F&I and Showroom March 2011

MAD MARV: DON’T QUIT JUST YET | EDIT: TECHNOLOGY REBOOT | LEGAL: REGULATING SPOT DELIVERIES

A BOBIT PUBLICATION FI-MAGAZINE.COM

LAUNCH At Mercedes-Benz of San Francisco, Chip Kirby and Ash Zaki Hold the Future of Automotive Retailing in Their Hands.

CHARGING Dealers, Lenders Say They’re Ready to Rebuild

STOPPERS

8 New Sales-Driving Tools

MARCH 2011 $10.00

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Contents

Endorsed as the official publication of the Association of Finance & Insurance Professionals

March 2011 Volume 14, Issue 3

Features Dealer Profile

12 Mobilizing the Dealer Experience Mercedes-Benz Financial Services is taking its mobile strategy where no company has gone before, but officials say the company won’t push its vision of the future on dealers.

12

Vehicle Finance Conference

18 Ready to Charge Ahead It’s clear that lenders and dealers are feeling good about the road ahead. The two sides met at the 2011 Vehicle Finance Conference to reaffirm the importance of their relationship.

NADA 2011

18

24 8 Show Stoppers Web-based tools ruled the aisle ways at this year’s NADA Convention and Expo in San Francisco. Here are eight solutions that caught the magazine’s attention.

Finance and Insurance

28 Pulling Out All the Props

28

The right prop can be the perfect objection killer, but you must choose your tools wisely.

F&I trainer shares a few of his top picks.

Departments 4 Letters 6 Editorial Page 8 Developments 32 Sales Driver 34 Mad Marv 36 Legal 39 Bottomliners 40 Ad Index 44 Industry Trends

24 F&I and Showroom (ISSN 2154-1728) (USPS 018-706) (CDN IPM# 40013413) is published monthly, by Bobit Business Media, 3520 Challenger Street, Torrance, California 905031-1640. Periodicals Postage Paid at Torrance, California 90503-9998 and additional mailing offices. POSTMASTER: Send address changes to F&I and Showroom, P.O. Box 1068 Skokie, IL 60076-8068. Please allow six to eight weeks for address changes to take effect. Subscription Prices: United States $20 per year; Canada $35 per year; Foreign: $35 per year. Single copy price: $10; Fact Book: $30. Please allow six to eight weeks to receive your first issue. Bobit Business Media reserves the right to refuse nonqualified subscriptions. Please address editorial and advertising correspondence to the executive offices at 3520 Challenger Street, Torrance, California 90503-1640. The contents of this publication may not be reproduced either in whole or in part without the consent of Bobit Business Media. All statements made, although based on information believed to be reliable and accurate, cannot be guaranteed and no fault or liability can be accepted for error or omission.

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Letters Charge-Backs 101 “Mad” Marv’s article, “Controlling Charge-Backs,” in the February issue was very informative.

I have several suggestions and comments. I’ve been an F&I manager for a very long time (probably longer than Marv). One of the things I have always done is to calculate (manually, using the lender’s formula) the estimated finance reserve, and I have always been within a dollar of what was actually paid. This takes less than a minute to do and it keeps your accounting department very happy.

Marv was correct in saying that the various DMS providers are not always accurate. By the way, there are lots of ways to figure out finance reserve, but the most predominate ways to do so are via the “ratio method” and the “finance charge at the contract rate minus the finance charge at the buy rate.”

My other comment concerns the handling of a lender’s requests for cancellations or refunds. I never use the lender’s figures. Upon receiving a request, I always contact the provider of the service contract, GAP, etc., and start the cancellation process. The lender’s request usually contains the two most important items impacting the cancellation: the date of cancellation and the vehicle’s mileage. Having always used the most reputable product providers, I have never, ever had a lender reject the refund amount calculated by the provider.

Keep up the good work, Marv.

TO THE EDITOR:

Steven Eisenberg Business Manager Shively Motors Inc. Chambersburg, Pa.

Sales vs. F&I TO “MAD” MARV ELEAZER: I really enjoyed your December column (“Who Needs ’Em?”) on the relationship between sales and F&I. I think, as F&I guys, we all need to be reminded that we’re not the gods of the dealership.

It’s funny how my salespeople can get so worried about bringing me a cash deal. As I learned during the training I received from JM&A, I always

remember to tell them, “Great job!”

Thanks for the reminder.

Thomas Stalteri Finance Director Williams Chevrolet Honda Kia Traverse City, Mich.

Update Those Pay Plans I just wanted to compliment Lon Leneve’s pay plan article (“Pay Plan Reboot,” Page 30) in the February issue. I worked in the dealer services department for a large, national bank for four years. I was on salary and, according to my contract, expected to work 40 hours per week.

Well, after working every other Saturday and attending early-morning meetings and 5 p.m. conference calls, I ended up working 52 to 60 hours per week. I didn’t think too much about it until another officer sued the bank for back pay. So, Lon is correct: It is important to pay attention to laws and pay plans.

TO THE EDITOR:

Jim Chapek F&I Manager Sportline Auto Sales Columbus, Neb.

Opposition to Fed’s Credit Insurance Proposals Hey Greg, I want to thank you for your “Fed Proposal Reveals Evidence GAP” column in the February issue. The more people are aware of [these proposed disclosure requirements] and the ridiculous methods the Fed is using to come to its conclusions, the more people will get involved.

As you are aware, the Fed has deferred this issue to the Consumer Financial Protection Bureau. However, my company is not really comforted by that fact, considering the political views and history of the people in charge of [the bureau], the total power they will have, and the lack of Congressional oversight. [The CFPB] will have the power to do basically whatever it wants.

TO THE EDITOR:

Klay Kelso Sales Trainer The Plateau Group Crossville, Tenn.

Vice President Group Publisher, Auto Group Sherb Brown Publisher, Dealer Group National Sales Manager David Gesualdo 727-947-4027 david.gesualdo@bobit.com Executive Editor Gregory Arroyo 310-533-2592 gregory.arroyo@bobit.com Managing Editor / Art Director Tariq Kamal 310-533-2470 tariq.kamal@bobit.com Senior Editor Justina Ly 310-533-2496 justina.ly@bobit.com Great Lakes Sales Manager Robert Brown Jr. 248-601-2005 rbrown8799@aol.com Sales & Marketing Coordinator Tracey Tremblay E-Media and Print Production Manager Brian Peach 310-533-2548 brian.peach@bobit.com Web Manager Sam Kim 310-533-2492 sam.kim@bobit.com Audience Marketing Manager Tony Napoleone

Chairman Edward J. Bobit President & CEO Ty F. Bobit Chief Financial Officer Richard E. Johnson Business and Editorial Office Bobit Business Media 3520 Challenger St. Torrance, CA 90503 Phone: 310-533-2400 Fax: 310-533-2503 Change Service Requested Return Address: Bobit Business Media PO Box 2703 Torrance, CA 90509 Subscription Inquiries 888-239-2455 BobitPubs@Halldata.com Printed in U.S.A.

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Letter from the Editor

Don’t Let Gen Y Distract The industry is on the verge of regaining some of the control it lost to the Internet, but the way dealers view technology must change before order is restored. By Gregory Arroyo

I

just want to say that I believe the iPad, or at least the dormant tablet category it awoke, will revolutionize the automotive retail industry.

In fact, I think it’s already revolutionizing how the industry views what’s possible.

My certainty is partially fueled by the scene I walked into in early February. I had just hoofed it across

is distracting us from what’s really possible. And besides, buying a vehicle is a personal thing, and I don’t think that’s been lost on Gen Y. Whether you realize it or not, the advent of the iPhone and devices like it have changed the way consumers think as well. No longer does Gen Y need Mom or Dad to play wingman on the road to a sale. All Gen Y

a vehicle with a wavering customer and then being able to — based on the customer’s credit profile and lender guidelines — pull up payment options or the customer’s monthly payment to get a commitment. That’s pretty powerful stuff, right?

Reynolds’ big thing this year is its new Retail Management System, a concept that represents a whole new

The advent of the iPhone and devices like it have changed the way consumers think as well. No longer does Gen Y need Mom or Dad to play wingman on the road to a sale.

All Gen Y needs is an iPhone to Google whatever it doesn’t understand. downtown San Francisco to the Palace Hotel for J.D. Power and Associates’ Industry Roundtable. The darkened ballroom was lit from below by a blue hue emanating from the sea of iPad devices in the audience. But the users weren’t Gen Yers. Heck, they weren’t even Gen Xers.

