We’re seeing benefits across the board in title and registration. We’ve seen very significant changes as well. 75% increase in efficiency per hour of work in title registration. Year-over-year, 15% increase quarter-over-quarter. So a lot of these things are also just making the customer experience better. And during that period, we’ve seen NPS go up as a result. So I think these are deep, fundamental, real gains. They are not tradeoff gains and so we’re extremely excited about them. Heading to same-day delivery, I think same-day delivery is a very good example of one of these projects internally that we’ve been working on, that is sort of a little fuzzy in terms of what is the ultimate goal. Is it Step two or Step three? And clearly it can play a role in both.
The way that we’ve been executing that to-date, first of all, as you said it’s in a small subset of markets. So I don’t want to get everyone too excited about this one just yet. But the way we’ve been executing it to-date, has more been aimed at efficiency gains. There are times when customers change their delivery date or they cancel a spot that they’ve previously booked and were not able to book that for another customer. By adding same-day delivery, we can kind of fill in those empty slots. And so we can offer faster delivery to our customers, and we also can do it more efficiently, because we fill in time that would have otherwise been wasted. And so that’s generally how we’ve rolled that out. We’re also just beginning to test same-day purchasing from customers as well, where they can go to our website, they can get a value for their car, they can bring the car to us.
We’ve actually had customers complete that process on the order of one hour from kind of being on the website to getting a check from us as they dropped off their car at one of our vending machines. So we are working on those things. I think those are exciting things. Today they’re aimed at efficiency. Tomorrow they certainly could be aimed at growth. In order to do that, I think it would just have some implications for our staffing models. I think whenever you’re trying to offer very rapid delivery times, the fundamental tradeoff there is always just between sort of efficiency and kind of excess capacity and time. But we don’t expect those costs to be super high, but they will require focus, and we’ll decide again how to use those fundamental gains as we head into step three.
Ron Josey : Thank you, Mark. Thank you, Ernie.
Ernie Garcia: Thank you.
Operator: The next question comes from Rajat Gupta with J.P. Morgan. Please go ahead.
Rajat Gupta: Great. Thanks for taking the questions. The third quarter units saw a bigger pickup than I guess what you had guided to, what you were expecting. It seems it was a little better than the normal seasonality the industry experiences. So I’m curious, like, what drove the pickup there? Was it just aided by the industry or anything you were experimenting internally? As you think about moving from Step 2 to Step 3, and why is that a reversing here in the fourth quarter? Is it, again, like a refocus on the operations or is it just more purely just industry pressures that you’re facing? And I have a quick follow-up. Thanks.
Ernie Garcia: I think the simplest way to think about Step 2 is that during Step 2 we’re effectively setting up the company to be kind of neutral to industry volume changes, whether that’s seasonality or otherwise. And so I think, Q3 was great from a unit perspective. I think that was largely driven by seasonality. I don’t think there was a ton of specific stuff that we were doing that was aimed at growth. In the quarter there may have been some benefits from some of the other projects we had, but there weren’t gains that were aimed at growth. I think heading into Q4, we again expect to kind of roughly move with industry, because we are remaining in Step 2 and we’re keeping the settings of the business fairly neutral. So I think normally there’s seasonal decrease in Q4.
We expect that to occur. Again, I think most importantly, kind of the unit range that we expect is very much in line with what we’ve seen over the last several quarters. And we think that that’s a reasonable unit range for us to continue to make gains as we power through step two and get ready for step three.
Rajat Gupta: Understood. That’s helpful. And just a quick one on just the financing and the ABS markets. We have seen spreads widen a bit, benchmark rates have gone up. How does that change your thinking around monetization in the fourth quarter? I believe you still have a bit of a backlog, from earlier this year that needs to be cleared. You talked about holding on to more residuals going forward. I mean, is that something, we should expect to start seeing this quarter already? And just maybe like just broader thoughts on how we should think about the finance or other GPU from Q3 to Q4. Thanks.
Ernie Garcia: Sure. I think there are – certainly all the changes you pointed to are reasonable. There’s been some kind of choppiness, I think across all financial markets over the last many months, and I think that that’s shown up in benchmarks, its shown up in spreads. As we have in the past, we would expect others to be passing that on to the consumers, and we would expect to do the same. So generally speaking, I don’t think that we have a tremendously different expectation there. I think in terms of our general monetization plan, I think that first order, our plans remain the same. The plan that we’ve had in place has been very good for a very long period of time. Even in this last quarter we had four securitizations that we were pretty happy with.
I think we still have room to improve our effective cost of funds, those securitizations, and I think if we were kind of achieving industry best cost of funds there, there would be another kind of area where we would have significant improvements in our unit economics, and over time we absolutely expect that to be the case. I think we also are clearly in a different capital position than we’ve been in quite a while. Most importantly, the improvement in that capital position is led by the gains that we’re seeing across the business that led to $300 million of EBIT dollars over the last two quarters. And then we’re in a good liquidity position with the business operating the way that it is. So I think that we are now communicating that we will be more open to maintaining residuals in the future.
