One of the biggest changes in the auto industry at least for Ontario is just around the corner as the new MVDA, 2002 will be in full force on Jan. 1.
Mandatory disclosure requirements found in section 42 of Regulation 333/08 will be one of the biggest changes for dealers. These disclosures must be collected during the appraisal process and then disseminated to the next customer who purchases that vehicle - be it a used car customer, a wholesaler, another dealer or the auction.
This change represents new standards and new expectations for the dealer body. The 24 disclosures are not a matter of choice. Fall out of compliance and you are subject to penalties enforced by OMVIC and consumer remedies.
In both cases, financial loss is the result.
So how do you test to see if your current appraisal process will keep your dealership compliant? Ask the used car manager for the last five appraisals. If you find that either the information collected does not address all of the 24 required disclosures or that any one of the appraisals is missing information, has incomplete, incorrect or illegible information, then you have a problem.
So how do you become compliant? You can either go with a paper appraisal system or an electronic appraisal system.
If you choose a paper appraisal system, then the UCDA forms are a must. Both the appraisal form and wholesale bill of sale contain all the required questions. When these forms are used in the proper manner, they ensure compliance with the MVDA. This means that the forms must be filled out completely every time they are used.
Unfortunately any paper appraisal system can fall victim to three human factors over time and when this happens, compliance is jeopardized.
• Completion. Sales teams are excellent at selling, but can lack attention to detail. Forms can be filled out incorrectly; information collected is sometimes inaccurate or missing. The writing can be illegible and the paper form can disappear.
• Comfort. The appraisal is the most contested step of any sale. Many sales people are not comfortable with this step and want to get through the appraisal quickly. They don’t want to ask too many questions since it makes them feel they are interrogating the customer. Short cuts happen.
• Consistency. The management team has to ensure the forms are filled out but questions can be missed, which may go unnoticed during busy periods. In addition, sending sales people back to a customer asking for more information undermines their competence and can be counter productive to the completion of deals.
In contrast, effective electronic appraisal systems minimize these human factors and do not fall victim to them over time.
An electronic system can be an excellent alternative as long as it has the following properties:
• It’s easy to access and use.
• Has a VIN decoder that accurately decodes critical information about the vehicle.
• Questions, including all of the MVDA disclosures, must form part of the input data. All questions must be answered in order to print the paper appraisal form.
• Produces all of the required disclosure documents and a wholesale bill of sale that meet MVDA specifications.
The electronic system should also be interactive. Ask the questions with the
computer screen turned towards the customer and make it part of the process. Under these circumstances the dynamics will change and the process will no longer feel like an interrogation. Every question will be asked every time for every appraisal and the data captured is stored and will always be correct and legible.
Finally, an electronic appraisal system, unlike CRM and TMS tools, must be fully under the control of the management staff. CRM and TMS tools rely on sales people to enter information into the system after the customer has left the showroom.
On a busy day, customers are missed or forgotten and often the information entered can be selective in nature. With an effective electronic appraisal system, entering the information will be part of the sales process. The managers will control this process by completing the evaluation only if a printed appraisal form is submitted to them. This is complete control and accurate data collection.
When selecting an electronic appraisal system make sure that it does not allow sales people to skip any of the mandatory MVDA questions and still produce an appraisal document. Also make sure that the system does not allow any document or template
to be printed that needs to have questions manually completed by the sales people.
Whether you choose the paper appraisal system or an electronic appraisal system, it is important to put the process in place right away. January 1 will be here before you know it, So make sure you are prepared.
Bill Xinaris is the general manager of Trade Tracker Inc., a Canadian company focused on the trade-in appraisal process and in partnership with more than 300 dealers across Canada. He can be reached at firstname.lastname@example.org.