F&I and Showroom July 2011 by Kelly Bracken

LEGAL: CFPB’S IDENTIT Y CRISIS | MAD MARV: PAY PL ANS REDUX | SALES: LIFE OUT SIDE THE LOT

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Contents

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

July 2011 Volume 14, Issue 7

Features Dealer Profile

16 The Hybrid Dealer Eliminating the business development center could be the death knell for any dealership in today’s Internet age, but not for Honda of Tenafly. In fact, it’s had the opposite effect. Auto Finance

20 First Quarter Delivers Optimistic Outlook Delinquencies and dollar volume of at-risk loans continued to fall in the first quarter, and auto finance sources responded, with shares of loans to credit-challenged buyers increasing by 11.1 percent. Executive Q&A

28 Under the Radar

30 A New Lease on Profits F&I trainer breaks down a process for making leasing a win-win for the finance office and the dealership. Finance and Insurance

34 Take a Walk

A tour of the service and parts department can be all it takes to move the needle on service contract and prepaid maintenance sales.

Departments 6 Letters 8 Editorial 10 Developments 36 Sales Driver 37 Mad Marv 38 Legal 40 Bottomliners 45 Ad Index 48 Industry Trends

16 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 90503-1640. 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 June 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 Questions to Break Objections I really enjoyed your explanation of how the simple things are the most important to master in the F&I department (“Being Brilliant at the Basics,” June 2009). In the article, you mentioned 30 effective questions every F&I manager should ask of their customers. Can you give some examples of the types of questions we should be asking?

TO RICK MCCORMICK:

Yas Ali Financial Services Manager Richmond Hill Mitsubishi Richmond Hill, Ontario, Canada

Yas, the goal when asking questions is to gather information that will create you-told-me-earlier opportunities. To do that, you need to figure out what objections you think you’ll face while working with a customer. Then figure out what information you’ll need to overcome that objection and develop questions you can ask your customers that will extract that information. Remember to use open-ended questions like: “What brought you into buy a car today?” and “Who will be driving the car?” or “How many miles a year do you drive?” Every answer they give creates a you-told-me-earlier opportunity. Developing a list of questions also will ensure that you have good opportunities to help a customer make good buying decisions. Remember that good F&I managers determine what to “say” next while great F&I managers determine what to “ask” next. I also recommend reading “Secrets of Question Based Selling” by Tom Freese. It’s not about car sales in particular, but it’s a great resource for using questions to sell effectively. Keep asking those questions! — Rick McCormick

Getting Compliance Training I read your May article (“5 Steps to Compliance”) and, in Step Four, you mention that some

TO JIM RADOGNA:

F&I training programs “cost less per employee than a box of business cards.” Can you please point me in the right direction? Karen Spady Shaffer Ford Sales Inc. Oakland, Md.

Karen, here are some thoughts you might want to keep in mind when reviewing training programs. Let me start by saying that I have become a big fan of online training because of the costs and logistics involved in in-person training. E-learning also is typically more affordable than training seminars since there are no travel expenses involved. Online training also tends to be far more convenient, as staff can train according to their own schedules and at their own pace. That means they won’t have to juggle handling customers with training, and you can train new hires without having to wait for the next scheduled seminar. Most online training providers also allow senior management to monitor results with built-in progress tracking. A good online training program also provides a level of protection to the dealership, as most programs will require staff members to pass a certification test and sign a “code of ethics” to ensure ongoing compliance. Best of luck! — Jim Radogna

Keep ‘em Coming TO MAD MARV: Hi Marv, I just wanted to say that I read your column every month and I enjoy them very much. Your April article on the hybrid manager was one of my favorites. I experienced that combined sales/F&I manager concept at my previous employer’s store. Needless to say, it was a disaster. I won’t go into detail about that failed experiment, but I did want to thank you for your articles. They’re excellent and I have learned a lot from them. Keep them coming.

Paul Hays Finance Director Golden Circle Ford Jackson, 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 Assistant Editor Jennifer Washington 310-533-2496 jennifer.washington@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.

6 F&I and Showroom July 2011

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Letter From the Editor

Rime of the Ancient Dealer Still rattled from the NAF Association’s latest conference, the editor shares one speaker’s unsettling vision of the dealership of the future. By Gregory Arroyo

nother show, another group of lenders talking about how close they were to being swallowed up by the credit crisis three years ago. The more I hear these stories, the more I know auto finance is back. But that’s not what I want to talk about this month. I want to tell you where I fear we may be headed. Before I do, let me run through a few insights I picked up at the National Auto Finance Association’s 15th annual conference. First, lenders have finally realized that F&I managers are fairweather fans. If they’re not buying, you’ll find someone who is. I also got the sense that finance sources are no longer looking to grow by moving outside of their comfort zones. Instead, they’re looking to pick up market share by adding more dealers with the types of customers they like. That’s good news if you have a solid lender spread, but I’m not sure the “I’ll-send-you-fourgood-deals-if-you-buy-this-one” tactic is going to work anymore. The capital markets also are doing well, which means there’s money to lend. What’s driving the auto segment of that market, said Standard & Poor’s Amy Martin, is prime and subprime auto. Unfortunately, there was no mention of nearprime and nonprime, and I know that’s a problem out there. Now for the scary part. Several conference presenters speculated where this margin-compressed, Internet-driven market is headed. Are we at the beginning stages of a recovery or in a race to the bottom? According to one speaker, the pain we’ve felt

the last three years isn’t over, and you might not recognize what we’re left with when it is. The speaker was Dale Pollak, founder of vAuto. The company, which he recently sold to AutoTrader, designed a used-vehicle management system that allows dealers to manage their inventory like an investment portfolio. The philosophy upon which this system was built is one that Pollak believes will eventually be the reality of the new-vehicle market. He opened his remarks by saying that he’s feeling a little vindicated these days. He had been telling anyone who would listen that the industry was in for a major transformation. When times were good, the industry grew too fat and lazy to explore exactly how technology could change the way dealers do business. “For my message, a wonderful thing happened,” he said. “We saw the collapse of the market in 2008.” If you’re reading this, then you probably belong to a dealership that spent the last three years cutting variable, fixed and semi-fixed costs to weather that economic storm. But it’s not enough, is it? Costs are rising, new costs are emerging and the Internet continues to cut into your margins. That’s a byproduct of what Pollak calls an efficient market. Such markets are characterized by pricing at the margins and more efficient operators. Those who don’t get in line with this movement will be lost, Pollak said, but those who do will enjoy higher margins in the future. See, the vAuto software bucks the idea that the used market still consists of two segments: wholesale and re-

tail. Pollak believes there is only one market, and that market is driven by what happens at retail. That’s why he believes a reliance on historical data, instinct, pricing guides, auction values and appraisals no longer works. Instead, he thinks everything should start with an average retail price. Once you know that, you can subtract your profit objective, reconditioning, transportation and auction fees to come up with a more dialed-in acquisition cost. It’s this kind of granular look at pricing that will continue to cut into margins and drive down profits, he said. In Pollak’s vision of the future, dealers will no longer be able to operate big, “Main Street” storefronts. Instead, we will see acre-and-a-half lots located off the beaten path. Inhouse service departments will be replaced by offsite facilities shared by multiple dealerships. The familyowned, single-point store, he added, will go the way of the family farm. See, Pollak believes that the albatross hanging around the dealer’s neck is the soil on which his or her dealership sits. Margins simply don’t support it, and no amount of profit made in service or F&I will help. Then there’s the Internet shopper, who is making it so those prime locations are no longer required. Problem is, dealers simply can’t extract themselves from their property, leaving them exposed to interest rates. I hope you’re angry after reading that. I don’t totally subscribe to what Pollak says, but I’m hoping that his message makes you think. We need to change, folks. Will we be like Amazon.com in the future? I don’t know about that, but change is needed.