See, the real reason why this Gen Xer believes the iPad will change our business is because a baby boomer told me so. Crossbow Group Inc.’s Ashley Herndon is a veteran of the starter-interrupt segment and he recalled the big plans he had when, in 1993, Apple rolled out its MessagePad — you may remember it as the “Newton.” The industry was on the verge of a breakthrough, but the world, unfortunately, wasn’t ready.

Well, folks, that time has come.

See, this Gen Xer is a little tired of hearing about what Gen Y wants and how the industry must cater to that generation’s needs. Frankly, I think this race to get the car-buying experience online to appease Gen Y

needs is an iPhone to Google whatever it doesn’t understand.

The Internet also changed the game for technology providers, but in a good way. As we’ve seen in recent years, technology providers are moving away from their devicedependent strategies to Web-based solutions. That means all you have to do is figure out what hardware you’ll need to access these tools.

A new study conducted by the Boston Consulting Group found that about two-thirds of U.S. consumers are now somewhat or very familiar with e-readers and tablet devices.

That means the iPad is one piece of hardware your employees are probably using already. And as you all know, the more your staff is familiar with a device, the more they’ll use it.

Now, wouldn’t it be cool if the iPad could be used to harness DealerTrack’s new prequalification tool for its CreditOnline solution? I mean, imagine your sales guy sitting inside

line of customer-facing tools. Ron Lamb, the new president of Reynolds, used a large square to symbolize the company’s dealer management system. He then drew a circle around the square to symbolize the company’s new RMS push. As he said, the DMS is great at capturing and storing data, but what it doesn’t do well is connect with consumers.

The company’s new RMS will.

By the way, one of the new solutions under Reynolds’ new RMS is a sales tool that runs on the iPad. It allows sales staff to create prospects, search inventory and do a lot more from the Apple device.

That study I mentioned earlier also surveyed magazine subscribers.

They found that readers will spend about an hour using a magazine’s app, but only a few minutes on the same publication’s Website. Yeah, I think the iPad is going to revolutionize a lot of industries. I just hope that both of our industries will be part of that revolution.

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Developments Dealers Slow to Respond to Internet Leads SIGNIFICANT SHORTFALLS REMAIN

in dealers’ responses to Internet leads, according to the 2010 ResponseLogix Mystery Resp Shopping report. The Sh sstudy of 1,300 U.S. dealerships found d tthat 12 percent of leads received no le response. Fifty-eight resp percent off responses did not include the price, and 30 percent of responses involved price quotes.

The median response time was three minutes, mostly driven by automatic responder systems. For price quotes the median response time was 1.1 hours, and 70 percent of those responses included quotes for just one vehicle. The percentage of price quotes received in less than 20 minutes was below 1 percent.

“The dealers who can respond with a multi-vehicle price quote right away, showing full vehicle detail and accurate pricing and incentive information, will establish the customer’s trust and win the day,” said Tom Mohr, CEO of ResponseLogix.

Borgmann to Lead Capital One Auto Finance CAPITAL ONE HAS NAMED KEVIN

Borgmann as the new president of its auto finance unit. A 10-year veteran of the company, Borgmann brings experience from Capital One’s corporate strategy, Internet and credit card units, as well as several years of work on the consulting side. Borgmann shared his goals for the company’s auto unit in an exclusive interview with F&I and Showroom.

To read the full interview, go to www.fi-magazine.com/ webexclusive/capitalone.

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Fort Worth, Texas

GM Financial Not Looking to Replace GMAC

G

M Financial’s rollout of a prime leasing program in 16 states may seem to indicate that the company formerly known as AmeriCredit is leaving its roots behind. Company officials, however, maintain that the former subprime finance company is merely sticking with the game plan General Motors set

Officials said the company also is eyeing a return to the Canadian market by the middle of the year or sooner, and is considering an expansion of its lease offerings to customers downstream on the credit spectrum.

As for retail installment contracts, DeYoung said originations will outpace what AmeriCredit did last year,

“GM bought us not to be the new GMAC; they bought us to plug the gaps. They bought us to bring back leasing.”

— Dan Berce, GM Financial forth when it purchased the company last October: Fill the finance gaps.

Since successfully piloting a new GM prime lease program in Ohio last December, the Fort Worth, Texas-based company has extended the lease offering to 15 additional states.

The goal now is to expand the program nationwide by this summer.

“When we were acquired by GM, the purpose was to fill in the financing gaps,” said Caitlin DeYoung, spokesperson for GM Financial.

“Our main focus was to get a leasing program out and prime leasing was the first priority.”

Aside from Ohio, the prime lease program is now available in Connecticut, Delaware, Indiana, Kentucky, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, Virginia and West Virginia.

but would not offer a target increase.

She added that although GM Financial is being positioned to help GM dealers, the former independent finance company will continue to serve non-GM dealers under the AmeriCredit banner.

“What we are looking to do is provide a competitive financing option for GM dealers,” DeYoung said. “Our current infrastructure is not built to take on 80 percent of GM’s business and we’re not looking to do that.”

Dan Berce, the company’s president and CEO, echoed that statement at the 2011 Vehicle Finance Conference in February, where he joined Ally Financial’s Tim Russi on a CEO panel.

“GM bought us not to be the new GMAC; they bought us to plug the gaps,” Berce said. “They bought us to bring back leasing.”

CART PHOTO ©ISTOCKPHOTO.COM / COREAY, FORT WORTH PHOTO BY ADAM STANFORD

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Developments Ally Takes Top Spot in New Financing ALLY FINANCIAL FINANCED

WARRANTECH CORP. HAS

more new-vehicle purchases in the United States than any other lender in 2010, according to Experian Automotive.

More than 803,000 new cars were financed by the former captive lender, resulting in nearly $23 billion in retail contracts. In total, Ally financed nearly 1.2 million vehicles or $31.6 billion in consumer auto contracts in the U.S. last year. It also provided financing for more than 2.8 million vehicles sold to more than 5,000 dealers in 2010, an increase of nearly 80 percent from the prior year.

signed a three-year contract to serve as the underwriterr of the Volvo Increased Protection (VIP) Program. Term options for new w vehicles range from four to eight years and 50,000 to 120,000 miles beyond the manufactur-

Two Detroit Dealers Take Sears Offer SEARS AUTHORIZED INDE-

pendent Auto Centers LLC announced the

Contact Management as its primary customer relationship management tool. The agreement will allow Hendrick dealers to handle follow-up activities for prospects, sold customers and service customers from one tool. The CRM solution also integrates with the Reynolds ERA dealership management system, which is currently used in all Hendrick stores.

Warrantech, Volvo Ink Vehicle Service Contract Deal

opening of two new franchises at the sites of two veteran Detroitarea auto dealers. The Galeana Auto Group location in Warren, Mich., and the Century Sales location in Taylor, Mich., are the latest additions to the Sears Auto Center family. The program was created by Sears Automotive in October 2009 to give dealers a chance to transform their dealerships into automotive

er’s warranty, and one to four years and 12,000 miles to 60,000 6 on eligible o used vehicles. u Through the T VIP Program, V dealers have d access to Waracce rantech’s t h’ online tools for contract issuance, coverage verification and claims.

DealerTrack Acquires Polk’s Price and Spec Business

service businesses and continue serving their communities. All Sears Auto Centers franchises are backed by the buying power, distribution network and corporate support of Sears Inc.

DEALERTRACK HOLDINGS

Hendrick Picks Reynolds’ CRM Solution HENDRICK AUTOMOTIVE

Group has selected Reynolds and Reynolds’

Inc. has acquired Polk’s U.S. Price and Spec Business, including the popular Vehicle Comparator Service, which delivers price and specification reports to manufacturer and retailer Websites. The newly acquired business will be merged into DealerTrack’s subsidiary, Chrome Systems Inc.

Moves and Hires Douglas J. Herberger was named president of Allstate Dealer Services and will be responsible for managing the company’s F&I products and services. Herberger, who spent 30 years with General Motors, most recently directed the automaker’s multibillion-dollar parts, service and accessories business.

The Warranty Group Inc. has appointed John Curtis as senior vice president general counsel and corporate

10 F&I and Showroom March 2011

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secretary. Curtis served as president and CEO of First Extended Corp., which was acquired by The Warranty Group in 2001. Since the acquisition of The Warranty Group

by Onex Corp. in 2006, Curtis has served on the board of directors as chairman of the governance committee.

Asbury Automotive Group Inc. announced in February its succession plan in anticipation of President and CEO Charles R. Oglesby’s retirement on July 31.

Senior Vice President and CFO Craig T. Monaghan has assumed the role of president and CEO. Senior Vice President and COO Michael Kearney was promoted to executive vice president. Oglesby will continue as chairman of Asbury’s board of directors. In addition, Asbury’s board elected Thomas DeLoach, a current Asbury director and former Mobil Corp. executive, to serve as a lead independent director.

