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Demand for Pickups and Small Cars Fuel Weekly Values

LAWRENCEVILLE, Ga. — Strong demand for pickups and small cars fueled another week of low depreciation in the wholesale market, according to Black Book’s Aug. 20 Market Insights report.

Overall car segment values decreased by 0.11% last week. In comparison, values had decreased at a rate of 0.2% per week during the previous four weeks. In the truck segment, overall values decreased 0.1% last week after decreasing at a rate of 0.2% per week the previous four weeks.

Subcompact and compact cars recovered their best week among all cars, as the average wholesale values for the segments were up 0.05% and 0.03%, respectively. On the truck side, small pickups and full-size pickups led the pack, as values for small pickups remained flat from the previous week and full-size pickup values were up 0.04% compared to the previous week.

The heaviest depreciation within the car segment came from prestige luxury cars, which experienced a 0.63% drop in value compared to the previous week.

The full-size van segment suffered the big drop in value among trucks, dropping 0.41% week-over-week.

“The overall used vehicle market is doing extremely well, bucking the seasonal trend seen in previous years, said Anil Goyal, executive vice president, operations for Black Book. “This time last year, the weekly drop in values was five times the rate seen today.”

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An Interview With Kumar Kathinokkula

An Interview With Kumar Kathinokkula

Over the past several years, Kumar Kathinokkula has emerged as a leading voice of reason and progress as technological advancements have changed the way F&I products are sold and administered. P&A sat down with the COO of F&I Administration Solutions to learn what new developments are on the horizon and how dealers, product providers and administrators will be affected.

Tell me a little bit about your company and its place in the industry.

F&I Admin is the leading provider of administration solutions for F&I products. Our core platform, SCS Auto, natively supports the broadest array of products amongst all solutions in the marketplace. It offers full lifecycle administration of VSC, GAP, prepaid maintenance and at least 15 other products with behavior specific to each product in the same system.

The functionality is as deep as it is broad, and it gets deeper with at least one new release every two months, if not more often. All this comprehensive capability is attested to by our customer base of 50-plus administrators, who collectively process more than five million new F&I contracts every year on our platform.

We also have the highest number of menus connected to us (53 and counting) for erating and econtracting. In fact, our open architecture makes it easy to support a wide array of integrations, such as inspection companies (nine), WrightExpress for claim payments with credit cards, SPP, PayLink and Omnisure for premium financing, and much more.

Are there any recent or future developments within your company that you would like to tell us about?

We are in a very exciting phase of our evolution at the moment. Our customer and transaction base and growth rate give us the muscle and stamina for the kind of long term projects and connected services that no one else has. In 2015, we launched “clearFI,” our business intelligence platform that allows our customers to slice and dice sales, earnings and claims metrics and publish them as interactive dashboards accessible via mobile and desktop devices.

We also launched the F&I private cloud systems architecture in June 2015 that offers our customers redundancy and load balancing within and across dual, geographically distributed data centers. All the while their data is stored exclusively on our disks and servers; nothing is stored on third-party cloud services, all while maintaining the highest levels of performance and availability.

We will soon launch “pureFI,” our next-generation administration platform. We now provide certified DMS integration services via our Agilifi services hub to SCS Auto and other customer systems. We will launch many other services via Agilifi in the coming months, such as VINtelligence support and aftermarket parts pricing integration.

How did you (personally) get started? What caused you to choose this career path?

I worked at Deloitte and CGI for much of my formative years, building business intelligence and P&C insurance solutions. The consulting role suited my temperament well, since I am constantly looking for new challenges. Eventually, I wanted to build the kind of solutions that would take a very long-term focus — something that was not possible in the consulting field.

In 2004, I left consulting for the opportunity to build an F&I administration and menu presentation solution set for a company that was eventually purchased by Dealertrack. David Trinder and I bought that division from Dealertrack in 2009 and formed F&I Administration Solutions.

What are your outside interests / what do you like to do on your days off? What activities/sports are you passionate about?

If I were ever to retire, you would likely find me riding a motorcycle in Africa, Asia or Latin America. I like traveling to new countries and places. Just last year, we visited the Taj Mahal in India, the cloud forests and beaches of Costa Rica, and the estuaries and coastal beauty of northwest Oregon. When I can’t afford a long trip, I like to run and cycle a few miles from home.

What are the biggest issues you see facing the industry today and in the future?

As always, our customers continue to watch the regulatory environment carefully. We do provide many pricing parameters that ensure dealers are pricing products fairly and within a reasonable range. In addition, however, the industry continues to pursue the holy grail of easy, paperless transacting in the F&I office. This requires several disparate entities (lenders, administrators, state and federal regulators) to all come together to create an environment that facilitates such seamless processing at the dealership.