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Developments FTC Finds Auto Dealers Compliant With Consumer Protection Rule AUTO RETAILERS CAME OUT ON TOP

in a compliance review conducted by the Federal Trade Commission (FTC), the agency announced in May. Last November, the FTC began investigating nearly 50 auto dealers in 45 states and two large online operations to determine the industry’s compliance with its “Holder in Due Course” rule. The agency closed its investigation after finding broad compliance among the dealers it reviewed. revi The rule in question preserves consumers’ p rrights to raise claims and defenses against a purchasers of consumer p credit contracts. If a dealer cre were to engage in fraud or made misrepresentations in the course of selling a car on credit, a consumer could raise the dealer’s conduct as a defense to a lender’s demand for payments. The rule requires dealers to include in their credit contracts a notice that lenders who buy the contracts are subject to the claims and defenses consumers may assert against dealers. During the investigation, dealers were asked to provide copies of consumer credit contracts executed after Oct. 1, 2009. The FTC’s staffers then reviewed the contracts to determine the industry’s level of compliance with the rule. The FTC took the opportunity to remind dealers that their obligations under the rule will expand in the near future due to the DoddFrank Act. The rule currently does not require dealers to include the notice in credit contracts exceeding $25,000 in the amount financed, but that will change on July 21 when the Dodd-Frank Act goes into effect. At that point, the bar will be raised to $50,000. 10 F&I and Showroom July 2011

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Jefferson City, Mo.

Missouri

Service Contract Bill

Passes Legislature

n the wake of the US Fidelis debacle, the Missouri General Assembly has sent a new bill to Gov. Jay Nixon’s office that aims to toughen the state’s regulation of direct-to-consumer sales. US Fidelis, which left thousands of customers in the lurch when it filed for a high-profile bankruptcy last year, was based in St. Louis, a city and state that remains home to many of these directto-consumer sellers of vehicle service contracts. House bill 132, sponsored by Sen. Scott Rupp (R-Wentzville), passed the state’s legislature on May 16 and could be signed into law by Gov. Nixon by the end of summer. It aims to curb the recent surge of telemarketing companies using deceptive sales techniques to sell service contracts to customers. “This was the No. 1 [issue] generating complaints to the Attorney General’s office and the Better Business Bureau in our area,” Rupp said of companies who engaged in tactics similar to those used by US Fidelis. Charged with false and deceptive business practices last year, the company was reported to have been using manufacturers’ names and logos without permission for marketing purposes, as well as failing to pay claims for customers in all 50 states. In addition,

company founders Darain and Cory Atkinson were indicted in June on multiple felony charges. “From maybe a 12- to 15mile radius from where US Fidelis was located, there were probably a dozen companies that were offshoots of that,” Rupp said. “A lot of US Fidelis’ upper management saw how profitable the organization could be, so you saw a lot of them leave and start their own companies.” Some of the main provisions in the bill include a licensure requirement for VSC telemarketers, delivery of contract terms and conditions prior to a sale, expansion of the definition of a service contract to include additive warranties, and a clarification on a consumer’s cancellation rights. “We’re hopeful that this bill will make people think twice before continuing with the practices that have occurred out there over the last couple of years,” said Stephen McDaniel, assistant executive director of the Service Contract Industry Council (SCIC). The organization, working in conjunction with the Missouri Department of Insurance, supports the bill and participated in Attorney General Chris Koster’s Auto Service Contract Task Force, which drafted the legislation. MISSOURI STATE CAPITOL PHOTO BY KTRIMBLE

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Developments

TD Auto Finance Open for Business

ith executives and employees on hand at the former Detroit-area home of Chrysler Financial, TD Auto Finance announced on June 10 that it’s open for business. The new company was formed after the April acquisition of Chrysler Financial by Toronto-based TD Bank Group, which added its existing portfolio business to the former captive’s portfolio. “It’s great to be here in Chrysler Financial’s hometown of Farmington Hills to announce our exciting new TD Auto Finance brand,

which represents both the financial stability and renowned customer service of TD and the deep experience and partnerships of the former Chrysler Financial,” said Thomas F. Gilman, the company’s president and CEO. Sources close to the

FRB Temporarily Exempts Dealers From Certain Dodd-Frank Requirements THE FEDERAL RESERVE

Board (FRB) announced June 20 that auto dealers are temporarily not required to comply with certain data collection requirements in the Dodd-Frank Act. Initially, Dodd-Frank amended the Equal Credit Opportunity Act (ECOA) to require creditors to collect and report information from credit applications made by women- or minorityowned businesses. The proposed rule falls under the ECOA, also known as Reg. B, and will allow dealers to remain exempt until the final regulations are issued.

Although the Consumer Financial Protection Bureau (CFPB) will have the authority to implement this provision of the ECOA, the FRB will maintain the same authority for certain dealers. Creditors are not obligated to comply with the requirements until the CFPB issues detailed rules to implement the law, so the FRB issued a proposed rule to clarify that its approach also applies to dealers that are subject to the board’s jurisdiction. Comments from the public on the proposed rule are open until July 29.

TD Auto Finance executives Tracy Hackman and Tom Gilman unveiled the new lending unit’s logo to a crowd of auto dealers, civic officials and staff.

company said TD Auto Finance has signed 6,200 U.S. dealers since December. Half of those are new relationships for the for-

mer captive and about 22 percent are Chrysler dealers. The focus of the initial lending program will be on prime buyers, with no specific timeline for adding subprime, nonprime, leasing or floorplan financing programs. “TD Auto Finance is off to a strong start, with thousands of new dealers signed up in Canada and the United States since December and many more poised to come aboard,” Gilman said. “Dealer and customer feedback for our products and programs has already been overwhelmingly positive.”

Kbb.com Study: Consumers Not Panicking Over Gas Prices

new Kelley Blue Book Market Intelligence survey indicates that new- and used-car shoppers have drastically changed their minds about gas prices in the near term. Fifty percent of the 467 vehicle shoppers surveyed in May said they think gas prices will either stay the same or fall. Additionally, the number of respondents who said gas prices have changed their mind about vehicles they are considering decreased from 35 percent in April to 30 percent in May. Consumers also are feeling better about their current economic situation, according to the study.

Concern about qualifying for an auto loan decreased from 27 percent in January to 17 percent in May. The study also showed a 10 percent decrease in the number of respondents who said they are delaying a vehicle purchase. If prices remain around $3.27 per gallon, car shoppers likely will not make major changes in vehicle consideration criteria, according to the study. However, at the $4 per gallon price point, 66 percent of consumers said their vehicle consideration would be impacted. At $5 per gallon, 90 percent of respondents said their vehicle consideration would be affected.