SERVICE PHOTO ©ISTOCKPHOTO.COM / DIEGO CERVO

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Dealer Profile

Mobilizing Dealer the

Mercedes-Benz Financial Services is taking its mobile strategy where no organization has gone before, but officials say the company won’t push its vision of the future on dealers. By Gregory Arroyo

A

sh Zaki isn’t sold on the idea of consumers buying solely online.

No, his vision of the future dealership is one in which the showroom and the online experience are fused together.

The bridge to that future, he believes, could be the Apple iPad, which is why he’s excited about the quickly evolving mobile strategy undertaken by his captive lender.

Zaki is chief operating officer of Mercedes-Benz of San Francisco, which sits underneath the Bayshore Freeway connecting Oakland and San Francisco. The 50-year-old operation was one of 40 dealerships selected by Mercedes-Benz Financial Services (MBFS) last May to pilot its iPad-compatible MB Advantage software. It was again selected in February as the launching pad for the finance company’s newest mobile offering: an iPad-compatible F&I presentation tool that aims to connect the F&I process to the showroom.

“I think this tablet technology is exactly what will marry the showroom and online experience,” says Zaki. “It was just a matter of time 12 F&I and Showroom March 2011

FI0311profile.indd 12

before it was integrated into the automotive vertical.”

Rolled out in late February to dealers who signed up to carry MBFS’s line of F&I products, the presentation tool takes aim at that small window of time customers spend in the showroom before transitioning into F&I. As of now, the mobile F&I presentation piece is nothing more than an interactive F&I brochure, using icon-dressed buttons to help customers delve deeper into the company’s aftermarket vehicle protection products.

Officials at MBFS, however, are quick to note that this is not the second coming of the F&I kiosk, a decades-old concept that was supposed to mark the end of the F&I manager.

Instead, they describe the tool as the entry point to a whole new set of dealer tools.

“We don’t prescribe any process to our dealers. We just want to give them the utmost level of flexibility,” said Andreas Hinrichs, vice president of marketing at MBFS. “We are

simply saying, ‘We’ll provide you the device, we’ll provide you the mobility that comes with the device and we want you, the dealer, to figure out the best way of doing business with it.’”

Dealer-Led Technology

In February, Hinrichs served as a panelist during the American Financial Services Association’s Vehicle Finance Conference in San Francisco, where he and Dietmar Exler, head of MBFS, touted the company’s mobile strategy during separate panel discussions. And although other companies talked about their interest in the mobile realm, it’s clear MBFS is in the driver’s seat.

“In our case, we decided to drive the bus,” Hinrichs said during the conference’s “Evolution of the F&I Office” panel.

The finance arm’s mobile strategy was launched in October 2009 behind an iPhone app that allowed customers to wirelessAsh Zaki, COO of MercedesBenz of San Francisco, demonstrates MBFS’s new iPadcompatible tools. Behind him is Chip Kirby, an MBFS dealer rep.

PHOTOS BY GREGORY ARROYO

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March 2011 F&I and Showroom 13

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Dealer Profile ly manage their MBFS accounts. It took a mere 15 months for the app to attract approximately $15 million in consumer lease and loan payments, or about 25,000 payments. That’s when the company knew it was on to something.

That “something” became a little clearer when MBFS officials caught wind last February — around the time it was preparing to release the smartphone version of its consumer app — of Apple’s plan to launch the iPad. Hinrichs says the thought of Apple entering the tablet category changed everything.

“When we became aware of Apple’s impending [iPad] announcement, it really sparked our curiosity,” Hinrichs says. “We thought it could create a new device category that would be very applicable to our business.”

Figuring the iPad would open the door to a slew of new tablet devices, the company decided to move away from its device-dependent strategy to one that was built around its dealer point-of-sale system, the aforementioned MB Advantage. The company’s software team knew it was the right decision when they got their hands on an iPad simulator four months before the device’s launch.

Hinrichs says the work that went into making MB Advantage compatible with Apple’s iPad and Safari browser means the road is paved for newer solutions down the road. “It is a device-independent strategy,” he

“If you look around this dealership, you’ll see flat-panel screens hanging throughout the showroom and that every desk has a computer. That level of technology is not typical.”

says. “Whatever tablet PC you want to use, you can use.”

As Apple began rolling out the iPad last May, MBFS kicked off a six-month pilot program for its new mobile tool at 40 dealerships, becoming one of the first companies in the world to take the consumer-oriented iPad and give it a business application. Each regional manager was given 10 iPads, which were then distributed to dealer relations managers like Chip Kirby. He was asked to select two dealerships from his Northern California area to run the new tool through its paces, and Mercedes-Benz of San Francisco was one of them.

“I knew the dealership and Ash, in particular, would embrace the technology,” Kirby says. “If you look around this dealership, you’ll see flatpanel screens hanging throughout the showroom and that every desk has a computer. That level of technology is not typical.”

The company’s six-month pilot phase of its mobile tool ended last

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Dealer Profile October. Zaki’s team put several features to the test, including one that allowed front-end staff to execute tasks such as starting loan applications, checking for financing options and grounding lease-return vehicles. Since leasing represents 60 to 70 percent of the store’s business, the store proved to be the perfect testing ground.

The dealership’s staff led demonstrations of the mobile tool during a media event held at the store the day before the start of the 2011 NADA Conference and Expo in February.

Staffers showed off the solution’s lease-return functionality, which

dia event at Mercedes-Benz of San Francisco also marked the unveiling of the company’s new F&I tool — which arrived about five months after the company sent iPads to all 355 U.S. Mercedes-Benz dealers. Kirby, who spent nine of his 24-year industry career in retail, believes MBFS is on the verge of redefining the dealership experience.

“I don’t know if it’s going to take six months or five years, but I see things moving toward an environment where every sales and finance representative is equipped with an iPad-like device,” he says. “This will

The ability to send inspection sheets directly from the iPad to a printer was “the last piece of the puzzle,” according to Chip Kirby, a dealer relations manager for Mercedes-Benz Financial Services.

guides users through five screens and a series of questions and check-offs before asking the customer to provide an acceptance signature right onto the iPad. The presentation ended with staffers wirelessly printing out copies of the inspection sheets — a feature that wasn’t available during the pilot program. That functionality became available last November when Apple released its iOS 4.2 Software update.

“That was the last piece of the puzzle,” Kirby says. “Without it, you would ground the vehicle and then tell customers you had to walk over to a desktop computer to do everything you were trying to avoid. Wireless printing, along with the signature capability, really did take the mobile initiative to the next level.”

Downturn Presents Opportunities

Aside from demonstrating the mobile MB Advantage system, the me-

be an environment where you can sit with a client and say, ‘Here are the products we think you need.’ And if the client isn’t interested, you simply flick the products off the screen and out of the equation instead of having to change the numbers, recalculate everything, reprint the contract and put it in front of the customer.”

For his part, Zaki has already taken steps toward that future. Like most dealerships, Zaki’s new-to-used sales ratio swung more toward pre-owned during the downturn. But the drop in new sales didn’t stop him from making investments in his store’s digital infrastructure.

“I’m a tech guy in car salesman’s clothing, so I like technology,” says Zaki, who also spent time in the semiconductor industry. “What you may not know about me is that I helped build what I believe was the first automotive multimedia Website back in 1995. And I can tell you,

not much has changed since then in terms of achieving our ultimate goal of combining Website technology with the showroom experience. The iPad, however, does change things.”

Zaki also is looking at some additional handheld devices that will allow his service advisors to take payments in the service drive. He’s even exploring the possibility of allowing customers to use their mobile devices to pay for repairs before they pick up their vehicle.

As for the new F&I tool, Zaki says he’s still ironing out the details on how the presentation tool will fit into his front-end processes, but he sees the possibilities.

“As this gets more defined and the speed of calculations increases, I can see us reaching a point in the showroom where we’re moving from simply talking about features and benefits of the car itself to discussing what the customer’s lease payments will be,” Zaki says. “So, I’m looking forward to seeing how the F&I functionality evolves.”

That evolution might not be too far off. Mercedes-Benz’s captive finance arm completed in January the rollout of a new electronic validation tool for dealers. Company officials say that marked the company’s first step toward e-contracting under its eStrategy initiative. Add in the pilot program MBFS is kicking off this month to test a new connection that DealerTrack’s Aftermarket Network is creating between Mercedes-Benz dealers and the companies underwriting its F&I products, and it’s not hard to imagine a day in the near future when dealerships will be able to use a tablet to electronically rate and contract F&I products from the showroom.