Although many are working on it, no single platform in use at the dealership yet provides a compelling paperless workflow to integrate the disparate transactions with these entities that a single vehicle purchase usually entails. The market will ensure that it is only a matter of time before such solutions are created. As has been the case lately with technological change, when this occurs, the pace of adoption will be rapid. Administrators must ensure they have the right technological platforms to connect with and support such solutions as quickly as they appear.

As always, the never-ending quest for greater efficiency continues to drive administrators to integrate and automate every aspect of their systems and processes. The current focus of this drive is producer signup and management processes, reinsurance administration and customer service. The common thread running through these efforts is the desire to make all aspects of the interaction with an administrator as easy as possible.

Administrators sit at the center of a complex web of service providers and partners that all need to work together to provide a seamless experience for their customers. This implies their systems need to be increasingly open and connected so they can drive this efficiency and ease of doing business. Increasingly, this means having open, flexible, secure, reliable and performant systems that can be easily integrated with a limitless array of partners and vendors. This is exactly the kind of systems we build and are continuing to build.

The entire functionality of pureFI will be exposed as REST APIs that can be consumed internally or externally so that integrating with other systems is merely a function of finding the right set of services to connect.

What advice would you give to someone new to this industry?

Get used to complexity and change. Always ask and know why. Never get comfortable with status quo. And don’t ever think you know everything. From the outside, the F&I industry may appear a bit behind the times with its reliance on paper at several junctures. But you only have to scratch the surface to be see the amount of complexity and sophistication that underlies the products on offer, and that the value chain that leads up to it is enormous. Go deeper and you see new products showing up on a regular basis, new ways of earning these, new and better ways of adjudicating claims, and more ways of automating every administrative process.

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An Interview with Thomas Elliott

An Interview with Thomas Elliott

P&A magazine met with Thomas Elliott, executive vice president of StoneEagle, to learn more about his automotive industry career and get the inside edge on the company’s latest innovations.

Tell me a little bit about your company and its place in the industry.

StoneEagle delivers a full array of applications to the retail automotive industry, including flagship offerings of our .net SEcureAdmin system and our industry-leading reporting application SEcureMetrics for sales and F&I. We also provide SEcureMetrics reporting for the service department, along with our latest technology offering, SEcureMenu, and our patented virtual payment platform, VPay.

Because of our rich history and experience in the retail automotive space and a team of dedicated, passionate professionals, we have been able to successfully navigate a multitude of changes in the industry over the past 20 years, and we continue to maintain our leadership position.

We realize that the industry is continuing to evolve. We have invested heavily in development resources and key team members who are able to understand our business today and also push us forward into the future with a clear vision and a methodical, strategic approach.

Are there any recent or future developments within your company that you would like to tell us about?

I am very excited about the launch of our latest application, SEcureMenu. Our team has worked diligently to create a simple, fast and flexible menu application that provides a fantastic experience for both the F&I user and the customer.

Since October of 2014, SEcureMenu has econtracted more than 10,000 contracts with multiple providers for a handful of primary test dealers. We have been working diligently to connect with F&I providers so that SEcureMenu delivers a comprehensive and stable network of options for dealers and general agents.

We also recently completed expansion of our SEcureMetrics application to include reporting analytics on closed repair orders and technician and advisor performance within the service department. As the service department now drives more than 30% of all dealer profits, we have seen a push from our agents, dealers and provider partners to gain insight into the performance details from service.

I am also very excited about our development efforts in regard to aggregate analytics. We will leverage the data from the approximately 4,000 dealers we currently have data for in order to present high-level, aggregate metrics such as F&I per vehicle retailed, product penetrations and averages and break the data out by OEM, dealership state and size. This data offers so many options for agents, dealers and providers as they perform initial analyses for dealer presentations and to provide benchmark targets for their F&I managers and producers.

For our flagship product, SEcureMetrics, we are about to release a new “violation report” that will allow our dealerships, agents and providers to monitor rate spreads, product sales price caps and profits, and overall profit caps on a deal-level basis and proactively schedule notifications to various personnel when any violation occurs.

How did you (personally) get started? What caused you to choose this career path?

While working on my undergraduate degree, I interned with a credit insurance company and gained my initial exposure to the retail automotive industry. I worked in multiple departments and benefited from the knowledge of several very talented individuals. It was during this internship that I met one of my greatest career influencers, Mark Genova. Mark challenged me and mentored me in the art of working with an intense focus and learning how to utilize technology to maximize my efforts, all while understanding the importance of the needs of the dealer and agent clients.

My first job after graduating from college was with a mid-sized, Texas-based vehicle service contract and aftermarket product and income-development provider. It was here that I was introduced to two additional colleagues who greatly impacted my career: Cliff Eller and Russell Howells. I was given the opportunity to work alongside them in the areas of risk management, accounting and, most importantly, providing support to our field agents and dealers.