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Our loyalty to dealers has never wavered. And it never will. Chase knows a thing or two about commitment.

Even in the toughest of times, we’ve been the leader our dealers can trust. We help them reach their goals and succeed, with expert advice and the right combination of ﬁnancial products. We’ve proudly served the automotive industry nationally for more than 60 consecutive years— we are a leader you can rely on.

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Developments Flagship Buying Below-Prime Portfolios

program nationwide for the remainder of 2011.

GM Finance to Offer Floorplan Financing This Year

FLAGSHIP ACCEPTANCE

rolled out a national program to purchase existing nonprime and subprime auto loan portfolios from auto dealers and finance companies. The Chadds Ford, Pa.based finance company’s program will target nonprime and subprime portfolios worth $5 million to $250 million and above. Additionally, accounts with sufficient pay histories will not require minimum FICO or equivalent scores, according to the company.

Nonprime Source Opens in California, Texas CARFINANCE CAPITAL LLC,

a new nonprime auto

GENERAL MOTORS CO.

Hyundai, Partners Launch Accessory Sales Programs HYUNDAI HAS LAUNCHED

an in-store accessory sales program that will be facilitated by MOBIS Parts America and powered by the Insignia Group’s Webbased accessory sales tools. Through Insignia, finance source founded by former Triad Financial executives and headquartered in Irvine, Calif., has begun to sign dealers in California and Texas. Led by Jim Landy, Triad’s founder and CEO from 1989 to 2005, the

Hyundai dealers will be trained on accessory sales and order management and have access to performance reporting and tracking tools, as well as a customer interactive 360-degree vehicle configurator. company launched on the West Coast in May and entered the Texas market in June. Company officials said the new finance source, which is focused on a FICO score range of 550 to 670, will continue to roll out its

said it plans to launch a floorplan financing pilot program through its captive lender, GM Financial, before the year is out. The program is part of GM’s efforts to re-create a fullservice captive finance company. Dan Berce, the finance unit’s president and CEO, said GM aims to provide 10 to 20 percent of the floorplan loans to its dealers “within a year or two.” Most of that financing is now provided by the governmentcontrolled Ally Financial Inc., which handled about 82 percent of GM dealer floorplan loans in 2010’s fourth quarter.

Moves and Hires Ally Financial announced that William Muir, president and head of global automotive services operations, has postponed his previously announced retirement and will remain with the company indefinitely. The company also announced several shifts to its executive management team to help with the company’s transformation, including its initial public offerings. The company named Jeffrey Brown, Ally Financial’s former corporate treasurer, to the newly created

position of senior executive vice president of finance and corporate planning. Brown now reports to Michael Carpenter, Ally’s CEO. Additionally, James Mackey was named Ally’s chief financial officer. He will report to Jeffrey Brown and lead Ally’s financial planning and analysis, accounting, investor relations and business planning initiatives. Ally also shifted structured funding executive Christopher Halmy over to the position of corporate treasurer. He also will report to

Brown and will be responsible for global treasury activities. Sergio Marchionne, chief executive of both Chrysler Group LLC and Fiat SpA, has tapped Reid Bigland to head the OEM’s sales strategy, dealer relations and operations, order facilities, incentives and field operations in both the United States and Canada. He also will serve as president and CEO of the Dodge brand, and will continue to hold his title as president and CEO of Chrysler Canada.

14 F&I and Showroom July 2011

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7/1/11 8:45:10 1:49:00 AM PM 6/14/11

Dealer Profile

he easy part is to sell you the car,” Donald Dwan, general sales manager of Honda of Tenafly, tells the camera. “The big job is, after we do that, how do we take care of you?” Asking that simple question has helped to create the customer-first culture at the 79-year-old New Jersey dealership. Maintaining

Dorf says. “That meant we had the least experienced people taking calls. Something just didn’t feel right.” The Costs of Technology

The D&C name has existed in New Jersey’s Bergen County — one of the highest per-capita income counties in the United States — since 1932. That’s when the family opened

The

Hybrid Dealer Eliminating the business development center could be the death knell for any dealership in today’s Internet age, but not for Honda of Tenafly. In fact, it’s had the opposite effect. By Gregory Arroyo

that image in today’s Internet age, however, has proven to be far more complicated. The two-minute video Dwan appears in is part of a new ad campaign the dealership rolled out in late June to announce that the operation was removing the “D&C” from “D&C Honda of Tenafly.” That change will help to distinguish the dealership from one of its biggest competitors, a nearby Honda store operated by DCH Auto Group. That low-tech change, however, is nothing compared to the many changes Tenafly’s third-generation owners, Norman Dorf and brother Jeffrey, have made to compete in the digital realm. Two years ago, the dealership decided to eliminate its business development center. Veteran salespeople now handle Internet leads and work the phones. “We were spending a fortune on manning a decent-sized Internet department and we were going through people all the time,” Norman 16 F&I and Showroom July 2011

FI0711profile.indd 16

a Chevrolet dealership at its County Road location. In 1971, it became the state’s first Honda store. The store, which sells, on average, 200 to 250 vehicles per month, was on track for one of its best years when the credit markets froze after Lehman Brothers filed for bankruptcy in September 2008. Things could have been worse for the dealership if not for the support of the affluent community it serves. The following year wasn’t much better, but not any worse. “Like everyone else, we made some adjustments with staffing and getting our expense structure right when the downturn happened,” Dorf says. Online sales have allowed Dorf’s family-owned operation, tucked away in one corner of town, to compete with the area’s “800-pound gorilla,” the 27-store DCH Auto Group. The group’s biggest Honda store is located a mere eight miles away, but that didn’t stop Honda of Tenafly from recording five record sales months last

year. Still, that doesn’t mean Dorf is a big fan of the Internet. “The one thing I don’t like about the Internet is that it nickel and dimes you,” he says. “I mean, we’re spending a fortune between all the different technology companies. And now I need to pay someone to handle my Facebook page?” Those rising costs were the primary reason Jeffrey Dorf decided to listen in on a few calls between customers and BDC operators. He was not impressed. “That’s when we said, ‘Forget it,’” he recalls. “There had to be another way, so we just got rid of it.” Rotate and Reset

Arthur McCracken is Honda of Tenafly’s Internet sales manager. He oversaw the creation of the dealership’s BDC three years ago and he was initially reluctant to disband it. He knew that getting the sales team to handle extra duties would be tough to accomplish. PHOTOS BY DAVID TENG

7/1/11 11:42:20 AM

a connection with over the phone wasn’t the person that greeted them when they arrived at the dealership. The Dorf brothers’ bold decision, executed in mid-2009, solved many of those issues. McCracken operated as a one-man department for the first 30 days after the change, and he quickly identified the more techsavvy salespeople to help him handle

Driver” columnist, with him every step of the way. Mosley had worked with the dealership when it established its BDC and was instrumental in formulating the strategy for the dealership’s new direction. What McCracken liked about Mosley was the way he meshed his philosophies with the dealership’s culture. “When I was going to take over the

leads. That continued until the summer, when the rest of the sales team began to realize they would have to pick up some new skills to get a piece of the action. “Not every salesperson was handling leads early on,” McCracken says. “But I think we started to turn the corner by the summer. Some of those little battles going on when we had the BDC started to cease, and everybody kind of got it.” By the time it was eliminated, McCracken’s former department accounted for 18 percent of the dealership’s production. Today, the sales team is hovering between 22 and 24 percent. The goal, says McCracken, is to be at 25 percent. The sales staffers also are converting 10 percent of the leads they get, and McCracken has his sights on 15 percent.

