The Cambridge dictionary defines transparency as follows: “the characteristic of being easy to see through; the quality of being done in an open way without secrets.” Like anything else, transparency is open to interpretation, and even nuance, and in the automotive industry, this is no different – and perhaps even worse – contributing to damaging stereotypes of auto dealers. After all, is there anything less easy to see through than all the nuances and factors involved, on all sides, in a vehicle transaction?

‘Transparency’ is much touted in automotive as key to a consumer-positive transaction experience, but what does transparency really mean to each stakeholder? A July/August 2023 survey of auto dealerships by eLEND Solutions investigates auto dealer perceptions of how they, consumers, and, yes, lenders, operate in the transparency equation – and to see if there is a disconnect. And, indeed, there is.

Transparency Disconnect = Transaction Friction:
It is a disconnect, the survey reveals, that is responsible for considerable friction in the vehicle transaction process, especially when it comes to digital finance. Consumers and dealers do indeed define transparency differently, say the vast majority of dealers surveyed, who also report a gap between how they want to sell and how buyers want to buy. This results in a ‘trust gap’ between dealers and consumers when it comes to arriving at ‘THE’ deal, and is acknowledged by 98% of those surveyed.  It is hardly surprising, then, that nearly 100% of dealer respondents find themselves in a balancing act between customers' expectations of transparency and the dealership’s financial success.

Lender Transparency Challenge:
What may be more surprising is that dealers attribute much of that friction to a lack of transparency from lenders. In fact, dealers overwhelmingly cite reduced transparency from lenders as the primary challenge to providing deal clarity to their customers. They say they feel caught in the middle between customer’s increasing demand for deal transparency and lenders becoming less transparent.

Operational Disconnects = Trust Gaps:
But, as the survey reveals, it is not all down to the lenders. There are significant disconnects between the dealers’ quest for transparency and their actual operations. For example, the majority say they quote customer payments before receiving lender loan decisions. This can set up uncomfortable gaps between consumer expectations and deal term realities. And nearly all dealers say they work the deal differently for an online shopper versus a shopper in the showroom or on the phone, potentially broadening that trust gap. While most dealer respondents believe in providing as much information as possible for transparency, only 10% emphasize ‘real’ numbers during negotiation. And, for the overwhelming majority, the traditional ‘sales first, finance later’ practice lives on, perpetuating negotiation frictions and conflicts in the F&I office.

Conclusion:
The survey indicates that there is a clear consensus on the challenges and perceptions surrounding transparency in the retail automotive industry. Increased collaboration and communication between lenders and dealers appears to be at the heart of bridging the transparency/trust gap and solving transaction frictions. With more transparency from lenders on qualifying finance terms, dealers may be more willing to evolve legacy practices, resulting in a smoother road to customer satisfaction and frictionless transactions. Along with that, a concerted move towards offering a unified buying experience – not separate experiences for online customers and in-store customers – has the potential to ensure consistency, trust, and simplicity for the customer, all while creating operational efficiencies and new profit opportunities for dealers.