The more I learned, the more I became intrigued by the solutions that dealers were searching for in an effort to maximize their customers’ experience and overall profitability, which eventually led me to StoneEagle and the opportunity to work with Brent Allen. StoneEagle has been an industry leader for more than 20 years, and Brent wanted to ensure that we put a team in place that would give StoneEagle the opportunity to continue to be an industry leader for years to come.

What are your outside interests / what do you like to do on your days off? What activities/sports are you passionate about?

I really enjoy spending my free time with my wife and my two teenage sons.

My favorite sport has always been basketball, and it is a good thing, as my 16-year-old son is a 6’8” junior and my 14-year-old son is a 6’4” freshman. Each of them is heavily involved in varsity and freshmen basketball, respectively. Most of our time is now spent caravanning to games across Dallas, San Antonio, Houston and the rest of Texas.

When not travelling to basketball games and supporting our sons, I enjoy time golfing and camping with friends and family.

What are the biggest issues you see facing the industry today and in the future?

I am extremely concerned about the manner in which several of the DMS providers have approached changes to their security platforms and how these changes are being messaged and presented to the affected dealerships and third-party providers.

DMS providers’ core focus is the accounting and tracking of a dealer’s sales, and the very complicated process of service repairs and integration points therein. Companies like StoneEagle have core focus on the best-in-class applications such as menu, reporting and CRMs. The DMS providers are making it economically infeasible for a dealer to pick the best product for their business.

What advice would you give to someone new to this industry?

I would strongly recommend that someone new to the industry spend as much time as possible learning about today’s consumer and what really happens at the dealership during the lifecycle of a customer transaction.

There is no substitute for understanding the business from all perspectives so that your team fully meets the expectations of your clients.

Is there anything else you would like to add?

Our team is focusing its efforts on collaborating with dealers, agents and providers to understand industry needs as the customer experience begins to transition to a more digital/online approach.

We are working to deliver a robust solution that allows the customer to drive the process, to view and rate products and review support material from anywhere on any device before they arrive at the dealership to complete their vehicle purchase.

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An Interview with Brian Reed

An Interview with Brian Reed

P&A had the opportunity to speak with Brian Reed, president and CEO of F&I Express, about the history of his company and his take on the current industry landscape. F&I Express is a Southlake, Texas-based provider of leading-edge technology solutions for dealers, agents and F&I product providers.

Tell me a little bit about your company and its place in the industry.

We have worked hard at creating relationships and connectivity to the aftermarket product industry. F&I Express has established the largest F&I provider network in the industry. We have integrated with a number of menu and selling systems, and we integrate with over 12 DMS providers. We are constantly connecting dealers to the companies with whom they are doing business!

The success of F&I Express is driven by our service. We have great relationships with dealers, agents and F&I providers and are known for going the extra mile to provide superior service. Being named a winner in the F&I Technology category of the 2015 Dealers’ Choice Awards, as well as P&A’s Provider Innovator of the Year, are all testaments to our innovation and the high-service solutions we provide to the market.

Are there any recent or future developments within your company that you would like to tell us about?

Our name in the market historically has been synonymous with econtracting. Today, F&I Express is a lot more than econtracting with the launch of ExpressDigitalMedia. This new solution enables dealers to promote their F&I products while consumers are on their website shopping for cars.

We have been pleased with the response of our ExpressDigitalMedia solution, which enables dealers to offer useful information about their F&I products and prices in a controlled online environment while giving consumers the much-desired opportunity to learn about their vehicle and purchase protection options before finalizing their deal structure. This F&I Express solution was launched with our partners at MakeMyDeal, a Cox Automotive company, and we have seen exceptionally positive interest from providers and dealers alike

How did you (personally) get started? What caused you to choose this career path?

In my career, I have worked with big companies like Mercedes-Benz and Capital One, as well as a number of startup companies. One area I have always been involved in and passionate about is building a new process, developing a business model or finding solutions for problems that customers have today. Many of the solutions that I have launched in the market have been technology-related. And while I wouldn’t consider myself a super “techie,” I do know how to use technology to enable the improvement of various customers’ processes.

What are your outside interests / what do you like to do on your days off? What activities/sports are you passionate about?

Life is about having passions! As I enjoy the growth we continue to see at F&I Express, I have also been working to master the art of growing vegetables. Unfortunately, our growth of F&I Express has been greater than the growth in my gardens at times. But each year is a learning experience and I look forward to when I can start all over again. My wife thinks I am a Chicago Cubs fan because I always say, “Wait until next year!” In addition to gardening, I am an avid Indiana University basketball fan and really enjoy watching all college basketball — except for the University of Kentucky.

What are the biggest issues you see facing the industry today and in the future?

In a word, compliance. We have all read the news and heard the concerns from the automotive industry about compliance with the Consumer Financial Protection Bureau. This is not going to go away. F&I managers — and all compliance stakeholders — should be implementing measures to automatically prevent contracts from violating any future CFPB policies.