BDC, I went to every seminar, every trainer I could, but the concepts all seemed the same,” McCracken says. “No one was able to say, ‘Let me learn what you guys are, what makes you different, and then let me put together a strategy that matches and allows you to accomplish what you want to do the way you want to.’ And that’s what Cory did.” Mosley started by training the salespeople to handle leads. That meant reprogramming them to understand that the sale isn’t over if the customer doesn’t buy within 72 hours, or even after 30 days. He also had to familiarize the staff with sites like TrueCar.com. His theory is that dealerships can retain control of a deal without being confrontational if they know what information customers are arming themselves with. “You need to know exactly what the consumer is seeing if you want to protect gross profit and regain control,” says Mosley. “People think ‘control’ is a bad word, but it’s about leading.”

The hybrid sales department that Arthur McCracken, Internet manager, Norman Dorf, owner, and sales strategist Cory Mosley constructed more than a year ago is already converting 10 percent of the dealership’s leads. The goal now is to get to 15 percent.

“It was a necessary move, overall, because what we were doing definitely wasn’t working — especially financially,” he says. “But I wasn’t sure the people downstairs could do it.” The people downstairs are the dealership’s 11-person sales team; two of whom have been with the store for more than 20 years. McCracken’s statement isn’t a knock on their talents as salespeople; in fact, he knew their experience was the one thing he had going for him. But to make things work, he knew they’d have to pick up some new skills. McCracken is quick to admit that his BDC was fragmented before it was dissolved. Turnover was high, and training new people was always a problem. There also was a deep divide between the operators and the sales staff. Salespeople felt the way leads were handed out was unfair and that BDC staffers were poaching some of their longtime customers. Customers didn’t like it either. In many cases, the person they made

Call in the Strategist

McCracken didn’t go it alone. He had sales strategist and trainer Cory Mosley, the magazine’s “Sales

July 2011 F&I and Showroom 17

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Dealer Profile One term Mosley added to the dealership’s lexicon was “price consultations,” which means the dealership will use all its resources to help the customer make the best car-buying decision. It’s a simple twist that customers seem to appreciate. “A lot of times, it’s the language you use and how it’s delivered,” says McCracken. “Some guys use it and some don’t. For guys that don’t have the gift of gab, it makes a difference in how the customer perceives what’s going on.” Mosley also trained the sales team to mine the dealership’s database and rethink their direct-mail campaigns. He taught them that mailers don’t have to be about selling. In fact, he says, sending a survey can be even more beneficial. They allow customers to rate their experiences and help dealers identify holes in the process. Filling the Gaps

The work McCracken put forth to create Honda of Tenafly’s BDC wasn’t all in vain. When the salespeople came online, having advanced systems in place allowed management to identify several procedural gaps that additional technology could fill. The first new solution was installed by Sunnyvale, Calif.-based ResponseLogix Inc., which Mosley recommended. The company’s lead-management experts equipped the dealership with software that automates responses to price-quote requests. In fact, customers can receive multiple price quotes within 10 minutes, the baseline Mosley set for the store. Mosley also wanted to optimize the dealership’s merchandising strategy, which meant working closely with the store’s Website provider, San Diego-based Autofusion Corp. “It was about putting as many mousetraps in place as we could,” Mosley says. “I just wanted the Website to give customers every reason to buy from the dealership.” Site visitors are quickly engaged by a chat feature provided by ActivEngage Inc. Todd Smith, CEO of the Orlando, Fla.-based company, once

At 79, Sanford Dorf (center), flanked by sons Jeffrey and Norman, still comes to the dealership everyday. The family leaned heavily on Arthur McCracken and Cory Mosley to map out a plan to eliminate the dealership’s BDC.

managed Dorf’s Chevrolet store, so he knew exactly what the challenges were and how his company could help. The software gives customers information about dealership specials and store hours, and can even connect them to a finance manager. “Here’s a dealer not located on a main highway, doesn’t have a 40acre facility, yet is highly competitive,” Smith says. “And that’s because they’re good at connecting with their

“Everyone in the dealership has to be ready to handle e-mails, texts or whatever medium our customers are using, and that goes for service and sales.” — Jeffrey Dorf local audience and because they know that success goes beyond the sale.” Weaving everything together was DealerSocket’s CRM offering. McCracken was on the phone with the company at least once or twice a day during those first few months to get the system to mesh with the dealership’s process and the sales team’s skill set. “Ultimately, the CRM is what connects all these dots and maintains a history of all those dots,” he says. “And they wove it all together, which was critical to getting salespeople onboard with everything.” The dealership’s hybrid sales department is still a work in progress, and Jeffrey Dorf says he and his

brother are always on the lookout for more effective solutions. He is quick to point out that the decision he and his brother made may not work for everyone or in every market. However, he believes that the connection between reaching more customers and selling more cars is a universal truth. “Everyone in the dealership has to be ready to handle e-mails, texts or whatever medium our customers are using,” he says, “and that goes for service and sales.” Things are smoothing out for McCracken and his hybrid team. In fact, he’s already moving on to several new projects, such as a new series of walkaround videos the dealership is creating for its online marketing efforts. After that, he’ll begin integrating the hybrid Internet processes he created for the sales department into the service area. “When the BDC didn’t quite work out, that could have been my demise right there,” McCracken says. “But the owners stuck with me and I appreciate that.” Mosley also is amazed at what Honda of Tenafly was able to accomplish. “Nine times out of 10, eliminating the BDC is a bad idea,” he says. “But these guys did it and those efforts have now translated into 50 cars a month consistently. “To me, dealers need to realize that you don’t have to have the premier highway location or an unlimited, mega-group-supported advertising budget to be successful. You can change the rules and still win.”

18 F&I and Showroom July 2011

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THANK YOU

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7/1/11 11:42:24 AM

Auto Finance

First Quarter Delivers

Optimistic Outlook Delinquencies and dollar volume of at-risk loans continued to fall in the first quarter, and auto finance sources responded, with shares of loans to credit-challenged buyers increasing by 11.1 percent. Experian Automotive’s director of automotive credit provides a snapshot of other auto finance trends from the quarter. By Melinda Zabritski

s the auto finance landscape continued to stabilize in the first quarter of 2011, lending sources continued to show a higher tolerance for risk. So what looked like a light at the end of tunnel in previous quarters now appears to be an expanding bright spot for the auto finance marketplace. The clear winners for the quarter were drops in 30- and 60-day delinquencies, a growing share of new-vehicle loans for credit-challenged customers, lower dollar volumes of at-risk loans and a drop in the average loan age. The quarter also represented the best time in 30 months for consumers to secure an auto loan, and all signs point to a market that will continue to improve and expand.

