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The secret weapon helping dealerships sell cars coast-to-coast
Featuring David Donaldson, DLRdmv
Welcome to another edition of the Car Dealership Guy Podcast Recap.
In this episode, David Donaldson, Senior Vice President at DLRdmv, discusses the daily challenges dealerships face when managing out-of-state sales, explores why banks are holding the stopwatch for vehicle titling, unpacks the infamous "Montana loophole," and much more. DLRdmv is a software company founded by titling experts with years of experience in the auto industry.
1. DLRdmv was founded in 2016 in Florida.
Over the last eight years, the business has grown swiftly, expanding from zero to 3,000 dealers across the U.S. David notes that Florida is a unique state when it comes to titling. Dealers can access the state’s Department of Motor Vehicles (DMV) system and actually acquire the buyer’s license plate ahead of time. This saves the customer a trip and speeds up the purchasing process for everyone involved.
2. The problem with modern titling.
In most states, the DMV controls the titling and registration process in their area. David explains that this can cause long wait times for the customer.
“[The DMV is] approaching everything from a regulatory compliance lens. They are scrutinizing applications and paperwork, looking for any kind of issues, looking for any potential for fraud…They're looking to be penny perfect on the taxes that are remitted.”
On the business side, however, dealers are focused on offering a hassle-free and efficient experience for the customer, taking care of the process as fast as possible.
3. Scaling up to thousands of dealers.
David explains that the process for rolling out a product to thousands of dealerships takes time to build momentum. When DLRdmv began, he notes that it spread largely through word of mouth, starting at a few storefronts before snowballing into something larger. The ability for retail auto-specific businesses to grow via dealer networks is unique to the car industry.
4. Why customers buy out-of-state.
The COVID-19 pandemic drove many changes in how dealers conduct business, including the titling and registration process. Since many customers weren’t able to find the vehicle they were looking for in their local market, this led to a greater increase in out-of-state purchases. Even after the pandemic has subsided, David notes that there are still many reasons for purchasing outside of one’s own state.
“It could be the customer that's just on the other side of the state line that's looking for a really good deal, and they're traveling outside of their market to get that deal…Or what I think is a little more typical, is it's a customer with a very particular car they're looking for, and the dealership has that unit.”
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5. The challenges of out-of-state titles.
While dealers are usually experts at in-state titles, out-of-state registrations can be more difficult as they usually come with different taxes, regulations, and fees than what they’re used to. For example, some states use ad valorem taxes while others don’t. Dealers may also be unable to access the forms they need from another state’s DMV: since these forms need to be highly accurate when submitted, this can be a very risky process if the dealership is unprepared.
6. The explosion of e-titling.
Thankfully, technological innovations like e-titling are helping dealers manage cross-country sales like never before. David explains that with the right DMS integrations, finance managers can enter data into forms and calculate fees automatically, drastically reducing the chances of human error and speeding up the process so that the customer gets the paperwork they need as fast as possible.
7. E-signatures are key.
E-signatures are also an incredibly helpful tool available through e-title platforms, allowing buyers to sign documents at home or even overseas (an invaluable benefit for military spouses). However, while David notes that many states accept e-signatures, some have yet to change their regulations. But, sometimes, the challenge lies with the DMV itself.
“Right now, it's a little fragmented where you have some DMVs that will say, we'll accept these nine documents electronically signed, and that's good, but this 10th document, maybe it's an odometer disclosure or particular power of attorney, that can't be e-signed. So you have to wet-sign that. So now this dealer is in a predicament where they're splitting things up, we're gonna wet-sign this, we're gonna e-sign that, it's really messy.”
That said, he remains optimistic that e-signatures will soon be available at dealers nationwide.
8. Electric vehicles and taxes.
Electric vehicles introduced a new wave of changes to how vehicles are taxed, especially in terms of incentives. David notes that many states have started to pull back on EV-related tax credits this year. This shift has drawn some negative reactions from pro-EV drivers, but he believes it is a natural progression now that battery-powered cars are more widely available.
“I think a lot of the consumers out there are almost seeing these changes as an attack on EVs. It's probably not. It's more of just they're trying, recognizing that tax loss and trying to catch up.”
9. Accuracy and speed.
Digital titles offer an additional layer of protection for dealers by offering more accuracy when handling out-of-state registrations. When dealers miscalculate, they are usually forced to cover the difference between what a buyer owes and what they were actually charged, since asking the consumer to pay more money than what was originally agreed to will drastically lower the store’s CSI score. E-titling, however, takes care of that problem.
“Finance managers can calculate title and registration fees in any state, any jurisdiction in a matter of seconds…And the fees are guaranteed, right? So you have that assurance that at the point of sale, you're collecting the right amount of money.”
10. Digital titles impact on the workforce.
With artificial intelligence becoming more common, it’s understandable that finance managers or title clerks would worry that e-titles will replace them in dealerships. However, David believes the technology is simply enhancing the performance of dealership employees rather than replacing them.
“You still need qualified finance managers to sell cars. They're going to be using our product. You still need a title clerk who has great attention to detail and is organized to complete the deal. But you want to arm them with the best product available.
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