Titling and Registration: The Hidden Cost of Deal Completion Delays

Titling and registration play a critical role in moving a vehicle from sold to delivered. While many dealerships view it as a Back Office process, delays at this stage can affect delivery timelines, customer satisfaction, revenue recognition and overall profitability.

Dealers continue to navigate an uncertain economic climate, which makes any performance-boosting strategy worth considering. One area that often doesn’t get much attention is the process that happens during the sale.   

Underlying issues that can create these delays or inefficiencies in this Back Office task often include manual/paper processes and lack of connected technologies supporting deal accuracy. This can sour a previously positive Sales experience, potentially resulting in negative online reviews, loss of Service business, and future vehicle sales if disgruntled customers choose to avoid the dealership in the future. After all, this last step in the process is what'll be top of mind when customers drive off the lot. 

Just as importantly, a complicated or inefficient registration and titling process can slow down the Sales process, negatively affecting Sales volume and even gross profit. That’s why more dealerships are turning to electronic titling and registration solutions to streamline the process and avoid the following pitfalls. 

How Registration and Titling Delays Slow Vehicle Sales

The faster a dealership can get deals out the door, the more deals can be done in a day and the healthier the cash flow. But paper-based manual processes slow down deal completion and can be prone to error. A sale isn’t fully completed until the vehicle is delivered and required documentation is processed. If reg and title bottlenecks delay deliveries:

• Deals remain pending longer
• Sales and F&I staff commissions may be held until the deal is completed
• Dealers may miss manufacturer volume targets potentially affecting OEM allocations and confidence

Increased Deal Fallout

The longer a customer waits after agreeing to purchase a vehicle, the greater the chance that:

• Lender stipulations may cause the sale to unwind
• Insurance issues arise
• The customer changes their mind
• The customer finds another vehicle elsewhere

Even a small increase in cancellation rates can materially affect dealership profitability.

Lower Customer Satisfaction and Repeat Business

Registration delays can create customer frustrations including:

• Temporary tags expiring
• Delays receiving plates
• Errors on registration documents
• Multiple trips back to the dealership
• Poor CSI reviews that lead to lost opportunities

When problems occur, customers often blame the dealership rather than the DMV. The impact can show up later in the form of lower CSI scores, fewer Service visits, reduced repeat purchases, and fewer referrals.

Online Reputation Hits

Today's customers frequently leave reviews when transactions go wrong. Let’s face it: A bad experience typically gets more airtime than a good one. A buyer who loves the vehicle but waits weeks for registration correction may still leave a poor review. Poor reviews can directly impact:

• Lead conversion rates
• Appointment-setting rates
• Showroom traffic
• Repeat Service customer defections

Reduced Selling Opportunities

As previously mentioned, a delayed reg and title process can slow the exit of sold vehicles from inventory. This creates:

• Higher days’ supply
• More floor plan expense
• Less room for incoming inventory

If inventory turns slow, the dealership ultimately has fewer opportunities to retail additional vehicles throughout the year.

Manufacturer Incentive Risk

Many OEM incentive programs depend on:

• Delivered units
• Accurate reporting
• Timely documentation

Administrative delays can affect qualification for Sales bonuses, stair-step incentives, or performance programs.

Bottom-Line Impacts

Consider a dealership that sells 150 vehicles per month and 15* registrations are delayed. These registration issues can:

• Delay reporting and cause extra days of flooring carryover
• Require additional admin follow-up to clear

Floor Plan Expense

• 15* vehicles delayed x 4*-day vehicle registration delay x $35* a day = $2,100 per month
• Annually: $2,100 per month x 12 months = $25,200

Office Clerk Expense

• 15* vehicles x 16* hours to resolve issues x $25* an hour salary = $6,000 per month
• Annually: $6,000 per month x 12 months = $72,000

The Real Impact Is Greater!

The annual extra expense equals or exceeds:

• $25,200 + $72,000 = $97,200 extra expense

The real Impact for a dealership with a net-profit margin of 2.5%* is more dramatic:

• $97,200 / 2.5% = $3.8 million additional sales

If each new vehicle sells for $47,500*:

• 80 more new vehicles must be sold to cover the expense

*Industry averages, may vary by state

Avoid Issues Before They Impact Profits

Registration and titling delays along with inefficiencies in the process can absolutely impact sales. The biggest effect usually isn’t that customers can’t buy a car but that delays increase deal fallout, reduce customer satisfaction, slow inventory turnover, and ultimately, lower the number of vehicles a dealership can profitably sell over time. The best way to avoid these negative impacts is to incorporate an integrated electronic titling and registration solution into your workflow.

The Benefits of Electronic Titling and Registration

Electronic Vehicle Registration systems provide an electronic means of processing reg or title transactions by an authorized user on behalf of the jurisdiction as well as:

• A better customer experience and reduced time at the DMV
• Enhanced data accuracy by eliminating manual data entry
• Reduced turnaround time for processing reg and title
• Fraud mitigation
• A foundation for electronic titling and electronic vehicle records management

By streamlining one of the most critical steps in the deal life cycle, dealerships can reduce costly delays, improve customer satisfaction, and keep vehicles moving from sold to delivered with fewer administrative hurdles. To see how you can simplify titling and registration workflows, learn more about CDK's Computerized Vehicle Registration solution.