30-Day Delinquency Rate 5.35% 4.83%

5.5% 4.5% 3.5% 2.5%

2.50%

2.98%2.67% 2.25%

2.0% 1.47%1.42%

1.5% 1.0% 0 Bank

Captive

Credit union Finance/other

1Q 2010

1Q 2011

60-Day Delinquency Rate 2.0%

1.75% 1.58%

Drop in Delinquencies Lowers At-Risk Loan Volumes

Vehicle owners did a significantly better job making payments on time in the first quarter, helping the automotive finance market stabilize more than it had during the yearago period. Thirty-day delinquencies are at their lowest point since the fourth quarter of 2008, giving lenders a little more leeway in their credit decisions. Having dropped 7.95 percent, 30-day delinquencies contracted to 2.52 percent in the first

1.5% 1.0%

0.73%

0.60%

0.5%

0.65% 0.50%

0.40%0.35%

0 Bank

Captive 1Q 2010

Credit union Finance/other 1Q 2011

1Q 2011: By the Numbers ■ The average credit score for used-vehicle customers was 663, down two points from 665 in the year-ago quarter.

■ The average loan amount for a new vehicle was up $8, increasing from $25,396 in the yearago quarter to $25,404.

20 F&I and Showroom July 2011

FI0711experian.indd 20

■ The average loan amount for a used vehicle jumped $397, increasing from $16,636 in the first quarter of this year.

■ The average loan term increased by a full month, jumping to 63 months for new vehicles and 58 months for used. PHOTO ©ISTOCKPHOTO.COM / STURMWARNUNG

6/30/11 4:35:58 PM

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Auto Finance quarter from 2.74 percent a year ago. Sixty-day delinquencies dropped by 13.45 percent in the same period, with the captive finance segment enjoying the largest decline. In addition, those drops in delinquencies lowered the total dollar volume of at-risk automotive loans from nearly $20 billion in the first quarter of 2010 to $16 billion in the first quarter of this year.

In a stabilizing automotive credit market, lenders were in a better position to loosen lending criteria and provide more consumers with opportunities to qualify for loans. The share of loans to credit-challenged new-vehicle shoppers increased 11.1 percent from the year-ago period. The share of loans made to the nonprime segment increased from 9.71 percent in the year-ago quarter to 10.57

28.1 27.6

29.4

27.7

26.5 26.8

28.6

30.8

1.4% 5.7% 9.7%

2.0% 6.2% 10.6%

13.2%

13.7%

69.9%

65.6%

0 Bank

+11.1%

Captive

Credit union Finance/other

1Q 2010

1Q 2011

Average Loan Age by Risk Segmentation 35 25

New-Vehicle Financing by Risk Segmentation

80%

Lenders Ease Loan Criteria

100%

Average Loan Age by Lender Type

32.5

30.2 31.4 26.2

27.7 27.0

26.6 25.9

27.2

25.4

15 5

60% â&#x20AC;&#x201C;4.7%

40%

Deep subprime

20% 0

1Q 2010

1Q 2011

Year-Over-Year Change in Risk Distribution 50%

44.8%

40% 30% 20% 8.5%

10%

7.8% 3.1%

Super prime

0 -10%

Deep subprime

Subprime Nonprime

Prime â&#x20AC;&#x201C;6.2%

percent. The share of loans made to subprime customers jumped from 5.67 percent to 6.16 percent, while the share of loans made to deep subprime customers rose from 1.38 percent to 2 percent. The improving ease of obtaining a new-vehicle loan also was reflected in average credit scores. For new-vehicle financing, the average credit score fell to 766, 10 points lower than in the first quarter of 2010. Coincidentally, 766 also was the average score in the fourth quarter of 2008, after which the market began to contract in earnest. Loan Ages Decline as Consumers Return to Market

1Q 2010

Prime 1Q 2011

Super prime

data suggests that this may not be the case. Taking into consideration variances with different lenders and risk tiers, the average age of vehicle loans in the fi rst quarter was 27.89 months, down from 28.14 months in the yearago period. Among lenders, loan age for banks and captive lenders dropped, while the average loan age for credit unions and finance companies increased. Finance companies showed the largest spike, moving from 28.64 months in the first quarter of 2010 to 30.82 months in the first quarter. Loan age for all risk tiers except for subprime, which jumped by 1.22 months, experienced a drop from the first quarter of 2010 to the first quarter of this year. Loan age fell 1.82 months for superprime customers, 0.69 months

This data points to customers with solid credit returning to market faster than in 2010, which bodes well for new-vehicle retailers and for lenders with portfolios geared toward higher-end credit customers. for prime customers and 0.76 months for nonprime customers. Loan age for the deep subprime segment plummeted by 6.25 months. This data points to customers with solid credit returning to market faster than in 2010, which bodes well for newvehicle retailers and for lenders with portfolios geared toward higher-end credit customers. â&#x2013;˛

Despite all the buzz about the sluggish economy causing consumers to hold on to their vehicles longer, loan

Subprime Nonprime

22 F&I and Showroom July 2011

FI0711experian.indd 22

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Auto Finance Financing and Monthly Payments Remain Flat

There was little change in loan characteristics, with monthly payment, loan length and amount financed staying relatively stable. The average loan amount for a new vehicle increased by a mere $8 to $25,404 in the first quarter, while the average used-vehicle loan increased by $397 to $16,636 in the first quarter of this year. Average Amount Financed $30K $25K

$25,396$25,404

$20K

$16,239 $16,636

$15K $10K $5K 0

New 1Q 2010

Used 1Q 2011

2 Wells Fargo Dealer Services 6.07% $462

$460

3 Toyota Financial Services 5.23%

$450

4 Chase Automotive Finance 4.27%

$400

5 Honda Financial Services 3.8% $341

$350

$343

6 Ford Motor Credit 3.44% 7 Capital One Auto Finance 2.8%

$300

8 Bank of America 1.91%

$250 New

Used 1Q 2010

1Q 2011

Average monthly payments showed little movement as the average new-vehicle payment fell from $462 to $460, while the average used-vehicle payment rose from $341 to $343. Loan terms followed suit, jumping just one month for both new and used vehicles. Terms for new vehicles jumped from 62 months to 63 months, while used increased from 57 months to 58 months. Continued Expansion Rests on the Economy

The combination of improved consumer payments and lower dollar volumes at risk has given lenders breathing room to loosen their overall lending criteria. It’s also made it easier for automakers to get customers into new vehicles. Brighter days are ahead for lenders and automotive retailers should these trends continue. However, if sustained economic turmoil causes consumer delinquencies to sneak back up, the lending industry could contract once again. Melinda Zabritski serves as director of automotive credit for Experian Automotive. E-mail her at melinda.zabritski @bobit.com. 26 F&I and Showroom July 2011

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THE TOP 20 LENDERS CLAIMED 51.18 PERCENT OF the loan market share in 2010 — a 12.9 percent gain over 2010, according to Experian Automotive. The first 11 lenders in the group held a majority of that share, while share was spread relatively evenly among the remaining nine companies.

