Let’s start with the good news! Out-of-state deals are increasing as dealers promote their inventory online and cast a wider net for potential customers. Out-of-state sales grew by 16% over the past year, according to Cox Automotive analysis of IHS Market new and used vehicle registration data*. Even with the current economic situation, cross-border sales are a natural consequence of online car shopping.
As great as it is for dealerships to leverage their online presence to bring in more cross-border customers, dealers and retailers need to be prepared to avoid potential complications that come from out-of-state business.
Here are some of those potential challenges:
Good: There’s a buyer coming in this weekend for a top deal with all the bells and whistles!
Bad: The buyer is from two states away and no one in the back office is familiar with the reg and title processes from the customer’s home state.
In the past, a dealership in Nebraska probably wouldn’t register a vehicle in North Dakota very often. Thanks to digital retailing, an increasing number of customers are willing to visit another state to purchase the vehicle they want, which means out-of-state registration and title processes are becoming a common challenge for dealerships across the country. Because no title clerk has every state’s reg and title processes memorized, this leads to more time spent on phones figuring out the details, more DMV rules and regulations to know and understand, and more paperwork to process.
Good: An enthusiastic and motivated online car shopper “went the extra mile” to come to your dealership because a few local customers of your dealership area raved about the service they received.
Bad: The deal process could be slowed down or held up by time-consuming manual tax and fee calculations to make the deal accurate.
Even if your dealership’s home state has technology solutions for in-state reg and title calculations, those don’t apply to cross-border deals. If your staff needs to build a deal for an out-of-state customer, they need to know that state’s taxes and fees to get to the best deal for the customer. Being forced to compare deal options using unfamiliar tax rates and fees could make it take longer than usual to complete the deal, which could dampen your customer’s enthusiasm. If calculation errors lead to deal inaccuracies, your customer satisfaction scores could take a hit.
Good: Your registration and title submission for in-state customers is handled electronically, straight to the state DMV.
Bad: It’s much more difficult to finalize out-of-state registration and title transactions because the in-state checklist isn’t the same for customers in different states.
Most dealerships end up providing their cross-border customers with a very general idea of what they might need for registration. That lack of specificity has drawbacks for customers that could cause them to overlook something important, make them have to chase down paperwork and documents during the signing process, or worse, leave them with an unwelcome to-do list that could sour their experience and drive down your CSI score. Your dealership could help create a much more positive experience by giving every customer a simple and defined list for what paperwork they need and what steps they need to take for their specific situation.
Good, Better, Best! The right out-of-state registration and titling technology solution can help ensure that all your cross-border customers get the same level of customer service that in-state customers receive. That technology support can help smooth the process for your back-office staff to help save them time and drive up deal productivity.
*Based on Cox Automotive derived analysis of IHS Markit new and used vehicle registration data as of Q3 2019 where a selling dealer was identified. Used registrations includes selling dealer for 31 states.