“This is just the beginning,” Hinrichs says. “With what we’ve developed, you can take the iPad right up to the car, punch in the last eight digits of its VIN and pull up all eligible finance and lease programs related to that vehicle. This is where it becomes very powerful, because now you can transfer the customer’s desire for the vehicle into the F&I process.”

16 F&I and Showroom March 2011

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Vehicle Finance Conference

Ready Charge Ahead to

It’s clear that lenders and dealers are feeling good about the road ahead. The two sides met at the 2011 Vehicle Finance Conference to reaffirm the importance of their relationship. By Gregory Arroyo

T

he mood at this year’s Vehicle Finance Conference, held at San Francisco’s Westin St. Francis Hotel immediately prior to NADA 2011, was exponentially more positive than in 2009 and 2010. It was clear from the way finance executives discussed the strategies they fell back on during the credit crisis that they’re feeling a lot better these days. Dealers serving as panelists wondered aloud about whether that would mean a return to the way things used to be.

With the economy on the upswing, members of the host organization, the American Financial Services Association (AFSA), and dealers in attendance spent much of their time on the dais reaffirming the importance of their relationships. But there was also a call from dealers for lenders to be more available, look beyond credit scores and restore the personal interactions they once had with F&I offices.

“Let’s not focus on credit score, let’s buy the customer,” said Michelle Primm, director for the National Au18 F&I and Showroom March 2011

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tomobile Dealers Association and managing partner of Cascade Auto Group in Cuyahoga Falls, Ohio. “Tell me how to get my paper bought, don’t just look at your rate chart.”

Stephen Wade, president of Stephen Wade Auto Center in St. George, Utah, would take over as the NADA chairman for 2011 a few days later. Addressing the AFSA crowd, he called for a return to the days when F&I managers interacted with the same buyer on every deal.

Cindy Kanellis, the F&I director for Freemont Automotive Retailing Group, had her own request. “We’re working weekends and we’re working nights,” she said. “We need our buyer. We need them on weekends.”

Not Out of the Woods

The state of the still-recovering economy wasn’t lost on dealers, either.

William Underriner, 2001 NADA vice-chairman and president of Underriner Motors in Billings, Mont., talked about reports that foreclosures could rise again this year. “The soon-

er that happens, the better off we’ll be as an industry,” he said.

David Wyss, chief economist for Standard & Poor’s, confirmed the recession is over. But, he added, “It just doesn’t feel like a good expansion.”

The biggest problem, he said, is the housing market, which is coming off one of the worst periods for home building since World War II. Wyss said it could take another six months before that market gets into balance, and noted that four states — California, Nevada, Arizona and Florida — were responsible for half of the nation’s foreclosures.

If the economy slips back into decline, Wyss said the Federal Reserve will not be able to lower the federal funds rate as it has in the past. Because it’s near zero, the Fed is looking at other types of rates to lower.

Despite fears of inflation, Wyss said the Fed has no other choice. “[The economy] is too squishy for the Fed to take its foot off the gas pedal,” he said.

Wyss said all markets had botPHOTOS BY GREGORY ARROYO

3/7/11 11:33:35 AM

Ally Financial’s Tim Russi, Mercedes-Benz Financial Services’ Dietmar Exler, Toyota Financial Services’ George Borst and GM Financial’s Dan Berce weighed in on the current state of the auto finance industry. David Wyss, chief economist for the S&P, said the key to a full economic turnaround is the still-lagging housing market.

Cindy Kanellis said today’s consumers are a lot more realistic than three years ago.

tomed out by March 2009, less than four months after the financial market froze in the fourth quarter of 2008.

“It was like we all joined hands and walked off a cliff,” he said.

As for when he thinks the 8.5 million jobs lost during the downturn will be restored, Wyss said he doesn’t expect to see any major improvements until the third quarter of 2012. Others speakers at the conference said it won’t be until 2016 before the national unemployment rate falls to 5.3 percent. The good news, said Wyss, is that jobs are coming back faster than they have during previous recessions.

“Payroll usually recovers last. In 2001, it took 17 months for employment to come back,” he said, noting that it was the American consumer who pulled the economy out of the recession.

“They kept spending,” Wyss said.

“I’m not sure that will work again.”

The good news is the American consumer is borrowing less and saving more. The term “down pay-

ment” is no longer viewed as a relic of a concept. But what’s good for the consumer may not be good for the still-recovering automotive industry.

And, as Wyss pointed out, there are more registered cars than registered drivers.

He finished his thoughts with this: “Cars will need to be replaced.”

Rebuilding the Market

The good news in auto finance is that auto loan defaults are doing well.

The rate of defaults peaked in 2009 at 2.8 percent, and has since dropped to 1.77 percent. Loss rates have also fallen to pre-recession levels, another reason for the better mood at the Vehicle Finance Conference.

“There’s a different energy in the room than last year,” said Chris Stinebert, AFSA’s president and CEO. George Borst, president and CEO of Toyota Financial Services (TFS), talked about the moment his company realized the economy was in trouble. It was December 2007, the month the Great Recession officially

started. That’s when the company began shifting its budget toward pulling in as many customer payments as possible. “It was a year of collections,” Borst said.

It was also a year of analytics.

Adem Yilmaz, corporate manager of consumer risk for TFS, said the captive finance company began redeveloping its score cards at that time.

The goal was to identify the portfolio segments responsible for losses. Although those score cards performed better than expected, he offered a word of warning.

“Can’t rely on historical data to predict the future,” he said. “We have to look at the psyche of the consumer.”

William Shope, vice president of portfolio management for Omni Financial Corp., echoed Yilmaz’s comments. “Predicting consumer behavior is not the strength of the score card,” he said.

Middle Tier Lending Needed

Missing at this year’s Vehicle Finance Conference were the calls from dealMarch 2011 F&I and Showroom 19

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The Funding Is There

Adem Yilmaz, corporate manager of consumer risk for TFS, said finance sources can’t rely on historical data alone to predict the future. The consumer must also be considered.

ers for subprime financing. What is needed, dealers said, is financing for the middle tiers.

“We got financing for the ‘A’ customer, we got subprime [financing] for the ‘D’ customer,” said Underriner.

“What we need is financing for the ‘B’ and ‘C’ customer. Those are the people who make this country run.”

Brian Leary, F&I director for Utah’s expansive Larry H. Miller group, echoed Underriner’s comment. He said 20 percent of his business is made up of subprime, and added that he expects that to increase next year as more subprime finance sources become available. “That’s our biggest hurdle, getting advances on nearprime customers,” he said.

For both new and used, the share of loans made to nonprime, subprime and deep subprime customers increased from 36.42 percent in the fourth quarter of 2009 to 38.42 in the year-end quarter of 2010, according to Experian Automotive. However, this still trails what was seen in the fourth quarters of 2007 and 2008, when loan share for credit-challenged customers stood at 44.63 percent and 41.03 percent, respectively.

Greg Oltman, finance director for Van Tuyl Dealer Group, said he’s noticed that consumers who couldn’t get loans during the downturn have yet to return. That could be one reason why subprime isn’t as big of a problem as it was in 2009. Another

reason might be that lenders can get a better read on a subprime customer than on a nearprime customer because they have already bottomed out. With nearprime customers, it’s more difficult to gauge whether

“We got financing for the ‘A’ customer, we got subprime for the ‘D’ customer.

What we need is financing for the ‘B’ and ‘C’ customer.

Those are the people who make this country run.” they’re ascending or descending the credit ladder.

Whatever the case, Freemont’s Kanellis said she sees a change in today’s subprime customer. “[Subprime] customers are more realistic. And when they come in, they’re coming in with a down payment,” she said. “They’re also coming in with a better attitude.”

One development that could turn the tide for the middle tiers is an improvement to the health of the securitization market, where finance sources sell loan pools to gain funding.

Toyota Financial Services’ Borst talked about the company’s success in the asset-backed securities (ABS) market in the last six to eight months. “We see it as a vibrant market,” he noted.

Dan Berce, president and CEO of GM Financial, said the market is as good as it was in 2006 and 2007.

“The ABS market is open for business,” he said.

Dietmar Exler, head of MercedesBenz Financial Services, indicated that his company could be active this year in the ABS market, saying it’ll be one of the tools it will consider this year.

Tim Russi, executive vice president of Ally, also talked about the company’s activity in the ABS market, saying, “I think the world is open.”

He also talked about the benefits of the company’s bank holding status, which has allowed it to diversify its sources of funding.

Leasing could also pick up the slack this year. And with Berce telling the audience that GM Financial may be taking General Motor’s new prime leasing program down the credit stream, leasing might also be used to fill the nearprime financing gap.

Whatever plays out, Wade said the relationship between dealers and lenders must continue to strengthen.