1 Ally Financial Inc. 9.44%

Average Monthly Payment $500

Top 20 Lenders by Market Share

9 Nissan Motor Acceptance Corp. 1.8% 10 Fifth Third Bank 1.57% 11 Santander Consumer USA 1.56% 12 AmeriCredit Corp. 1.28% 13 BMW Financial Services 1.23% 14 Hyundai Motor Finance 1.18% 15 US Bank 1.08% 16 Credit Acceptance 1.02% 17 The Huntington National Bank 0.92% 18 SunTrust Bank 0.91% 19 USAA 0.84% 20 BB&T 0.83% Ally 9.44% Wells Fargo 6.07% Toyota 5.23% Chase 4.27% Honda 3.8% All others 58.11%

Ford 3.44% Capital One 2.8% Bank of America 1.91% Nissan Infiniti 1.8% Fifth Third Bank 1.57% Santander 1.56%

PHOTO ©ISTOCKPHOTO.COM / MONKEYBUSINESSIMAGES

6/30/11 4:36:42 PM

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Executive Q&A

Under the Radar

ounded in 2006, Alphera Financial Services has operated under the radar, quietly expanding its portfolio and growing its dealer count in the shadow of BMW Financial Services. The shroud is now coming off, at least according to Fred Isele. In fact, Alphera’s president reveals that his management team is eyeing several opportunities to become a captive finance company. F&I: Talk about the down-

turn and how it impacted your operations.

Isele

Isele: Like everyone, we were affect-

was that saying we’re a division of BMW actually helped us when we were in front of dealers. We also operated with some restrictions in those first six months of our founding. We were only allowed to sign dealers who had a BMW store within their corporate entity, which hindered us. We only had 340 BMW stores here in the United States. But once we got our foot in the door, the shackles were lifted and we were able to sign any new-car franchised dealer.

F&I: So what’s your dealer count at today?

cided to move toward a more luxury experience. Right now we’re about 70 percent used and our mileage ceiling is 90,000 miles at inception. The reason our used percentage is so high is we’re not going to compete against the new-car rates offered by captive finance companies. We’re not out there to be the cheapest game in town, but we won’t shy away from a deal that makes sense. F&I: You took top honors in

J.D. Power and Associates’ annual dealer satisfaction study for prime credit. Will you repeat that feat this year?

Isele: The results are coming out July

F&I: Things were better

Isele: We have about 875 dealers here in the continental United States and we cover all brands. And to make a separation, we’re parallel to BMW Financial Services, which covers BMW Group products, including new and used, motorcycles, Mini and RollsRoyce. We basically finance everything else, from Kia’s to Maseratis.

Isele: It was a great year for us in

F&I: Are you looking to

F&I: What were the keys

Isele: Not necessarily. However, we

Isele: It’s a combination of things.

are looking to add to our headcount in 2012. As that happens, we could see our dealer count climb to 1,000. The key for us is we want to be exclusive, which is a key selling point for us.

We have 14 dedicated Alphera sales and marketing managers nationwide and each covers between 60 and 65 dealers on average. What separates us from the competition is the bond our reps have with dealer personnel. We also provide what I think are key tools and services. For instance, we offer a self-service funding tool called AlpheraPath, which is a Web-based system that gives dealers the ability to fund themselves within 24 hours of keying in some information. It automatically edits

ed by the credit crunch and the lack of liquidity, however, we did not exit the marketplace. We bumped our credit profile up to a 700 FICO for about three or four months during the credit crunch and then dropped it down to 670. Now we’re buying 650 and up. last year, I take it.

terms of profitability and volume. This year we’re ahead of our volume target, profitability is exceeding our plan, and credit losses are below forecast. So we’re going to hit our volume projections this year, but if it comes down to volume or profitability, we’ll choose profitability.

sign more dealers?

F&I: What customer or F&I: You guys have kind of

operated under the radar, haven’t you?

Isele: When we first came to market,

we were only allowed to sell the Alphera name. The fact that we were a division of BMW was totally hushhush. What we found pretty quickly

vehicle profile are you looking to finance?

Isele: We’ve redefined ourselves. We

really bought down into subprime when we first came to market, but we found, as others did, that it takes a significant amount of energy to collect that business. As a result we de-

28, so put that on your calendar. What the JD Power award did was provide legitimacy to our program and business model in the marketplace. But it’s been a double-edged sword in that it put a lot of pressure on us to maintain that image, and a lot of competition stood up and took notice. to earning that accolade?

28 F&I and Showroom July 2011

FI0711qa_alphera.indd 28

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Alphera Financial Services is feeling a little freer these days. In fact, according to the company’s top exec, becoming a captive is a real possibility for the five-year-old company. By Gregory Arroyo and performs an audit on the deal, eliminating contracts in transit. F&I: Do you offer F&I products? Isele: Not at this time, but we’re work-

ing on it. We just wanted to get our feet on the ground first with our basic products. Offering F&I products is a logical next step, but we want to do it smartly and we want to make sure it’s Alphera branded. F&I: What about

floorplan financing?

Isele: We are a full-spectrum com-

mercial lender, so we have floorplan, real estate, mortgages and term notes. Our finance portfolio is modest now but growing. Now, we also provide floorplanning to independent dealers, which is a new twist for us. We first like to build a relationship on the retail side. Once we have earned the trust and confidence of the dealer, verified their financials and growth plans, we’ll move forward with floorplan financing. F&I: So, what’s the ultimate goal? Isele: Well, we really would like to

become a captive finance company for an automaker. We’ve entertained companies I can’t share the names of right now, but I believe we have the expertise and the bandwidth to become either a private label financing organization or a captive for an OEM — not a domestic make, but a lowvolume import brand. Quite frankly, there are some strange bedfellows out there between OEMs and banks that are not providing the level of service that is expected. I think the J.D. Power award put us back on the radar, and manufacturers want the service we can provide to their customers. July 2011 F&I and Showroom 29

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6/30/11 4:29:22 PM

Finance and Insurance

Lease on Profits

A New

By all accounts, leasing is back, but that doesn’t mean your F&I profits have to suffer. F&I trainer breaks down a process for making leasing a win-win for the finance office and the dealership. By Rick McCormick

30 F&I and Showroom July 2011

FI0711leasing.indd 30

s the economy and the auto finance landscape continues to improve, manufacturers are once again turning to leasing to reach their annual sales goals. Whether that’s a good thing for F&I production or not will depend on the F&I manager’s ability to educate their customers about the issues they could face from the time they leave the dealership to the time they drop off the key at lease end. Leasing can be advantageous for both the customer and the dealer. It allows for shorter trade cycles, builds loyalty and, most importantly, keeps payments low. And with credit criteria and income requirements loosening, leasing is becoming a serious option for today’s car buyer. To maximize profitability and make the return of leasing a positive for your dealership, the F&I office must develop intentional and effective strategies.

