A Prposal for Centralizing credit approval systems for Car Dealerships

Proposal 1

Prepared by. Ghassan KabbaraAll Rights reservedConceptualized in 2007 Updated Presentation Sept 2008

04/12/23 Property of Ghassan A.N.Kabbara 2

This proposal has been conceptualized and prepared by Ghassan Kabbara.

Any information that you will obtain hereafter will remain with you in strict confidence.

Further due diligence on the project matter for the purpose of conducting a feasibility study of the proposed project will only be initiated upon the approval of Mr. Ghassan Kabbara in writing.


You the viewer will be required to sign an NDA immediately after the Presentation has been made.

If you agreed to these terms and conditions we shall proceed with the presentation


Proposal for Centralizing of Credit Approval System For

DealershipsPhase 1


A Car Dealership in Kuwait has a primary objective.

Selling Cars.


Selling cars normally occurs in a Showroom. This “Showroom” besides having Car Exhibits for Display also occupies Salesmen and Staff of multiple Financial Institutions.


We all know that the Salesman job is to Sell Cars and get the best deal for his dealership by getting the maximum profit.

Regardless of the outcome of the Profit a Prospect who enters the showroom eventually is converted into a Customer who is willing to Finance payments for his Car.


Before we proceed it is important to note that over 85% of the Sales are Financed by one of multiple available Financial Institutes (FI) in Kuwait.(KFH, CFC, NBK, etc.) Over 10 FIs offering Financing.

Hence the Customer is directed to the Representative of an FI who calculates his payment plan once the dealership salesman has secured the deal.


This frees up the Salesman to take on the next potential customer while his to-be customers finalizes the deal with the Representative of the Finance Company.


Usually Payment plans for all the FI are very similar. Depending on the offering of the lenders. Conventional and Islamic Finance Instruments exist.

However a flaw lies in the Credit approval process that some FI take advantage of for the benefit of making the Sale.


Once the customer has decided on the payment plan and has been approved the Finance Representative utilizing his Application that connects him to his company’s server prepares the necessary documents and get the customers signature and follows up with the approval process.


What we have here is a bunch of representatives all accessing their Server for Credit approval and document printing.

Some FI even utilize a manual system.


In the following graphic example I have shown only 2 showrooms connecting to 2 FI Systems


CFC Credit Approval SystemKFH Credit approval System

Showroom 2Showroom 1

Data Entry Stafffrom Financial

Companies

Data Entry Stafffrom Financial

Companies

Sales men ofDealership


iMaciMac

iMaciMac

DealershipApplication


Current Set up in Dealeships


Problems with this setupThe Selling process is delayed.There is duplication of effort done initially by

Salesman and then by Representative.Corruption occurs as Salesmen are getting un-

official commissions from FIs for passing Customers to them. Kick-backs

For each Showroom in Kuwait there is on average 4-5 Representatives for each FI participating in the Dealership occupying floor space that can be used otherwise for displaying automobiles.


Problems with Setup Cont..

Extra cost for FI to connect Systems to Central Server. Cost of Link, Servers, printers, Occupying Tel lines for Internet Access.

License costs on Server for S/W.Each credit approval system differs for

each FI provided multiple forms for Dealership to process.

No connection between Dealership database with The FI Database


Problems with Setup Cont..

Customer time is wasted as he moves form Salesman to Representative and back to Salesman.

Not All FI systems have direct access to monitor Customer Credit Rating.

Black Listed Customers can bypass the system. No control.

There is multiple database of customer records in each of the FI database. No Customer data integrity.


These are some of the Problems.


Advantages to the FI in Dealership

Presence in Showroom provides a means to market his plans.

Hence Attracts more customers.Frees Salesman to continue with

potential customer during peak hours.


But does physical presence of FI Representative add value to the Dealership?

Wouldn’t the Dealership achieve more benefit if the Customer’s experience is a delighted.


Can we find a solution to address these problems and possible introduce a more automated Streamlined System where there will be Increased Revenues and reduced costs to Dealerships.

Can we find a solution to lower costs to the FI.


Centralized Application






Proposed SetupFI Back OfficeServers

SynchronizeData

Credit ControlServer. (CBK?),

CI-NET

The Entity that hosts the application could bea company whose shareholders could be FI

owners, CarDealership Owners, Public

Customer only has to approach Salesmand who hasaccess to a crediiit approval system. Provides the

Customerwith all FI options


Questions come to mind.– Did this solution address the problems we

have identified?– Does it produce cost saving for the FI?– Will the Dealership accept to remove the FI

from their showrooms?– Is it Feasible to Generate Revenue for the

Hosting Entity?– What is the potential growth of such a

project?– Has someone else beat us to it?


Key Question: how will the Dealership benefit from eliminating the FI in the Showroom?– Cost reduction– Streamline the Selling process– One stop shop.– Free Floor Space.


Did this solution address the problems we have identified.The Selling process is delayed.

– The new setup seems to improve the process as Customer has to approach only Salesman who inputs the payment plan and a printout for all FI plans is produced. Giving Customer the option of choosing the desired plan.


Did this solution address the problems we have identifiedThere is duplication of effort done

initially by Salesman and then by Representative.– the Salesman has to input the

Customer Details (Civil Id) that will be linked to the Hosting Server


Did this solution address the problems we have identifiedCorruption occurs as Salesmen are

getting un-official commissions from FIs for passing Customers to them.– This can be monitored as each

Salesman ID will be logged and audited in the system.