“I’m excited about where we’re going.

We’re moving in the right direction,” he said. “And if we’re going to be effective, we need to stick together.”

Stephen Wade, the 2011 NADA chairman, called for a return to the days when F&I managers interacted with the same buyer on every deal.

20 F&I and Showroom March 2011

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NADA 2011 Web-based tools ruled the aisleways at NADA 2011. Here are some solutions that caught the magazine’s attention.

T

By Justina Ly

ools to help dealers rule the Internet were in abundance at this year’s NADA Convention and Expo, set inside San Francisco’s Moscone Center — where 363 exhibitors vied for the attention of more than 18,000 attendees.

Solutions that allow dealers to tap into today’s mobile marketing phenomenon were prevalent, but so was an emerging strategy that allows technology providers to deliver their solutions through the Web. The idea is to allow dealers to select the Webenabled device they’ll use to access these new solutions — which could spell savings for dealers.

Here’s a look at some of the products that caught our attention at this year’s show:

1

DealerApp Vantage: Going Mobile

The company showcased an upgraded version of its mobile marketing tool, DealerApp Vantage Pro. Dealers can now build their own dealership app that displays inventory in real time and sends service appointment reminders. The tool also allows dealers to personalize the apps for their customers based on the vehicle they currently own.

The app builder comes equipped with a “Toolkit” feature that provides one-touch dialing for roadside assistance. Other features include a gas price finder, parking assistant and a database of owner’s manuals. The app can even turn a mobile device into a working flashlight.

24 F&I and Showroom March 2011

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Show-S Dealers can also load the app with dealership promotions and event information. The app also allows customers to get price quotes, schedule service appointments, make payments, order parts and contact any department at the dealership via onetouch dialing.

The app-building tool also allows dealers to take advantage of RSS feeds so their customers can receive dealer and manufacturer news and recall alerts. Dealers can also manage their store’s social media sites and Websites via the app’s back-end management tools.

The “lite” version of the company’s mobile builder is available for $19.95 a month. The “pro” version is available for $49.95 per month. Consumers can download the lite version of the app for free on their Android and Blackberry mobile devices, and both versions on their Apple devices. For more information, visit www.dealerappvantage.com.

2

@utoRevenue: Manage What They Say

The marketing services arm of Autobase CRM rolled out PRIME Response, a new online reputation management solution that allows dealers to profile, track and influence what’s being said about their dealerships online.

The solution’s “profile” controls provides dealers with the ability to manage their online profile and distribute content to third-party sites.

Dealers can promote their store’s carbuying experience, send coupons, promote events, post videos and more.

The tool also boasts a “track” feature that allows dealers to follow what EXPO HALL PHOTOS BY TARIQ KAMAL

3/7/11 11:32:33 AM

devices, is available to non-Carfax subscribers starting at $75 per month.

For more information, visit www. ecarlist.com/TrueTarget.

4

Autobytel: Getting a Commitment

-Stoppers their customers are saying about their store — and their competitors. It does this by monitoring data streams in social networks, RSS feeds and indexed search results. Additionally, dealers can track their stores’ ratings and consumer reviews.

PRIME Response also offers “influence” controls to help dealers get their customers to write online reviews about their store. These reviews can then be directed to third-party Websites, as well as other consumer forums. Users also have access to an @utoRevenue reputation specialist to assist them with their marketing efforts. For more information, visit www.autorevenue.com.

3

eCarList: Level the Playing Field

eCarList’s TrueTarget Mobile App was designed to offer dealers an answer to the Carfax report-wielding consumer. The software provider has equipped its mobile solution, named the most innovation solution of 2010

by Drivingsales.com, with a direct connection to Carfax’s Vehicle History Reports.

Dealers can use TrueTarget to access pricing and appraisal insights from their mobile phones, as well as manage, photograph and market their inventory on vehicle listing sites. The app includes retail market data from online marketing sites like Cars.com, AutoTrader.com and eBay. Dealers also can access wholesale pricing data from NADA, Galves, AuctionNet and more. More importantly, the app allows dealers to filter, organize and view data geographically. Dealers can even flag pricing from competing dealerships.

The app, which can work on the iPhone and Android-based mobile

The online leads and marketing provider unveiled a new consumer purchase request tool designed to transition shoppers into buyers. Called WebLeads+, the new program presents a dealership’s Website visitors with special offers, incentives or coupon forms to entice them to submit a purchase request.

The new tool also allows dealers to provide leads with personalized offers, lock in pricing or discounted pricing. And if customers leave the site, WebLeads+ will keep the offer live to get the potential buyer to re-engage the Website. The program is available for $295 per rooftop for Autobytel clients. For more information, visit www.autobytel.com.

5

Reynolds: Get Your Free Mobile Site

The rumors are true: The Reynolds and Reynolds Co. has extended its free mobile Website offer to all U.S. franchised dealers. And here’s the kicker: You don’t even have to use the company’s dealership management system. The offer is being used to promote the Reynolds Web Solutions’ WebMakerX software suite.

The basic mobile Website allows dealers to share their site’s most important features with mobile device users, including new- and used-veMarch 2011 F&I and Showroom 25

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NADA 2011 hicle inventory, vehicle photos, dealership contact information and payment calculator.

Reynolds Web Solutions also offers a number of other automotive mobile marketing features, including inbound and outbound text marketing, a send-to-mobile widget and more. For more information, visit www.reynoldswebsolutions.com.

6

CUDL: Credit Union Portal

On display at the Credit Union Direct Lending (CUDL) booth was a new dealer portal Website aimed at helping dealers secure credit union financing, access prequalified credit union members and monitor activity on CUDL’s lending platform.

The company, which administers an auto lending network for credit unions and the CUDL AutoSMART vehicle shopping site, is providing dealers with a better look into the credit union world by allowing them to search for member loan pre-approvals and view the national, regional and credit union message boards housed on the CUDL system.

A “Dealer Queue” feature was added to allow users to view and track pending and funded deals.

Dealers also can access key data, including the number of credit unions and credit union members using the CUDL platform in their local region.

Other information at hand includes the number of loans and total loan amount funded through the platform.

Dealers can also track the number of visitors to the CUDL AutoSMART vehicle shopping site, as well as the number of views their inventory and store information received.

Regional rollout of the new portal is scheduled for the second quarter.

For more information, visit www. cudl.com.

NADA 2011 attracted a crowd of more than 18,000 attendees to San Francisco’s Moscone Center, where they were greeted by 368 exhibitors.

7

Chrome: Quoting Payments Online

DealerTrack Holdings Inc.’s subsidiary, Chrome Systems Inc., has launched PaymentDriver, an online finance payment calculation service for dealership Websites. The solution was designed to help dealers convert online consumers into highly qualified prospects.

Car buyers can use PaymentDriver to calculate monthly payments for specific vehicles based on current finance rates and residuals available from each dealership’s finance partners. Built as a Web service, PaymentDriver also can be integrated into mobile applications, online vehicle research and inventory workflows on portals, as well as manufacturer and dealer Websites.

In addition, dealers can customize lender and rate choices to provide round-the-clock access to competitive rates and programs, according to the company.

For more information, visit www. chrome.com.

8

MAX: Manage Your Advertising

MAX (Marketing through Automated eXpertise) is a new division under the INCISENT Technologies umbrella. The new business unit showcased two new Web-based solutions at NADA 2011, both designed to help

dealers manage their online sales and advertising efforts.

The MAX for Selling Elite solution is an iPad app that arms salespeople with the same information consumers research online, including reviews, ratings and more. Salespeople can use the app to access Carfax vehicle history reports, access reviews from J.D. Power and Associates, Kelley Blue Book and Edmunds.com, run price

comparisons and create prepopulated sell sheets that can be e-mailed to customers. The iPad app is available for $399 per month for one user and $99 for each additional user.

Also on display was MAX Ad, a Web-based platform that allows dealers to create advertisements for new and used inventory and distribute them to third-party Websites.

The system uses the MARK Engine, which aggregates vehicle information available online, such as seasonality, vehicle age and industry trends.

It can then generate ads based on that data. The system is available to dealers for $299 per month.

For more information, visit www. maxadsystems.com.

Be sure to check out the April issue of F&I and Showroom for more coverage of the 2011 NADA Convention and Expo.

26 F&I and Showroom March 2011

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Finance and Insurance

Pulling Out

Props All the

The right prop can be the perfect objection killer, but choose your tools wisely. By Gerry Gould

P

rops aren’t just for theatrical productions; they can be the perfect tool for selling intangibles like F&I products. Not only do they serve as great visual aids, but they can also liven up your F&I presentation. More importantly, a well thought-out prop can help develop a dialogue with your customers.