Different Payment Type, Same Approach

The misconception is that lease customers aren’t interested in protecting their vehicles. After all, it’s not their vehicle; they are just “renting” it for a short period of time. Unfortunately, nothing could be further from the truth. When a lessee loses a key or dents a rim, they have to pay for it at lease end, if not sooner. That’s why you have to approach lease customers with the same needs-discovery process used for retail buyers, because they need the same level of protection. The key is to implement an intentional process that will uncover how the customer will use the vehicle and what he or she intends to do once they turn in their key. Questions about what they like about leasing also are great ways to uncover a possible need. We’ll get into that a little later, but the message here is that good PHOTO ©ISTOCKPHOTO.COM / SKYAK

6/30/11 4:33:17 PM

July 2011 F&I and Showroom 31

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Finance and Insurance

F&I managers are always thinking of what to say next. Great F&I managers, however, are thinking of what to ask next! And the more needs discovery questions you ask, the more you’ll find out why your customer needs your product. Your questions will extract the need for your products, but customers won’t buy if they haven’t discovered that need for themselves. That’s why your intentional needs-discovery process must center on how your products will protect them from the hidden costs of leasing. And remember, nothing hurts customer satisfaction more than finding out they’re on the hook for an unexpected cost at lease end. What’s In Your Contract

The manufacturer’s wear-and-use guidelines provide a perfect starting point for building a tailored product presentation. Just check the back of the lease contract for the list of costs the customer could incur. This list will typically include six to eight categories of wear-and-tear items, such as lost or damaged keys, interior stains, rips, burns or excessive wear. Having the contract handy also works when the customer raises an objection. Simply turn it over and highlight the excess wear-and-tear disclosures and point out the items the manufacturer will be looking at when the vehicle is returned. Some manufacturers even offer a “Lease Return Guide.” Just be sure the products you offer cover all the possible issues your customers could face throughout the life of the lease. Filling in the Gaps

Simply asking, “What do you like about leasing?” can help you uncover 32 F&I and Showroom July 2011

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exactly what the customer does and doesn’t know about the responsibilities that come with a leased vehicle. For instance, they may not be aware that if they have to replace a flat tire or damaged wheel, they must replace it with the exact same tire or wheel the vehicle came with. If they don’t, they could be in for a big surprise. Now, let’s take a look at how the

same approach can work for selling windshield protection: F&I manager: I certainly understand

your declining the coverage, especially since you are leasing this vehicle. However, that may not be the best option for you given what you told me earlier. You plan to turn this vehicle in at the end of the lease, cor-

Lease Share of New-Vehicle Sales 22.6%

24.1%

March

24.5%

23.7%

April

24.5%

May 2010

IT MAY SEEM LIKE A BOOM, BUT the recent pickup in leasing is more of a correction. The industry is building leasing back up to its traditional market share after it all but vanished through the credit crisis. According to CNW Research, leasing represented 24.6 percent of all transactions in May. Jonathan Banks, who manages NADA Used Car Guide’s editorial and data services, believes

2011

23.7%

23.1%

24.2%

June

2011: June 1–15 only

leasing will stay within the 20 to 25 percent range going forward, which would be a healthy percentage for the industry. Products ideal for a lease include excess wear-and-tear coverage, interior and exterior protection, tire-and-wheel protection, key replacement, dentand-ding protection, prepaid maintenance and windshield protection. SOURCE: CNW RESEARCH

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Many manufacturers are now including GAP in a lease at no charge, but a slew of new ancillary products are allowing dealers to stay in the game.

That customer was excited that the coverage had saved them money in the first 12 months. Not only did the customer come back to the dealer for the repair, but you can bet he or she will be more than happy to buy from that store again. rect? And you said you will be using this for business, and a majority of your driving will be on the interstate, correct? Well, that’s why it’s critical you have windshield protection. With your driving habits, the likelihood of a rock placing a minor star wheel in your windshield is high and you can’t take the chance of it expanding. And the last thing you want is to replace a

Products that aren’t dependent on the customer suffering a mechanical breakdown increase the odds of the customer returning to the dealership to have a claim handled. windshield on a vehicle you’re going to give to someone else to enjoy, right? Remember that products that aren’t dependent on the customer suffering a mechanical breakdown increase the odds of the customer returning to the dealership to have a claim handled. That’s why products geared toward leasing are viewed as great loyalty builders. In fact, I recently visited a Toyota dealership’s service department. A tire-and-wheel claim had come in on a Toyota Avalon with less than 10,000 miles on the odometer. The total claim paid was $701.23. PHOTO BY GREGORY ARROYO

FI0711leasing.indd 33

The Road to Consistency

Producing a consistent profit on lease transactions is definitely challenging. Aside from breaking through those misconceptions about leasing’s impact on F&I production, some manufacturers now provide some coverage at lease end — and many even include GAP at no charge. Luckily, there’s been an influx of new ancillary products that address the perils of leasing that some of the more traditional products don’t. Also in the favor of auto dealerships is the fact that F&I managers are the most adaptive and talented closers in the store. They have adjusted to a changing customer and tighter lending guidelines. They have overcome a steady stream of car-buying articles that warn customers against buying anything on the F&I menu. The challenge now is to adapt to the return of leasing. That option has not historically lent itself to F&I production. But, with the right approach and a slew of new ancillary products, you can make leasing a profitable venture for your dealership. Rick McCormick is the director of training and income development for Automotive Financial Services, a provider of F&I products and training for dealerships nationwide. E-mail him at rick.mccormick@bobit.com. July 2011 F&I and Showroom 33

6/30/11 4:33:20 PM

Finance and Insurance The best way to sell a VSC is to create awareness of the need for service and to demonstrate your ability to handle it. F&I trainer explains how a quick tour of your service and parts department can do just that. By Gerry Gould

f you’ve been in the business any amount of time, you’ve already heard a number of tips, tactics and techniques for presenting vehicle service contracts. It’s a popular topic among trainers. But every book, CD, seminar or article like this one tends to point to a specific factor that, when captured, can have a profound effect on your ability to gain a customer’s commitment to purchase a VSC. That factor is consumer awareness. Simply put, your customer is not going to buy anything until they are aware they need it. There are many ways to articulate that need: There’s the “99.9% perfect” rebuttal, or the “One day in the shop,” or the “Why do you think the manufacturer gave you a 3-year/36,000 warranty?” responses. They’re great word-tracks, but, when it comes to VSCs, the single most effective way to create awareness among your customers is to show them. There are two opportunities for offering a customer a VSC: at the time of purchase and every time the customer returns to the dealership for service — that is, if they didn’t elect to purchase the VSC in the F&I office. Creating awareness is critical to gaining a purchase commitment, but it can be difficult to broach the subject. That’s especially true for a new-vehicle purchase. The odds, however, tend to tilt in your favor as the customer gets closer to the end of the factory warranty. So, how do we create better odds in the F&I office at the time of purchase? To visually create a need for a VSC in the F&I office, you need to send 34 F&I and Showroom July 2011

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Take a your customer on a service walkthrough. Ideally, it should be performed by the sales consultant after the F&I manager is introduced and while he or she is getting the paperwork ready.