Did this solution address the problems we have identifiedFor each Showroom in Kuwait

there is on average 4-5 Representatives for each FI in the Dealership– No need for an FI representative in

each showroom. The automated approval system will Credit controls This produces a significant cost saving on Human Resources as well for the FIs.


Did this solution address the problems we have identifiedExtra cost for FI to connect

Systems to Central Server. Cost of Link, Servers, printers.– Although a minor cost burden it will

be Cost reduction for FI as they no longer have a presence in the showroom. (also reduces maintenance and having to resort to manual work)


Does it produce cost saving for the FI. (Example)If each FI has one representative in Each

Showroom and one PC, and a connection with S/W. A cost saving of approximately KD 120,000 /year on Staff can be realized. Taking only the top 5 dealerships assuming only 5 showrooms for each. Cost of Employee is KD 400.

Other costs for H/W, S/W Lic and IT support staff, Hiring, Firing, not included yet.


Did this solution address the problems we have identifiedLicense costs on Server for S/W.

– License costs on main Server for each End user will be reduced as there is no need to access servers (now back office servers) from the showroom.

– Again this is a cost burden to the FI that will be reduced.


Did this solution address the problems we have identifiedEach credit approval system differs

for each FI provided multiple forms for Dealership to process.– Centralized on Application that is

hosted will provided a standard set of e-forms outputs for a dealership. Improving the selling process even more.

– The whole process will be Automate and the approval cycle time will be reduced.


Did this solution address the problems we have identifiedNo connection between Dealership

database with The FI Database.– Dealership Data can be extracted to

the FI Database. (info such as car model prices, Customer info, history can be imported into the FI Server for calculation of payment plan.) Alternative is for portal application used by Salemans to access dual databases.


Did this solution address the problems we have identifiedCustomer time is wasted as he

moves form Salesman to Representative and back to salesman– Customer only has to settle down with

ONE Salesman to close the deal.

FUTURE PLANS WILL ENABLE CUSTOMER TO USE A KOISK.


Did this solution address the problems we have identifiedNot All FI systems have direct

access to monitor Customer Credit Rating.– The FI Server can be linked to the

Credit rating application. (CBK) or the providing entity such as CI-NET.


Did this solution address the problems we have identifiedBlack Listed Customers can

bypass the system.– Black listed customer Data can be

accessed from the source or imported to FI. None need to send multiple CD’s, printouts etc to Dealership.


Did this solution address the problems we have identifiedThere is multiple database of

customer records in each of the FI database.– The Centralized Hosting Server will

have a single Customer Database. This will be used for Audit purposes, for control of Credit Rating for ensuring Integrity of Customer Data.


Is it Feasible to Generate Revenue for the Hosting EntityThis is the BIG question.What are the sources of Revenue.

– An Agreed Income per Transaction.– A percentage of the direct saving.– A Leased Fee for utilization of the

Server.– External access to customers for FI

calculations. TCO of owning a vehicle.– As creative as we can get.


How to provide Incentives to FI Shareholders. Potential GrowthOffer them Shares in the Hosting

Entity.Promising them that this Hosting

Service will move on beyond Car Dealerships.

Promising them that this Hosting Service will move beyond the physical borders of Kuwait.


Has anyone else beat us to this?In Kuwait?In the GCC?


More advantages

Internet payment plans can be made via a portal for customers.

Koisks in Dealerships are being installed that can be linked to the hosting Server.

Better Credit Control by CBK.(CI-Net)

Lender Vs Mediator Vs Borrower


This setup is going to happen Soon.Do you want to watch this opportunity

go by.Knowing the potential of the Earnings

that can be generated by this setup why wait. It will take at least one year to prepare the infrastructure.

How will this effect the current Credit constraints that the CBK has imposed?


Proposal for Centralizing of Dealership System for

Dealerships‘SaaS”

Phase 2

“Kerridge as an Example”


Centralized Hosting ApplicationDealership Kerridge & Credit Control




Proposed SetupPhase 2FI Back Office

ServersSynchronize

Data

Credit ControlServer. (CBK?)

Customer only has to approach Salesmand whohas access to a crediiit approval system. Provides

the Customerwith all FI options


Proposal for Centralizing of Credit Approval

System for Merchants(Retail

Outlets)

Phase3


Proposal for Centralizing of Credit Approval

System in Dealerships in GCC “SaaS”

Phase4


Summary

Phase 1 – Offer SaaS to Dealerships in Kuwait. Min 2 major dealers. The rest will soon follow.

Phase 2 – Offer Kerridge SaaS with the Hosting Company. (Not in our control however)

Phase 3 – Offer SaaS to Merchant Retail Outlets whom FI have existing presence.

Phase 4. – Explorer expanding to GCC Dealerships.


If you want to build a thriving business you have to see beyond today’s certainties to tomorrow’s uncertainties. You have to look at what is going to happen next in your field and put your self in a position to take advantage of it.

• Extract taken from “The Second Bounce of the Ball” – Turning Risk into Opportunity


NDA

Confidentiality Agreement

Between

Ghassan A. N. Kabbara

And

____________________

Automotive

A Prposal for Centralizing credit approval systems for Car Dealerships