Just remember that a prop can’t sell your products by itself.

You first need a wellrehearsed presentation, which should include questions that will help you gain an understanding of your customer’s ownership habits. Here are a few examples: Mileage question: “How many miles a year will you be driving, and how long do you plan on keeping the vehicle?”

Raise awareness: “What is your insurance deductible and do you know if they offer discounts for theftdeterrent devices?”

Plant the seed: “We’ll be paying off the remaining balance on your trade. Are there any products for which we should be applying for a refund?”

Now, whatever you do, don’t spring your props on your customers without getting their permission

first. Here’s a nice way to do just that: “There are three things you cannot control while you own this car: weather, the driving habits of others and road conditions. Do you mind if I share something with you?” Also try: “I don’t expect your new car to break down, but you never know.

Do you mind if I share something with you?”

Mightier Than the Sword

When you’re pitching products from the menu, use your pen like a conductor’s baton. See, the pen can be used

to control the pace of your presentation. It can also be used to direct your customer’s focus. For example, if you want your customer to look down at your menu, point your pen down or toward specific sections on the menu while making verbal points about your products.

Additionally, keep a pad of paper close by so you can jot down specific points you’ve made about your products. Feel free to draw illustrations during your presentation or close. Illustrations can communi-

cate a much stronger message than words alone.

Just the Facts, Ma’am

An evidence manual is a must-have for any F&I manager. And as the saying goes, a picture is worth a thousand words. So, dust off your camera and snap a few shots of your service department, diagnostic equipment and toolboxes. You also want to get a few shots behind the parts counter, as this will help you illustrate to your customer the investment the dealer has made to keep the shop running efficiently. Pictures of vehicles that have been repaired by a paintless dent repair technician are also helpful. Just remember to make your evidence manual look neat and tidy.

Before-and-after photos of reconditioned vehicles treated with environmental protection are also good to include in your manual. Photos of tradeins being appraised by the used-car manager are another must. They help to illustrate how a vehicle’s condition can affect its resale value. Just make sure you’re pointing out how your products will positively impact the future value of your customers’ vehicles when showing off your photos.

Copies of repair orders — particularly those showing the cost of a

28 F&I and Showroom March 2011

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3/4/11 5:51:13 PM 9/21/10 1:43:39 PM

Finance and Insurance claim related to the products you offer — are also good additions to your manual. You should also include a copy of a recent invoice your dealership paid to the dent repair technician. This will demonstrate to your customers that vehicle damage can happen anywhere if it can happen on your lot.

Not Just a Novelty Act

You can get a little creative when pitching environmental protection. For exteriors, treating half of a detached hood with paint protection is a perfect demonstration tool. For interior protection, you’ll have to get a little creative. I equip my

toolbox with a tipped-over juice box and coffee cup, each bonded to a melted plastic material I’ve colored to look like juice and coffee.

Yes, these sales tools are a bit comical, but they’re also effective.

What you do is leave your creation on the visitor’s chair in your office.

Once your customer sees it, pick it up — plastic “liquid” attached — and explain how easily stains can be removed if interior fabric guard is applied. The goal is to get them to inquire about the consumer kit you have sitting on your desk. Their inquiry is your green light to break down the features and benefits of your protection products.

Some providers can also supply you with a fabric demo card, which is an effective demonstration tool. Simply dip the card into a cup of coffee or soda and pitch away.

Flank Their Objections

Your customers may know that manufacturers are extending out their powertrain warranties. What they may not realize is that there are still a lot of holes your products can fill. Don’t be afraid to ask what their understanding of the factory warranty is and, once they’ve answered, flank their “I don’t need it” objection with a couple of objection-handling tools.

First, pull out the laminated desk mat most service contract providers provide to set the record straight. Use it to point out specific components your service contract can cover, the length of coverage, as well as other benefits your program offers.

If the customer remains unconvinced, show him or her a window regulator. They’re not likely to recognize it, and they’ll be amazed at the 30 F&I and Showroom March 2011

FI0311props.indd 30

PHOTOS COURTESY UNITED DEVELOPMENT SYSTEMS

3/4/11 5:51:13 PM

cost to repair or replace it. Most importantly, you want to tell them that the part won’t be covered under any powertrain warranty.

If the customer still objects, pull out a vehicle computer. Explain to the customer how today’s vehicles are like computers on wheels because virtually every component runs off of one of these devices, which makes them more expensive to repair. Finish up your pitch by explaining that these units can only be replaced when they fail.

tection works when showing off your damaged rim prop.

The Mini Cart

A mini shopping cart is a great way to start a conversation about paintless dent removal. Once the customer sees it, try this line: “The reason I keep

Jarring Pitch

Nothing tells the story of the benefits of tire-and-wheel protection than a mason jar filled with tire debris. Just make sure to explain each road hazard contained in your jar.

For customers who say they’ll take their chances, a damaged rim might be the only way to go. Just make sure to point out how tire-and-wheel pro-

this on my desk is to remind myself to park as far away from the real ones as possible, because you never know when one will bump into your car.

However, the only real way to avoid them is to never drive your car. Obviously, this is not an option for you.”

This is your opportunity to close with the following: “Now, wouldn’t you agree it’s better to have it and not need it than to need it and not have it, especially for such a low monthly cost?”

When used properly, props will help you get closer to a “Yes” with your customer. They work because they evoke a memory in the customer’s mind. If things go as planned, that memory will help the customer realize why he or she needs your protection products.

Gerry Gould is director of training for United Development Systems Inc. He can be reached at gerry. gould@bobit.com.

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3/4/11 5:51:14 PM

Sales Driver

7 Team-Building Must-Haves Employees can’t train themselves. But before you launch your store’s in-house training program, check out this primer on what it takes to get the most out of your sales team. By Cory Mosley

T

he coaching and development of sales staff always sounds like the right thing to do, but very rarely is it done consistently and, more importantly, properly. Many times, we assume the best person for the job is the one with a manager’s title. Unfortunately, that’s not always the case.

Take a recent conversation I had with a sales manager. He remarked to me that one of his salespeople was on thin ice because he wasn’t closing his customers. I asked about his store’s training program. “We don’t have a formal training program,” he responded, adding that he personally shadows his salespeople and that his experience in the real-estate business served as the only reference his team needed.

Apparently, poorly performing salespeople are supposed to miraculously get better at their jobs. I asked the manager if he could coach his salespeople. “I don’t have time,” he said, which I took to mean he didn’t know how.

See, according to Dr. John C. Hall and John Steuermol — innovators in the field of selection testing — there are seven critical components to becoming a great coach. Let’s examine each one and see if we can turn you into the coach your dealership and your team needs.

1

Be your own ally: The primary focus

here is to instill in your sales team a positive and optimistic outlook.

You want to keep them from playing mental games against each other and fostering negativity that impedes

performance. So, rather than starting another Saturday sales meeting by telling your staff how much they suck, think of a positive way to motivate them to victory.

2

Maximize your return on energy:

Coach your sales team to avoid common distractions and unproductive activities, such as coffee klatches, during high ROI times of the day. It

Top performers who really care about what they do want to know that they are crushing it, so track and monitor your salespeople regularly and encourage them along the way. is so easy to misuse your time when you work the car schedule, so be sure to provide your team with a game plan for winning the day.

3 4

ponents of your store’s sales message that add the most value.

6

Sharpen the saw: Although it’s sad to say, the idea of continuous learning among sales professionals is very rarely taken seriously. I’ve been in dealerships all over the country, including some of the largest dealership groups, and can only recall one that had a recommended reading list for ongoing improvement. That dealership also provided spiffs to encourage team members to read and advance their skills. It’s no wonder the store boasted the highest grosses in its area.

7

Keeping Score: Show me a sales-

person who doesn’t want to win, and I’ll show you one who isn’t making money or hitting their sales objectives. Top performers who really care about what they do want to know that they are crushing it, so track and monitor your salespeople regularly and encourage them along the way.

Prospect: This is a great opportunity

to share and exchange strategies on how to prospect both inside and outside the dealership.

Develop a compelling story: Help

your team develop sales approaches that speak to the needs of your store’s most common type of clients. All customers are not the same, so why should the sales approach be?

5

Become a master of communication:

The core focus here is to help your sales team communicate the brand and dealership’s message effectively.

Identify and reinforce particular com-

We have more technology and widgets at our disposal than ever before, but so does the competition.

That’s why your employees remain a critical factor in differentiating your store from your competitors, so be sure to utilize and develop that talent. Change your approach and see what happens. I promise you won’t be disappointed.

Cory Mosley is principal of Mosley Training LLC, a nationally recognized training provider focused on new-school techniques, products and services.

