The COVID-19 crisis has accelerated the move toward digital automotive retail, but and executive Honda say the process can only be pushed so far by a pandemic.
Dealers are essential to the car-buying process, they say, especially for lease returns.
Jean Marc Leclerc, newly minted CEO of Honda Canada, said financial institutions generally won’t accept transactions without “wet signatures on documents.”
“We have a captive finance company through Honda Finance,” Leclerc said. “There are solutions in place that we were developing. They weren’t fully prepared to be launched.
“Obviously, we would have liked that to be the case in this crisis. But certainly, these things were in development.”
Honda’s sales model will, at least for the foreseeable future, include in-store contact with customers, Leclerc said.
“We’ve told our dealers that we have no intention at this time to do something 100 per cent online and just have the vehicle delivered at your door. Maybe someday we will go to that. But we still believe that the human interaction, the relationship with the dealer that you build, is important.”
In the meantime, Honda is “developing the documents [for] electronic signatures versus wet signatures, which from a legal perspective in Canada in terms of acceptance is something that continues to evolve,” Leclerc said.
“But the technology certainly is there. It just needs to be, in our particular case, perfected so we can launch it out to add it to our e-business process.”
Genesis Motors Canada, meanwhile, has a system in place for completing transactions entirely online, including contracts for leasing and financing. The company’s leasing is done through its own captive finance banner, which is a subbrand to the Hyundai Finance business unit, and financing is completed directly with RBC and Scotiabank. In each case, the customer downloads and prints a copy of the contract from the Genesis at Home platform, signs the physical copy, then scans it and uploads it back into the same platform.
“Since launch, we have been working with the print/ sign/scan/upload formula in light of the ‘wet signature’ requirements,” Jarred Pellat, spokesman for Genesis Motors Canada, said via email. “Our current method meets all of the lender requirements.”
ON THE LOOKOUT FOR FRAUD
Dealers said having a physical presence was necessary, even as they facilitate customers doing more of the shopping process online. Many warned that online sales were more susceptible to criminal activity.
“This type of environment is so ripe for fraudulent transactions,” said Shahin Alizadeh, CEO of the Downtown Auto Group in Toronto.
“We’ve already caught a couple fraudulent transactions who tried to basically grab a car from us. They weren’t who they said they were, and we got the police involved.” Alizadeh was among several dealers who told Automotive News Canada that preventing fraud has become a top priority and that they have implemented measures that include requiring and verifying multiple forms of identification from customers.
“I find it scary,” said Robert Stein, president of Plaza Auto Group in the Toronto area. “Online sales are awesome. If we can head in that direction, we’re going to be very lucky to do that. But there’s going to be a lot of fraud. There always is. You have to do your due diligence. It’s not like you’re just going to leave the car in a parking lot for the guy to pick up before mailing a cheque in.”
In Windsor, Ont., Terry Rafih, CEO of Rafih Auto Group, said his employees ask for multiple forms of ID to prevent fraud.
“If someone wants to screw somebody, they can figure out a way to do it,” Rafih said. “But we’re doing everything we can [to prevent that].”
Executives and dealers insisted that physical interaction remained necessary, not only to guard against fraud but because “wet signatures” in many cases are still needed to complete a sale.
Rafih said the crisis is bound to permanently transform auto retailing. That makes it critical that dealers figure out the best way to work with customers remotely, safely and securely because many will be reluctant to leave their homes for a while, even after restrictions lift.
“Whether it’s restaurants, bars, dealerships, it’s going to take a while for people to get comfortable enough to come back in,” he said.
With files from Stephanie Wallcraft