On the consumer side, it’s all about education. There will be more research needed about F&I aftermarket products before the customer comes to the dealership. Recent surveys have indicated that the overall accurate awareness of F&I products is pretty low. This shouldn’t be the case in today’s information-at-your-fingertips society.

F&I is one of the few remaining areas of the dealership that hasn’t been digitized. There is a real need and opportunity for more of the process to be brought online, and car-buying customers have an expectation to have digital options. One of the enablers of this change will be the creation of true digital content to present to customers online. I believe they will replace the paper brochures that are produced today to hand to customers in the F&I office.

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Going Paperless – What It Takes and How to Get There

Going Paperless – What It Takes and How to Get There

The use of eSignatures is quickly becoming the standard MO in everything from real estate to retail purchase agreements. Those working in F&I report they hear fewer questions about the legality and enforceability of electronic signatures than ever before, as consumers’ exposure to electronic processes grows. P&A Magazine recently met with a panel of executives, who are leading the way in this digital era, to discuss the latest developments in the push to go paperless.

Daniel Lievrouw, vice president of operations and IT, American Guardian Warranty Services pointed out that eSignatures have been in use on the finance side of F&I for quite some time with notable success. “On the ‘I’ side of F&I, however, the use of eSignatures is still in its infancy. Recently some menu systems have announced initiatives they’re taking for eSignatures.”

John Jacobs, director of business development, eOriginal, Inc., presented an overview of eSignatures as defined by US law, and explained the various ways in which they are being used today. “An electronic signature is an electronic sound, symbol, or process that is attached to, or logically associated with a contract or record and is executed by someone who is intended to sign that record. The legal definition was made intentionally broad so as not to limit us in the different ways and methods in which we can capture electronic signatures from customers. It allows us be creative with how we capture an electronic signature.”

Jacobs listed numerous types of electronic signatures currently in use:

  • Text type – Typing one’s name with a keyboard or keypad. This text font is representative of the customer’s signature.
  • Drawing the signature – This can be done with a mouse, finger or a stylus on a touch screen, such as on a mobile phone or tablet.
  • Voice recording – The recording of one’s voice accepting the terms of a contract. The recording is then attached to an electronic contract creating an electronic voice signature.
  • Capturing an image of a signature­ – This can be done in many different ways.
  • Using a signing pad – This is a connected signing pad with a stylus.
  • Signing remotely – For example: a married couple makes a purchase but only one spouse can be present in the store. The other spouse can be sent an email link to a secure site where he or she can have access to the document and can provide his or her electronic signature.

There are two primary methods of capturing an electronic signature:

  • Out of the box – Utilizing the functionality and user interface of the vendor to load and present a document to the customer for the capture of their electronic signature.
  • Integrated solutions –Integrating an electronic signature into an existing application, essentially replacing the “print” button. The document is generated electronically, the data is captured and applied to the document, and then in one streamlined fashion, the document is presented to the customer for the application of their electronic signature.

Electronic signature service can be delivered as a web-based application, mobile application or embedded application. Jacobs reported there are a variety of integration options, ranging from minimal (“zero”) integration to a complete OEM embedded solution, depending on business requirements and transaction volume. There are many ways to sign electronically. An individual can apply their signature by drawing it, uploading it, using a voice recording, by typing it, or using a mouse to sign. From explanations to legislation and authentication, this group had lots to say.

Understanding eSignature Law and Compliance

A major push to eliminate paper for high value contracts is underway. Companies looking to make this transition must comply with all laws pertaining to eSignature and electronic contract management. There are steps and best practices for creating legally admissible and legally enforceable electronically signed documents. Jacobs summed up the latest legislation and the provisions within the governing laws designed to protect the consumer:


In 2000, during Clinton’s presidency, Congress enacted the Electronic Signatures in Global and National Commerce Act (ESIGN Act). Its purpose was to facilitate the use of electronic records and signatures and ensure the validity and enforceability of electronic contracting to help businesses make their processes electronic. At that time, not many companies were executing theses processes.

  • In addition to the federal ESIGN Act, all but three states have enacted the Uniform Electronic Transactions Act (UETA) allowing documents to have electronic signatures – and the other three states have enacted similar laws over which the ESIGN Act is potentially preemptive.
  • The ESIGN Act did not change the basic rules of contract law; it preserves underlying consumer protection laws and the consumer’s right to receive certain information in writing.
  • Its purpose, as set forth in Section 101(a) of the ESIGN Act, was to make it clear that a signature, contract, or other record could not be considered invalid or unenforceable just because it was done in an electronic format.
  • Under Section 101(d) and (e), however, an electronic contract could be deemed unenforceable or invalid if the electronic record was not capable of being retained and accurately reproduced for later reference.

Compliance Driven Solutions

Mortgages, auto finance and consumer lending all have special compliance requirements for implementing paperless workflows. A solution to identify an electronic signer and create an evidence trail is a necessity. “You must ensure that you are creating that trail of evidence and capturing all the right information, at all the right times in the process,” explained Jacobs. He shared the established best practices for creating legally admissible and legally enforceable electronic documents:

Authentication – In person, this could be a photo ID, such as a driver’s license. There are many things available remotely as well, such as front line authentication – name and password. It could be as granular as ID verification for someone who is accessing remotely.