E-mail him at cory.mosley@bobit.com.

32 F&I and Showroom March 2011

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FIC11-83summit.indd 1

September 26-28, 2011 Las Vegas Hilton

www.IndustrySummit.com

I’m a Green Pea. I Don’t Know What “F&I” Stands For. I Have Never Seen a Red Flag.

If They Want to Pay Cash, That’s Fine With Me. I Do Enough E-mailing at Home.

I Think I Can Do Better.

I Want to Reach the

FIC11-83summit.indd FI0311salesdriver.indd 1 33

3/4/11 3:05:05 5:51:36 PM

Mad Marv

Know When to ‘Fold ’em’ Now that the ‘do more with less’ period is over, you might be fantasizing about greener pastures at some other store. Before you pull the trigger, here are a few questions you need to ask yourself. By Marv Eleazer

S

hould you go or should you stay? That’s a question some of us have had to ponder while walking our chosen career paths.

And if you’ve spent any amount of time in the car business, you know you’ll face insurmountable obstacles along the way. We all have maximum tolerance levels, so how you deal with those bumps in the road will determine whether it’s time to pack it up or stay the course.

As for me, I can’t imagine myself doing anything else. I love what I

ing into work turns your stomach, and the money you’re making isn’t worth the hassle of interacting with your coworkers or your boss.

That’s when you begin fantasizing about greener pastures. Kenny Rogers said it best: “You got to know when to hold ’em, know when to fold ’em.”

Nobody relishes the idea of changing jobs, but sometimes it seems inevitable. However, before you make your decision, be certain the problems you’re facing aren’t fixable. In

to end up in the same situation with your next job if you don’t. It’s also important that you don’t overreact to the situation you’re facing, and that you plot your course with great care.

And remember, a few months’ worth of bad turnovers or low finance penetration is an internal issue that can be corrected. I’m talking about far more difficult issues here, such as: ■ Dealers downwardly modifying your pay plan ■ Constant battles with co-managers ■ Verbal or sexual harassment

I love what I do. In my opinion, few professions can compare to the excitement and reward of working in an automobile dealership, especially the finance office.

The thrill of putting impossible deals together is a feeling I just can’t do without. do. In my opinion, few professions can compare to the excitement and reward of working in an automobile dealership, especially the finance office. The thrill of putting impossible deals together is a feeling I just can’t do without. I especially like that no two days are ever the same.

But even I know that working conditions can get complicated. It’s a harsh reality we all must face.

Sadly, the problems that drive us out of our jobs are usually rooted in our own egos.

You know how it goes: Everything is going along smoothly, sales are robust, grosses are great and your commission isn’t bad, either. Then it happens. Staffers start taking each other for granted and personal respect goes right out the window.

Tempers begin to flare, even over the tritest issues. Soon, you’re caught up in the melee. The thought of com-

fact, here are six questions you need to answer honestly before you start updating your résumé: ■ What is best for my long-term career?

■ What is best for those in my care?

■ What must I have from this job or employer to stay?

■ What will I absolutely not tolerate if I stay?

■ What will I lose if I leave?

■ What do I expect to gain if I stay?

I can’t answer these questions for you, and neither can anyone else.

You must analyze your own situation and weigh the answers carefully before proceeding. The answers are even more serious and complicated if you’ve been at your present store for a long time, so tread carefully and be honest with yourself.

It’s vital that you understand what’s motivating you to consider a job change, because you’re doomed

■ No resolution of internal problems that hurt your performance ■ Unacceptable market conditions that are impacting your pay ■ Increased work schedules with little time off ■ No F&I backup person, making vacation time nearly impossible ■ Being pressured to commit fraud There are times when you’ve gone the distance and can bear no more, leaving you to decide whether to “hold’em” or “fold’em.” But when you take the plunge — for better or worse — own that decision. Don’t look back and get caught in the “coulda-shouda-woulda.” The new job will have its ups and downs, but remember why you left and be the best you can be.

Marv Eleazer is the finance manager at Langdale Ford in Valdosta, Ga. E-mail him at marv.eleazer@bobit.com.

34 F&I and Showroom March 2011

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FIC11-83summit.indd 2

September 26-28, 2011 Las Vegas Hilton

www.IndustrySummit.com

I’m an Experienced Salesperson.

I Don’t Believe in Digital “Ups.” I Let the Finance Guy Worry About the Financing.

I Say Leaderboards Are for Golfers.

I Have Never Sold Two Cars to the Same Buyer.

I Think I Can Do Better.

I Want to Reach the

FIC11-83summit.indd FI0311madmarv.indd 35 2

3/4/11 3:05:14 5:49:26 PM

Legal

Spot Deliveries: Pitch the Bathwater, Not the Baby There still is room in auto retail for spot deliveries, but a balance between the needs of dealers and consumer advocates must be struck. By Tom Hudson

I

f done correctly, a spot delivery transaction can be a win-win situation for all involved. Being able to leave the dealership with a vehicle pending the assignment of the retail installment sales contract (RISC) to a finance source makes the dealer and the customer happy. The customer gets to enjoy his or her new ride while the dealer and the finance company confirm that the information the customer provided is complete and accurate.

Done incorrectly and/or unethically, a spot delivery deal can be viewed as a deceptive or abusive dealer practice by consumer advocates, state regulators and courts. The former have for years railed against spot deliveries. They refer to them as “yo-yo” deals, and believe dealers intentionally spot deliver cars to customers knowing they will be unable to assign their RISC without having them return to the store to recontract with new terms that are more detrimental. But when pressed for proof that these abuses occur frequently, they can offer little or no evidence.

Consumer advocates simply want spot deliveries outlawed. They pressed the issue before congressional committee hearings on bills that eventually led to the Dodd-Frank Act, and you can bet they’ll press the issue with the Bureau of Consumer Financial Protection (CFPB). When they do, they will point to stories like these: ■ A customer buys a spot-delivered car, only to be called back to the dealership two months later because the deal is being rescinded.

■ A customer trades in his car for a spot-delivered car. Three days later, he is told his RISC cannot be assigned.

He returns to the dealership only to

find that the car he traded in was sold.

He receives the trade-in’s wholesale value and, if he owed money on it, must repay the lienholder. Meanwhile, he’s walking, not driving.

■ A customer buys a spot-delivered car and signs a RISC. She does not sign any sort of rescission or “unwind” agreement, and no such language is contained in the RISC. Notwithstanding the absence of any contractual right to require the customer to return the car, the dealer, unable to assign the RISC, demands that the customer return the car and recontract. When the customer refuses, the dealer repossesses the car despite the buyer not being in default.

I have no doubt that these sorts of situations happen occasionally. Sometimes they happen because the dealer has never had the spot delivery process vetted by an attorney. Sometimes they happen because of mistakes. Sometimes it happens out of simple abuse.

When the new CFPB addresses spot deliveries, I hope it doesn’t throw the baby out with the bathwater. If President Obama were to appoint me as the bureau’s director, I would first tell my staff to research how often abuse occurs. Only if the staff determined that abusive practices were occurring in significant numbers would I consider regulating the practice.

If evidence showed that dealers were behaving badly when they engaged in spot deliveries, I’d have the staff address the practices they believed to be harmful to consumers, not ban spot deliveries altogether.

Additionally, regulations would be based on the “best practices” of dealers who spot deliver on a daily basis.

They might, for instance: ■ Allow for mutual rescission until the contract is assigned; ■ Require a dealer to keep the customer’s trade-in until the customer’s RISC is assigned; ■ Provide a reasonable period (say, 10 business days) for the assignment of the RISC, beyond which the deal could not be unwound; ■ Prohibit a dealer from imposing any fees other than charges for excess wear and use, or damage to the car; ■ Prohibit a dealer from requiring a customer to re-contract if the RISC could not be assigned; ■ Prohibit any unwinding of a deal unless the customer has agreed to it in writing. (This last one, in my view, isn’t necessary since a dealer generally has no unwind rights absent the customer’s written agreement, but the prohibition might still serve to educate dealers and consumers alike.)

No doubt there are other protections and prohibitions my staff might consider. As long as they are based on real evidence and dealer best practices, they might well be acceptable. At the end of the day, though, spot deliveries have their uses, and, if done correctly, can benefit dealers and customers alike. Throw out the bathwater. Keep the baby.

Thomas B. Hudson Esq. is a partner in the law firm of Hudson Cook LLP and author of several books. For more on his books, visit www.CounselorLibrary. com. ©CounselorLibrary.com 2011, all rights reserved. Based on an article from Spot Delivery. Single print publication rights only, to F&I and Showroom magazine. HC# 4843-1317-8120 (2/11).

