While “aggressive” dealers still pursue inventory sales on eBay Motors, private-party financing through the online retailer remains dim, experts say.
The company’s platform for buying and selling vehicles — ebay Motors — which currently hosts more than 30,000 automotive dealers, also provides a financing channel for buyers, dubbed the Financing Center. Through the center, buyers can access the “top national lenders” and obtain loans for their purchase, the company said. “For buyers, the Financing Center is designed to make the buying experience safer and faster by connecting buyers with quality lenders that meet buyers’ specific needs,” according to a company statement. “Sellers benefit from more bidding, and more qualified buyers.”
RoadLoans Inc., the online lending subsidiary of Santander Consumer U.S.A., has served as eBay’s preferred finance provider for autos since 2012. However, the online lender is now “winding down” the auto lending relationship with eBay Motors.
“The effectiveness of the campaign tapered over time and we mutually agreed to sunset the offering,” a Roadloans spokeswoman told Powersports Finance. Ebay did not comment on lender-partners for either auto or powersports financing.
“We have lost a lot of lenders in the years of 2000 to 2010 on eBay and in genera. They are very shy about jumping back in, because powersports lending is higher risk for banks and credit unions, compared to other products.” – Haider Saba, General Manager, iMotorsports
Elmhurst, Ill.- based iMotorsports started out as an online dealership in 2010, with its inventory kept in a warehouse. “We still had local customers, but we didn’t rely on brick and mortar,” Saba said. Selling through eBay, however, is still essential for iMotorsports’ internet-based model. “Our sales on eBay have definitely grown in the past couple of years, but the inventory itself has grown as well.”
When it comes to financing, however, iMotorsports mostly taps into its own lender partners. “eBay Motors is definitely a great advertising avenue for us, 33% of our leads are generated through eBay,” Saba said. “But people rarely hit ‘Buy It,’ let alone finance.”
If selling is not the primary use, dealers increasingly utilize eBay’s platform for advertising and lead-generating, said Adam Goldberg, marketing manager at solutions provider LotVantage. Earlier this year, LotVantage partnered with eBay as the online retailer’s preferred software provider for online merchant listings. “We work with over 1,200 powersports dealers, which makes up 30% of our total dealer base, and added 400 in 2015 alone,” he said. LotVantage helps dealers list and manage their inventory on eBay. The company provides dealers with lead-generating “calls to action,” when a customer bids on, or otherwise interacts with an eBay listing.
“Our software doesn’t allow us to drill down to how many credit applications we get from each source, but we are seeing an increase in overall credit applications sent to the dealership through our software,” Goldberg said. However, those credit applications can come from eBay’s Financing Center, as well as from dealers’ own credit application portals. eBay’s popularity among lenders and dealers peaked five to 10 years ago, according to Jim Woodruff, chief operating officer at National Powersport Auctions.
“eBay is still popular as a lead-generator, but most of the deals occur locally, whereas eBay shoppers search outside of their territories. So, odds of them buying are very little,” he said. Those odds drive away the lenders, who mostly prefer providing curb-to-curb financing, he said.
Casey Harmon, senior vice president of corporate development at Westlake Financial Services, said eBay’s Financing Center is a “great idea,” and is something that Westlake may consider. “Anything that makes the retail model easier for consumers and dealers is what we need and what everybody appreciates,” he said. Westlake partnered with Kawasaki in 2014, and currently services 700 powersports dealers, with plans to increase to 1,500 dealers by yearend.
For other lenders, though, like Reno, Nev.- based Nextep Funding LLC, eBay’s platform doesn’t seem enticing. “We just prefer to be point-of-sale for now,” said Vice President of Sales Kamron Davis. “We are really focused on not spreading ourselves too thin, which is why we are so focused.”
Listing inventory on eBay is not for everyone. “It can get very expensive, we are talking thousands of dollars a month,” said Saba of iMotorsports. For every successful deal, there are 20 that are barely profitable, and 20 “that are hard to swallow,” Saba said. In addition, the industry still struggles to find lenders, he said. “Aggressive dealers pursue channels like eBay for advertising and sometimes sales, but they still don’t want to share their lenders and want to keep financing deals in-house, which, I guess, makes sense in a way.”
This story originally appeared in the second quarterly Powersports Finance magazine. For access to this issue, subscribe here.