Automakers and banks are working to eliminate a holdover from the pre-digitized age: the “wet signature” on sales contracts. That mission has been accelerated by pandemic-related restrictions on business openings and gatherings.
Long seen as a necessary step in having customers commit to a purchase agreement, the wet signature — where a seller witnesses a buyer’s signature firsthand — is rapidly becoming regarded as archaic and no longer necessary in online transactions, said Don Romano, president of Hyundai Canada and a leading advocate of electronic signatures.
“What’s accelerating is we’re digitizing the entire engagement process with our customers, from sales to service.
“I believe it would have happened anyway without the pandemic because people want to do business online. It’s a friendlier environment.”
Hyundai, through its captive-finance arm, is testing a fully online e-signature transaction process this summer in Toronto.
Romano said streamlining the sales process has several benefits, from allowing customers to conduct the transaction on their own schedule, to helping automakers and dealers manage production, shipment and inventory.
“When you buy a Genesis, we deliver the car to the dealer for delivery. They don’t keep them in inventory,” he said. “So in this case, where it really makes a lot of sense is the customer has committed to the car, so we commit to the truck driver or to the production facility, ‘OK, make the car.’
“That’s the real game changer.”
‘ALWAYS ON OUR ROAD MAP’
The pending arrival of e-signatures and e-contracts is another in a long line of innovations that was “always on our road map” but has been fast-forwarded by COVID-19, said John Hiscock, senior vice-president of automotive finance at Scotiabank.
“The pandemic has accelerated several aspects of several businesses. I don’t think it’s necessarily going back to the same way.”
Hiscock said that in early March, Scotiabank expected to replace its remaining fax-toimage document servers with Scotia Auto Hub. This allows dealers to upload documents electronically, see the status of credit applications, identify any missing elements and work with the bank to complete a transaction.
“That will be the basis for us moving toward fully electronic contracting approximately another quarter from now.”
The move was driven by the demands of Scotiabank’s automaker partners and their dealers and by the desire of their customers to eliminate as many touch points in the sales process as possible.
The Ontario Motor Vehicle Industry Council (OMVIC) is leaving the decision of what constitutes a valid signature up to dealers, automakers and financial institutions, said spokesman Connor Coles.
“OMVIC’s interpretation of Ontario’s Motor Vehicle Dealers Act says whether buying a car online or in-person, the law still applies: E-signatures on contracts are allowed under the act, but we recognize there are challenges between some financial institutions and dealers,” said Coles.
“OMVIC does not determine what constitutes a valid signature for someone else’s purpose.”
John Bordignon, a spokesman for Honda Canada, said the company has moved to electronic signatures where possible, as requested by dealers and their customers.
“It offers convenience, one less touch point and an increased element of safety to the sales process, allowing customers to shop and complete transactions in the way most convenient for them,” Bordignon said.
INK STILL NEEDED?
The death of the wet signature in automotive transactions is long overdue, said Glen Demetrioff, president of Rapid RTC, a Winnipegbased company that supplies live-chat functions and other services through the websites of 4,200 dealers and 27 automakers. He noted that electronic contracts aided the recent sale of his company to U.K.-based Keyloop.
“E-contracts have long been the basis for transactions much larger than the purchase of a car,” Demetrioff said. “I can use them for the sale of my company but not for the purchase of a car? I mean, really?”
Romano doesn’t want to overstate the importance of e-signatures since buyers and sellers eventually do have to meet and put pen to paper, where the law requires it. But the ability to confirm the transaction — from settling on a trade-in value to pre-negotiating inclusion of after-sale services and accessories such as extended service contracts or cargo liners — represents an incremental improvement in the online experience, he said.
Romano has been working with provinces and banks to recognize digital signatures as a way to ease the early parts of a car purchase, especially because it allows dealers to commit to a certain trade-in value for the customer’s existing car — assuming the inspection confirms the trade-in’s condition.