36 F&I and Showroom March 2011

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FIC11-83summit.indd 7

September 26-28, 2011 Las Vegas Hilton

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The F&I Conference, Vehicle Service Contract Administrators Conference and the nation’s only Agent Symposium will unite on September 26-28 at the Las Vegas Hilton to become one comprehensive event: Industry Summit 2011.

We all know that success in automotive retail requires close contact between dealers and the finance sources, agents, trainers and product providers that serve as their partners.

Combining three powerful conferences to form Industry Summit 2011 represents a crucial step toward reaching that goal.

It’s a new era. Join us September 26–28 at the Las Vegas Hilton for the first-ever Industry Summit 2011!

To learn more, call 800-576-8788 or visit www.IndustrySummit.com.

FIC11-83summit.indd FI0311legal.indd 37 7

3/4/11 3:05:18 5:47:58 PM

AT BOBIT BUSINESS MEDIA, WE WE’RE RE KEEPIN KEEPING THINGS

You can feel confident that within our magazines, websites and trade shows, Bobit Business Media is doing our share to maintain a “green” working environment.

As individuals and as a company, we are dedicated to maintaining green initiatives and strive to be good citizens of this planet. Finding new and innovative ways to reduce our carbon footprint is always a priority for Bobit Business Media.

Here H ere a are re a ffew ew o off tthe he w ways ays p g GRE REE EN: we’re keeping GREEN: • RECYCLED PAPER PROGRAM: 5 5,000 ,0 000 lbs lbs per month

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3/4/11 5:44:50 2/17/11 4:57:46 PM PM

Bottomliners Dealer Impact Launches Mobile Video App

Carfax Expands Dealer Marketing Support

Dealer Impact Systems has launched a new mobile application that allows dealers to create custom walkaround videos from their smart phones. Using the company’s Video Inventory Mobile Manager, dealers can preview, approve and upload videos to their dealership or social media Websites from their iPhone or Android-based mobile device.

The free app can be downloaded from the iTunes App Store and the Android Market. For more information, visit www.dealerimpact.com.

Carfax is now providing subscribing dealers with access to an expanded set of free marketing materials, including vehicle and door stickers featuring the Car Fox, and media assets related to the company’s “Show Me the Carfax” campaign. Dealers signed up for the Unlimited Carfax Report Program also can reserve a variety of Car Fox inflatables and a full-size Car Fox suit for special events. Subscribing dealers can contact their Carfax account manager for more information.

DealerTrack Tool Enables Pre-Qualification DealerTrack Inc. plans to release a new tool that will allow car buyers to securely submit personal and confidential credit application data through a dealership’s Website.

Using CreditOnline, dealers can prequalify customers, convert Website leads into finance customers and route select applications to lenders for a credit review and decision. The new solution is expected to launch by the end of the first quarter and will be packaged with DealerTrack’s subscription-based Compliance Solution. For more information, visit www.dealertrack.com.

What suits you?

ADP Launches Deal Review Compliance Tool The Dealer Services Group of Automatic Data Processing Inc. has launched Deal Review, a new tool designed to help dealerships track, monitor and report their compliance efforts. The tool can check the status and completion of various compliance tasks before the sale of a vehicle is finalized. The tool’s reporting feature is designed to review store performance and identify any compliance gaps. For more information, visit www.adp dealerservices.com/dealreview.

Product Feature eBay Motors Launches iPhone App eBay Inc. showcased its eBay Motors iPhone app at the 2011 NADA Convention and Expo. xpo.

The app is designed to allow dealers to display inventory and communicate in real time with prospective buyers.

Features targeted to car buyers include the ability to create multiple vehicle profiles, view

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vehicle history reports, search for vehicles and parts, and view photo slideshows of vehicles phot currently for sale on eBay. cu IIn addition, the app has a VIN scanning function tthat allows users to look up a vehicle’s information. u The new app will be available bl ffor ffree from the iTunes store in the first half of 2011.

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March 2011 F&I and Showroom 39

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Ad Index Company

Phone

Web

Allstate Dealer Services

888-244-1935

allstatedealerservices.com/ads008

17

Association of Finance & Insurance Professionals (AFIP)

817-428-2434

afip.com

40

American Financial & Automotive Services

800-967-3633

afasinc.com

C4

AUL Corp.

800-826-3207

aulcorp.com

15

800-345-0191, ext. 720

cnanational.com

C2

CARLAW Auto Dealer Suite

877-464-8326

counselorlibrary.com

42

Dealerlink

800-890-8850

dealerlink.us

30

Friendly Finance Corp.

800-872-2877

friendlyfinancecorp.com

29

GSFS

713-580-3023

gsfsgroup.com

27

â&#x20AC;˘

industrysummit.com

CNA National

Industry Summit Innovative Aftermarket Systems (IAS)

Page

33, 35, 37

800-346-6469, ext. 8989

smartdealerproducts.com

3, 43

NAC (National Auto Care Corp.)

800-548-1875

nacsolution.com

7

National Automotive Experts

800-810-8859

nationalautomotiveexperts.com

9

800-331-3780, ext. 7386

orias.com

31

Protective

800-794-5491

protectiveassetprotection.com

5

Reahard & Associates Inc.

866-REAHARD

go-reahard.com

1

Resource Automotive

800-527-3448

resourceautomotive.com

22-23

Ristken Software Services

800-368-9680

ristken.com

C3

United Car Care

800-571-6412

unitedcarcare.com

39, 42

â&#x20AC;˘

veteranstrainingcorp.com

41

Warrantech

800-833-8801

wtcookie.com

11

Wells Fargo Dealer Services

888-937-9997

wellsfargodealerservices.com

21

Old Republic Insured Automotive Services Inc.

Veterans Training Corp.

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Industry Trends

Deconstructing the Internet Shopper We know car buyers love the Internet, but what sites drive their buying intentions?

A new study discovered that today’s consumer is driven by research, not brand.

T

he Internet has definitely become a key research tool for car shoppers, but how good is it at influencing a vehicle purchase?

R.L. Polk and AutoTrader.com sought to answer that question and more through a study of more than 4,000 new- and used-vehicle buyers.

Conducted between September and October 2010, “The Automotive Buying Influence Study” revealed details about how consumers use the Internet when shopping for vehicles.

The study concluded that dealers still have room to improve their Internet marketing strategies.

Internet Wields Influence

Not surprisingly, the study found that the Internet is the research medium consumers turned to most when shopping for a vehicle. In fact, more than 71 percent of respondents said they use the Internet while shopping for new and used vehicles, more than double the rate of any other information sources.

TV, radio, direct mail and magazine ads represented the second most influential sources for car-buying information. Ninety-seven percent of respondents indicated that social media sites such as Facebook had little influence on their final purchasing decisions.

Shoppers Rely on Third-Party Sites

New-vehicle buyers who responded to the survey spent an average of 19 hours shopping for a vehicle, about an hour more than used-vehicle buyers. Both groups spent 60 percent of that time shopping online, with third-

party Websites such as Edmunds. com — rather than dealer and manufacturer sites — getting the bulk of their attention.

New-vehicle buyers spent 3.5 hours on third-party Websites, while used-vehicle buyers spent seven hours on such sites. The study also showed that new-vehicle buyers tend to distribute their time more evenly

reason for establishing an online presence, but the study’s findings indicate that dealers need to better understand why customers search for their sites.

“Give shoppers what they want — detailed vehicle information, accurate pricing, relevant content, ability to compare vehicles — and promote your inventory and brand throughout

How New-Car Buyers Spend Their Time Online Research pricing

43%

Compare models across makes

45%

View exterior/interior photos Locate a specific vehicle to purchase Read car reviews Research reliability/ safety Evaluate trade-in value Research offers, rebates, incentives Locate a dealer Request price from a dealer

across third-party, OEM and dealer Websites.

Search engines — especially Google — represent key tools in the shopping process, the study showed.

Dealer Websites, address and phone number information ranked among the top searches. Manufacturer Websites also were highly sought out by shoppers.

Beyond Brand Visibility

Aside from looking at how consumers use the Internet to shop vehicles, the study also provided implications for how dealers should engage consumers online. Visibility is the main

37% 26% 33% 28% 24% 42% 22% 19%

the entire shopping process,” noted the study’s researchers.

Dealers also will need to do a better job with their search engine optimization strategies to drive traffic to their Websites. This finding speaks to the importance of dealers marketing their sites on third-party Websites.

In addition, the study found that seven out of 10 shoppers don’t establish contact with a dealership before making a visit. This means dealers need to look beyond the number of phone calls and e-mails they receive and develop other methods to track which advertising sources drive walk-in traffic.

44 F&I and Showroom March 2011

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