplied the users. This was an unusual arrangement, and key to Bank One winning the business. Our systems had to meet their standards before the bank would commit to service levels.
Outsourced servicing can be an important first step for a new finance company, as it was for BMW, and I have seen it done various ways. A more typical arrangement was our earlier one with GE Capital. They did all the servicing using their own facilities, and BMW did the sales and marketing.
I once observed that you could start a finance company using only a checkbook and some business cards. This was at the Consumer Banking Expo, where one could easily find an outsourced credit department, collections agency, call center, etc. This opens up the possibility of departmental outsourcing.
Manufacturers have captive finance companies, and so do dealer groups. During my tenure at AutoNation Financial Services, we had our own credit department, sales, e-commerce, and staff functions. World Omni handled discounting, collections, and customer service. The plan was to migrate the operation in-house, one function at a time.
Depending on their objectives, a finance company may choose various servicing options, from hybrid arrangements to full autonomy. I would also recommend a permanent core team at the executive level, regardless of which functions are outsourced.
In my business, you can never spend too much time in the dealership. I bought a new car over the weekend, and took the opportunity to study their software (they didn’t believe me, that I had invented the InfoBahn).
“Hey, can I sign this waiver electronically?” No.
“Does this desking system push to ADP?” Not exactly.
Aeros is a slick little system, certified by BMW two years ago. I gather they’re in a couple hundred dealerships. I liked Aeros a lot, but noticed the F&I Manager rekeying between it and ADP. Just user error, I hope.
The same goes for the menu presentation. Scratching out the GAP row with a Sharpie is probably not what Maxim intended.
I enjoyed using Zag. They have a good, web-friendly process, and it gets you close to invoice before the first phone call. Of course, this cuts into gross – but hey, I drove past the other BMW dealer. Like many BMW drivers, I will order a car sight-unseen. This makes BMW a prime brand for online selling, and Zag.