So it is with Provider Exchange Network.  The business model is established, the software is up and patented, and the staff are fluent in their new roles.  It has been my pleasure to work with the talented people at PEN, and I wish them all the best.

Group 1 had also been in the vanguard, but now Honda is pressuring them to drop the TrueCar relationship.  The comments from Honda remind me of some I heard way back when MSRP data first appeared on the internet.  “Unacceptable,” stormed Herr Heitmann, “must be stopped!”  Meanwhile, Edmunds was already publishing our invoice prices.

Of course, as an e-commerce guy, I am biased.  You can’t just say information wants to be free, to an angry factory exec – or a struggling GSM.  Except that it’s true.  Transaction prices, like invoice and MSRP, are going to be out there.  We might as well get used to it.

As long as we receive the data and payment, that’s all we need.

This succinct formulation reminded me of Dr. Hammer’s pronouncement on accounts-payable matching – if supplies come in, and you need them, then pay the invoice.

Closer to home, it reminded me of my own experience with online credit.  When we rolled out the BMW InfoBahn, we wanted to receive credit application data – but not the faxed copies.  So, we arranged for the dealers to retain signed originals, subject to audit, for every application submitted online.

The car buyer will probably want a paper contract – to sign, for instance, where electronic signature is unavailable – but at least we can avoid mailing a copy to the provider.  Saving the rainforest, one ply at a time …

As I have written here before, the best place to present products is in a system that the dealer is already using.  Ideally, this means the DMS, but it could also include a menu or desking system.

In 2008, as the situation worsened, I had lunch with a friend in the online credit business.  He remarked that GMAC had just about stopped making car loans.  The new owner, Cerberus, was taking measures to protect its capital – sensible for them, but not what a dealer wants to hear.

GM concluded that it needed a captive lending arm after all: in October it bought AmeriCredit.

I observed that GM would have to develop a new captive, to take care of its dealers.  GMAC 2.0, I said.  I might have added, after Chapter 11.

What followed was a mad rush to certify GMAC as a bank holding company and obtain TARP funds.  My DMS integration project was cancelled, and many of my friends at GMAC were laid off.   Last year, the new GMAC bank signed up with Dealer Track.  Of Route One’s exclusive captives, this left only Ford and Toyota.

When GM bought AmeriCredit, that seemed to validate my observation.  Oddly, GM was denying it as recently as January of this year.  That’s why this week’s announcement is important.  Adding floorplan proves that AmeriCredit, now GM Financial, is the new GMAC.

Outsourced servicing can be an important first step for a new finance company, as it was for BMW, and I have seen it done various ways.  A more typical arrangement was our earlier one with GE Capital.  They did all the servicing using their own facilities, and BMW did the sales and marketing.

I once observed that you could start a finance company using only a checkbook and some business cards.  This was at the Consumer Banking Expo, where one could easily find an outsourced credit department, collections agency, call center, etc.  This opens up the possibility of departmental outsourcing.

Manufacturers have captive finance companies, and so do dealer groups.  During my tenure at AutoNation Financial Services, we had our own credit department, sales, e-commerce, and staff functions.  World Omni handled discounting, collections, and customer service.  The plan was to migrate the operation in-house, one function at a time.

Depending on their objectives, a finance company may choose various servicing options, from hybrid arrangements to full autonomy.  I would also recommend a permanent core team at the executive level, regardless of which functions are outsourced.

Provider Exchange Network, which ODE purchased last year, will allow for e-rating and e-contracting between providers and dealers through the DMS.

As I have written previously, we innovators have an obligation to show value for the dealers.  They don’t care if multipart forms are impractical, for instance, as long as they are supplied free of charge.  Matt’s article answers some of the objections to e-contracting.  A little discount wouldn’t hurt.

Walking past the Route One booth, I was hailed by CEO Mike Jurecki and my old friend Pat McPherson.  A dealer was asking them about bi-weekly payment plans.  I ended up demonstrating the sales tool I had designed for U.S. Equity, on a MenuVantage account, in a Route One frame.  “Mark helped us design our system, too,” Pat added.

I read the dealer’s business card and said, “you sell a Resource warranty and you recently stopped using MenuVantage.” He wants Flash in his menu, so I referred him to Impact Group.

My new friends include a number of menu systems – formerly competitors.  We have announced the deal with Impact Group.  Others are in the works.  This is part of my “many to many” strategy, making PEN the single connection between all product providers and all dealer systems.