Consent – This is part of the ESIGN law, which requires that an individual’s consent be captured, documenting that he or she understands the technology being accessed. Without consent, it is not a legally admissible and legally enforceable contract.

Opt-Out – Everyone must be given the option to sign on paper.

Signature with Intent – This involves being able to prove that the person who applied consent to the document actually intended to do so. There are reasonable assumptions that can be made when a customer is applying a wet signature to a paper that cannot be made in the digital world. This is typically done through the use of statements throughout the contract.

Copy Access/Distribution – Being able to show that due diligence has occurred and that the signer has been given access to copies of the contract after it has been signed.

Tamper Seal – This is a safety feature, which should happen during the process of using a digital signature to ensure the information in a document exists today just as it did the day the customer provided their signature on the document. The digital seal protects the customer data within the document and controls who has access to the data and the customer’s information post closing. This is usually done with server-side digital signatures – a central server that locks down and seals the document. If someone attempts to break in and alter the document, it will break the seal, rendering the document invalid. There will be evidence of any attempt to do this. From an auditing perspective, it should be demonstrable that the customer had the ability to review the document, knew what they were signing, and intended to sign it.

eAsset ManagementThis is another piece of the electronic process that is typically used in reference to assets with some sort of financial value.

Jacobs emphasized the importance of managing a document and protecting the customer data it contains through its life cycle. To use electronic documents, constant control over the process post-closing must be maintained, protecting access to the data. The ability to protect the data going forward must also be evidenced. A key component to this is being able to review all steps throughout the process. From an auditing point, Jacobs explained that there should be evidence that the customer had the ability to review the document, knew what they were signing and they intended to sign. The panel emphasized that ensuring each step is taken throughout the process is important, not only from a best practices standpoint, but also from a legal admissibility and legally enforceability perspective.

Consumer Demand

“Jacobs estimated that more than one million eSignatures were processed through various portals in 2014. “Dealers have the ability to sign eMenus on the iPad and Jacobs says this has had a phenomenal effect in the F&I office. “Customers would rather view a contract on the iPad than have a conversation. By using the iPad with the eSignature, we have experienced a $550 dollar lift in F&I (back-end profits) versus using a paper menu.”

Many F&I offices across the country use some sort of signing pad to capture signatures. In the past, it was about making things easier for the businesses. Our group of executives agreed; customer demand is the primary driving factor today. The customer wants to walk out of the F&I office in five minutes with their new vehicle and everything they need to protect it. The group predicted that in the future, more dealerships would take advantage of mobile solutions, allowing them to walk around the dealership, using an iPad or tablet.

“Customers today want things to be simple, quick and easy,” said Ronda Lewis, national sales director, Dealertrack. Dealertrack has offered eSignature since 2002 from a signing standpoint to contract submission. “Initially, we saw the elimination of errors. From an F&I standpoint, they can get that warranty immediately. The customer can take the car out Saturday afternoon, confident that the warranty company has already received their information and their vehicle is covered.”

“When the customer walks into the dealership,” added Jacobs, “they want it and they want it now. They want instant gratification; we have to be able to provide that to them. They want eSignatures. . . We are the ones who are a little behind the eight ball.”

Brent Allen, president, StoneEagle said all his clients are asking for it. “The customers are now this young generation and are online all day long everyday. They are ready for paperless and they want it.” But with penetration of eSignature on the actual insurance products only around 10%, Allen says they have had some clients who would rather not do it at all, simply because it is easier for them to go to one place. “The technology is there. Part of the gap is between F&I and the financial side. How do we bring them together? I know many companies are all working on a single signing ceremony that I think will be a very important piece.”

Kumar Kathinokkula, COO, F&I Administration Solutions, Inc., said he has had similar experiences with clients. He agreed with Allen, but said he believes the actual penetration percentage was even less than 10%.

Obstacles and Solutions

Brian Krasavage is the director of product management at ADP Dealer Services, a DMS provider that has used eSignatures for many years. He says from the dealers’ perspective, eSignatures are great, but what they really want is a completely digital deal – to eventually get rid of paper altogether. “This is a challenge that eSignatures alone can’t solve. Not all documents can be signed or even created electronically – the DMV is one of the biggest culprits in this regard. The goal of our eContracting system is to help dealers become entirely digital. That process entails everything from giving them the ability to create, customize and update forms, to providing an integral distribution network for the forms to get from the provider to the dealer, all the way through to the digital deal jacket – the electronic storage for archiving, saving accessibility, and of course the transmission or moving of those documents to whatever constituent needs to receive them. To enable them to go completely digital, non-digital documents can be scanned in, as can copies of driver’s licenses, insurance cards, etc. This helps reduce the overhead in the F&I office and improves the customer’s experience.”

Krasavage said ADP recently began piloting a new signing process, which is an improvement from their current hybrid of digital and paper. The new process no longer requires that papers are printed and is designed to be hardware independent. “Today, the solution requires the F&I manager to print the documents and then dance between paper and digital – it uses a signature pad and the customer doesn’t actually see their signature on the document until everything is printed out. Internally, we call the new system ‘see what you sign.’ The electronic document is shown on the display of whatever device they are using at the dealership. The difference is the customer can actually see their signature on the screen after they have applied it either with their finger or a stylus, instead of having to wait to see it on a printed copy.”

Some dealers are looking to a dual monitor solution; so one monitor faces the customer. Using iPads or tablets also allows dealers to change their process. Some dealers are experimenting with F&I selling outside of the F&I office – doing more with the sales person in the front area of the dealership, in order to reduce the amount of time the customer has to spend in the F&I office.

Lewis said everyone has a fear of change. “Just getting dealers and lenders ready for eSignatures was a challenge. We are trying to get away from the tethered signing pad so you can be mobile throughout the dealership. The signing pad is just another piece of equipment that could break. Doing an eContract versus a regular deal is much simpler, but it still involves a training process within the dealership. We have to ensure that we are able to deliver that digital deal jacket to the aftermarket provider and the lender in real time, so the customer has the best overall experience. The consumers are ready; we’ve just got to be sure we can provide the tools for them.”

In addition to most DMVs lagging behind in the race to become paperless, there are also a number of banks that are not yet equipped to take the plunge. Lewis says these are two of the biggest challenges. “It will require effort for legislation to be approved that will allow us to move forward with this.” She said she could personally imagine one day being able to do an entire traction online without a customer even stepping foot in a dealership, with the car delivered directly to the customer’s home.

On the administration side, Allen said the improvement in efficiency is huge when it comes to electronic processes. “If you are still getting paper, think about all the people needed to process everything. There are companies that are having record months and they are out having to hire for this reason. The idea of making things as electronic and electronically consumable as possible means better efficiencies. Admin companies can bring in more business without having to grow their staff.”

Krasavage brought up the complexities and processes that have been built around paper. “If you go to some captive lenders, they have large rooms with tables set up and their day starts when the Fed Ex truck rolls up. They will have to reengineer their processes. There is some IT development involved, but many of us offer services that can make that easy for them, so I don’t think that is a real obstacle.” He says the biggest challenge is adjusting business processes, “Instead of having someone meet that Fed Ex truck, they need someone who knows know how to get into the systems that are used to build paperless business processes.”

The lack of standardization in dealers’ digital forms requires an inordinate time investment to initially establish electronic processes. “This is one of the barriers in the adoption of eSignatures,” Krasavage explained, “When we move a dealer over to digital contracting, we spend around 85% of our time on the dealer’s site dealing with forms. . . There is no standardization in the design of forms amongst companies.”


“There are a million transactions in dealerships that are signed electronically in a face-to-face setting,” says Jacobs, “and probably a hundred times in remote transactions.” The typical method for which documents are executed remotely includes an email invitation with a link to a secure online portal. This could be hosted by a vendor or it could be on the company’s website, and could be accessed through a phone, PC or tablet. Authentication is very important.

Jacobs listed several methods to reasonably authenticate signers when they are not available to sign face-to face. Front line authentication is a user name and password – something that is unique to the signer and the transaction that they are about to access. In many cases, the password could be provided verbally, via the telephone or in person. It could also be sent via text to the signer’s cell phone. This is referred to as multi-factor authentication process. “So in order for you to have access to the transaction, not only did you have to login to have access to the email I sent, you also have to have access to the mobile device that I am sending the text to. It can all get very granular,” explained Jacobs.

In financial services, identification verification tools are used to put someone through additional exams to further authenticate them. They utilize out of wallet questions – meaning the data requested is not available easily to anyone outside the user, and is not likely to be found in that person’s wallet. Questions such as “Which of these zip codes did you live in in 1988?” or “Which of these three mortgage companies do you currently have a mortgage with?” are typical out of wallet questions.

Some companies offer options for providing an online signature. Others prefer consistency so they limit the options. In most cases when a customer signs remotely, once they have been driven to the online portal, the process takes around two-minutes. They review the document, apply their online signature (using a finger or a keypad to type it in), then they close the portal and the transaction is done.

Lewis pointed out that credit applications have used electronic signatures for quite some time. She recommended ensuring that the dealers you work with have an identity theft program, and a compliance solution – and then take the time to review them. “They can provide signed forms stating that they have everything in place and are doing their due diligence verifying consumers are who they say they are.” Taking the time to ensure this, as well as other security measures are in place and fully functioning is now a foundational part of the electronic process that is quickly becoming the norm.

Kathinokkula, said if questions arise about electronically signed documents, typically they are not asking if the customer signed, rather they are asking about the content of the document itself. This is why providers must have the ability to produce the document after the sale. He emphasized that whatever technology is being used, it needs to be supported by the administration company.

The Cost of eContracting 

There are many benefits in using digital documents, but the transition to electronic processes comes with a cost. However, the reduction in administration costs that typically follow a volume increase can help pay for the electronic process.

Allen pointed out the significant value and expense involved with an electronic delivery. “It may be per contract or per rooftop, but there is going to be an expense for the process. There is no doubt about that. The problem is, as TPAs, you can’t absorb the cost, so you end up adding X number of dollars to the price of your agreement in order to cover the cost. So in reality, the customer is actually paying. This makes your product a little bit more expensive than the next guy’s. I think the processes and reduced manpower that will be the result of eContracting are what we need to look at. Will the savings in these areas be enough to cover the cost? Probably not, but if we can make a dent in it, it will help. The cost of electronic delivery is inevitable – it just needs to be made palatable.”

Lewis said the real issue is not the cost for eSignatures, but is the cost to build out all the required forms. “Every time there is a change, there are entries involved that have to be redone.”

“Many of our dealers are getting more demanding with anything that is going to make it a better consumer process,” Lewis continued, “Essentially customer satisfaction, CSI, drives a lot of it. If you haven’t already seen this, I think you will in the future. When things are electronic, customer satisfaction goes up. I have heard more than once, ‘If you aren’t willing to do things electronically, then there are other providers that we can sell.’”

Lewis said the timing of moving forward with eSignatures depends on the partnerships between F&I providers, technology vendors, and dealers. “Working together and creating all the steps and processes, as well as getting buy in, all need to happen. As far as the technology goes, everyone agrees; we’re already there.”

“On the admin side,” Allen noted, “I think we are pretty much there. We are doing everything we can to help the pieces come together. A lot of us are just waiting on the dealer and the state.”

“For eSignatures to become more widespread, it is going to take connectivity in all directions,” concluded Lievrouw, “Ultimately, it is up to those whose systems have integration with third parties and lending institutions to move the process forward. The rest of us (third party administrators) are participants.”

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An Interview with Henry Coffeen III

An Interview with Henry Coffeen III

Henry Coffeen was raised in Oklahoma City and grew up in the car business. His grandfather was an Oklahoma car dealer and his father worked in sales. However, by the time Coffeen graduated from the University of Texas in Austin, his grandfather had passed away and his family had gotten out of the business. The 80’s real estate scene was booming, so upon graduation Coffeen took a job with a real estate company – a company that promptly bounced his first check. Coffeen says he was broke and in trouble. He stared cleaning apartments to stay afloat.

After learning of Coffeen’s bad luck, his best friend’s father and the owner of a Cadillac dealership in Plano, Texas, offered Coffeen a job at his dealership. This launched Coffeen’s career path into the automotive world. Starting out in used car sales, Coffeen quickly moved through the dealership ranks, eventually becoming the sales manager at his boss’s Hyundai dealership.

Coffeen says he was lucky enough to attend a Karl Singer and Associates finance and insurance school in Dallas before Singer sold to Pat Ryan and Associates. “Some people don’t know this, but Singer and Ryan were best friends. Karl Singer’s approach was focused on sales, whereas Ryan’s focus was strictly F&I,” recalls Coffeen. He was offered a job as a trainer at the school, and stayed there for about five years. It was at the end of that time that he met Red McCombs.

“I pitched Red on our program but then he figured out a way to get me to come work for him.” Coffeen became the COO of Red McComb’s Automotive Group. By the age of 30, Coffeen was running 39 dealerships for McCombs. “McCombs was heavily in debt at that time,” recalls Coffeen, “He owned the San Antonio Spurs and the real estate market had sort of crashed. His dealerships were not making a lot of money, so it was good timing for me. I was 29 years old and I pitched him our training program – what we were able to do and how we did it. During the course of the next month, Red agreed to pretty much give me the keys to all his dealerships and let me do what I needed to do. We did a phenomenal job and soon he became the fourth largest car dealer in America, with over a billion-four in sales.”

Coffeen says this all happened in the early 90’s when publically held companies had just come on the scene. He describes his time working for McCombs as a lot of fun. “We bought a bunch of dealerships. We sold a bunch of dealerships. Then, I realized I had done all I could do for Red. He gave me equity in our management company, but he wouldn’t give me equity in the stores, which is what our deal was supposed to have been.” Coffeen says when he realized McCombs was not going to make good on their deal, he decided it was time to start his own company.

Coffeen Management Company began in 1997, offering sales management and finance and insurance training. For the first year and a half, the company did not sell any F&I products. “I would go into dealerships and would basically work for free,” says Coffeen, “What I got paid was based on a percentage of improvement in the dealership’s front and back end gross.”

Eventually, Coffeen was approached by a general agency that needed help increasing their penetration in certain dealerships. This led to the company’s first dip into the product side of the business. They began selling GE service contracts. Soon, Coffeen grew the agency to become the largest GE agency in the US. “I found that dealers did not like writing checks for training,” recalls Coffeen, “but they didn’t mind selling your products.”

The mission Coffeen Management Company was founded on was providing quality training that resulted in measurable improvement in dealership profit. “We would go into dealerships that were struggling and improve their bottom line. Our pitch was ‘we will do the training and improve your bottom line, but you have to sell all of our products – ancillary products, service contracts, and so forth.’”

Today, Coffeen Management Company is a vibrant, full service agency. They provide compliance training, sales management training, and they offer an F&I school. “We do everything,” says Coffeen, “We are one of the largest agencies in the country for Allstate. Last year we were the largest agency in the country for National Automotive Experts (NAE). We have about 22 people who work for us at Coffeen Management Company and we are nationwide, doing business coast to coast.” In addition to his role at Coffeen Management Company, Coffeen also serves as the co-chairman of the advisory board for Allstate.

Business Today

Henry Coffeen has not slowed down. Recently, he purchased a Yamaha Dealership. In 2008, he was given a Texas Honda Dealership through American Honda. He built it into a 70,000 square foot, state of the art facility, and was a Gold LEED Certified Dealer, before selling it to his partner in 2013.

What Coffeen says he dislikes most about the industry today is the perception many hold that the auto industry is a shady business to be in. “Run properly, it is a great business. I was lucky enough to be partnered with the only dealership in America to ever win the Malcom Baldrige National Quality Award, so I got to go through all their training programs and understand, from a business perspective, what it means to do things right. I learned how to run a dealership differently – to do things the right way.”

The Malcom Baldrige National Quality Award was established by Congress in 1987. It is the only formal recognition of the performance excellence of both public and private US organizations given by the President of the United States. It recognizes US companies that are built on quality management and that demonstrate outstanding performance excellence. Coffeen considers himself fortunate to have been a part of such an organization; its effect on him has been long lasting.

From an agency perspective, Coffeen says if you don’t have a full service agency today – doing all the training, compliance, monitoring, technology – you are probably going to go away. “Dealers are leaning on their agents today for their growth and to help train their managers.”

Coffeen believes the publicly held companies’ and Berkshire Hathaway’s recent involvement in the industry is a good thing for the industry. “It’s making people become students of our business instead of doing things as a knee jerk reaction, which is the way most people ran their dealerships. It has given us a little more credibility, which I’m happy about.”

Tragedy to Triumph

When he isn’t working, you might need to look up to find Coffeen; he has been flying since he was nineteen years old. Today, Coffeen says his piloting abilities make doing business all over the US that much easier. But flying hasn’t been all blue skies for Coffeen.

After ten years of flying airshows professionally, Coffeen was in a serious plane wreck. In 1998, he parachuted from his airplane as it blew up inflight during an airshow practice. He suffered from 3rd degree burns on a third of his body. The burns resulted in a year and a half of of hospital stays and rehabs. “It changed my world quite a bit. I was lucky enough to be able to go to Brooke Army Medical Center in San Antonio, which is a burn unit at a military hospital close in proximity to the accident. Nonmilitary are only admitted in emergency situations. I met a lady there who did charity work. Once I was out of the hospital, I partnered with her to cofound the Moonlight Fund, a nonprofit that provides money and support for burn survivors and their families.” And the Moonlight Fund is making a difference in many lives today, as they provide 24/7 financial, emotional, and physical assistance to burn survivors and their family members, through private donations and corporate sponsorships of their annual fundraising airshows, galas and other events. Their outreach is to veterans and private citizens alike who have sustained serious burn injuries.

As if his accident were not enough bad luck, only a month before the crash, Coffeen’s house was completely destroyed when the hundred-year flood of the Guadalupe River filled his home with 16 feet of water. “It was a rough time between losing everything to the flood and then my extended recovery from the plane accident,” says Coffeen, “I had some great dealers who stuck by me at that time.”

Fast forward to 2015 – life is good and business is booming. Today, Coffeen’s free time centers around his two kids – a 14-year-old son and a 13-year-old daughter. They live on a Texas ranch in the Fort Worth area. The ranch is a cutting horse ranch where they do breeding and training. Cutting horses are agile saddle horses trained to separate individual animals from a cattle herd.

Coffeen and his family are also regular boaters and water-skiers. “My kids grew up water skiing and they are now both ski instructors in the summer at water skiing camp.”


“We all have to be a student of the business,” says Coffeen, “If you aren’t constantly monitoring what’s going on in our industry and staying on top of it, it’s going to pass you by. With technology advancing at a crazy speed, things are happening fast right now. You have to be really focused on what’s gong on and what’s there to help so you can funnel it into something that’s going to make money.”

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