Guided Tour

The service walk can be one of the most influential steps on the road to the sale. Many salespeople don’t like this step, but the reality is a service tour adds value to the sales presentation by providing a few more reasons for doing business with your dealership. A quick tour of your service and parts department creates awareness in two key ways: ■ Service: Seeing cars on lifts will remind customers that their own machine may one day break down or need repairs. However, it’s important that your salespeople point out

just how much the dealership has invested in diagnostic tools and to train, retrain and certify mechanics. It’s also important for the sales consultant to point out that the store’s

The service walk can be one of the most influential steps on the road to the sale. Many salespeople don’t like this step, but the reality is a service tour adds value to the sales presentation. mechanics have invested upwards of $15,000 in specialty tools to service vehicles. ■ Parts: Taking the customer on a tour of the parts department — where the dealership stocks more than $250,000 in parts and supplies each month — also lets the customer know that your dealerPHOTO ©ISTOCKPHOTO.COM / LEEZSNOW

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Salespeople should lead customers on a guided tour of the service and parts department while the F&I manager prepares their paperwork.

prepaid maintenance program. Here’s how it works: F&I manager: Now that you’re set up for your first oil change, you have an opportunity to take advantage of our prepaid maintenance program. May I share the benefits with you? Customer: Sure.

Walk ship is armed for more than just oil changes and tire rotations. Back in the Box

The service department is great at creating awareness, but it’s up to the F&I manager to take advantage of the awareness created during the service tour when making his or her F&I presentation. Doing so will take more than word-tracks, because the key to keeping that awareness alive is to recreate the feeling the customer felt while walking the service and parts department. First things first: If your sales consultant has not taken the customer on the tour, call him or her into your office to do so. F&I manager: Did your sales consultant show you our award-winning service department? Customer: No. F&I Manager: While I’m getting

the paperwork ready, I’ll have your sales consultant introduce you to one of our service managers and set you up for your first oil change. Scheduling that first oil change gets the customer thinking about how they’ll maintain and service their vehicle. It’ll also remind the customer of the thousands of dollars the dealership invested to keep the parts department well-stocked and the service department well-equipped. With sales and finance working together to create awareness, you’re getting closer to gaining a commitment from the customer to purchase a service contract or prepaid maintenance plan. Now let’s review a couple of word-tracks to hammer the message home:

Prepaid Maintenance: Schedul-

ing the customer’s first oil change is the perfect lead-in for presenting a

Vehicle Service Contract: Here’s a way to go when your customer says, “I won’t need that.” F&I Manager: I understand. I don’t expect you to enroll in the vehicle service contract if you don’t see any value in it. To see if it would be beneficial to you, do you mind if I share something with you? Customer: Sure, go ahead. F&I manager: When you took a tour of our service and parts department, did you happen to see those large toolboxes the mechanics had nearby, the diagnostic equipment and vehicles being repaired on the lifts? Customer: Yep. F&I manager: Each one of our certified technicians keeps nearly $15,000 worth of tools in their toolboxes, and our parts department stocks an average of $250,000 a month in parts inventory. We made that investment to ensure our dealership would be capable of doing more than just oil and filters. Vehicles today are more dependable than ever before, but the fact remains that they still can suffer costly breakdowns. Have you thought about it in that way, or do you have other concerns with the program?

There are many ways to sell VSCs, but if you want to increase your sales chances, consider the service walk as the essential ingredient to creating customer awareness. Gerry Gould is the director of training at Clearwater, Fla.-based United Development Systems. He can be reached at gerry.gould@bobit.com. July 2011 F&I and Showroom 35

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6/30/11 4:23:15 PM

Sales Driver

Challenging the Status Quo Does life in the car business really mean working ‘bell to bell’? Is good talent really that difficult to find? Sales columnist offers Part One of his take on how to fix one of the industry’s biggest problems. By Cory Mosley

uring a recent interview for The Norm Jones Show, a talk radio show in Detroit, I was asked what I thought was the biggest challenge facing the car business. Without hesitation, I said the inability to acquire, properly develop and retain fresh talent would prove to be an epidemic for the car business. I have a dealer client whom I’ve worked with for six years, and I began to notice some blasts from the past during my last eight visits. There was the recycled sales manager, the twice-fired salespeople and a fresh-from-rehab finance manager on his third tour at the dealership. When I asked why this was happening, the client said, “It’s hard to find people.” That answer, along with “This is the car business,” are two of the alltoo-familiar responses I often hear. So many things go unexamined, unaddressed and not dealt with in the name of our industry’s culture. So, how do we change this? What’s needed to attract and retain talent in the car business? Well, let’s take a look at two possible solutions. Problem 1: The Work Schedule

The typical dealership schedule has been enforced, accepted and treated as gospel for decades. The problem is that’s exactly what’s kept a lot of talented people with great potential from getting into the business. It also has contributed to years of missed soccer games, vacations, family outings and countless other pursuits. Is the bell-to-bell lifestyle the only

way to successfully run a car dealership? Is the end-of-the-month frenzy to roll more vehicles and get deals done the only option for maximizing sales? One of the first stores I worked for when I started my career offered 9 a.m. to 3 p.m. and 3 p.m. to 9 p.m. schedules. The dealership also allowed employees to take two Saturdays off per month, something that is unheard of in the car business. But why is that? Why is taking a hard look at dealership hours and work schedules so “outside the box,” especially since the people people making the schedule don’t actually work it? Holiday store hours are always an interesting conversation as well. I mean, how many cars can a dealership really sell over a holiday? When I ask dealers that, which I often do, the answer is usually two or three. If that’s the case at your store, wouldn’t you foster more goodwill among your employees by giving them the day off instead? Hey, it’s just a thought. Problem No. 2: Managers vs. Leaders

There are probably people out there more qualified than I to address leadership. However, my experience working for and with managers who never led and don’t know how to lead provides me with a nice perspective on what a leader should be. I will save full commentary on this topic for a future article, but allow me to offer a few nuggets of advice: First, as leadership guru John Maxwell points out, good leaders are self-improving. They realize

that their team must first improve themselves before improvement in performance can be realized. Yet, so many managers obtain their title and simply put the shifter into park. Leaders have subordinates by default, but what they really do is manifest followers. Managers simply have subordinates. Let’s review a few typical character differences between leaders and managers: ■ An approach of calculated change vs. stability. ■ Vision vs. objectives. ■ Personal charisma vs. formal authority. ■ Energy of passion, rather than control. So, which traits describe you? Want to take it a step further? Put those traits on a piece of paper and ask your staff to circle options that best match you and let them anonymously provide you the results. See, leaders create a culture of achievement that shapes outcomes. They are not focused on being right and simply producing results. Next month, I will use this space to explore the topics of training and development. I will also address the two biggest breakthrough topics most relevant to the future. So, stay tuned. Cory Mosley is principal of Mosley Automotive Training, a company focused on new-school techniques, products and services. He also is the creator of the “Control Your Sales Destiny” seminar series. E-mail him at cory.mosley@ bobit.com.

36 F&I and Showroom July 2011

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6/30/11 3:23:05 PM

Mad Marv

It Takes Two The magazine’s F&I columnist revisits pay plans and offers some food for thought before, during and after negotiations. By Marv Eleazer

know I’ve been hitting pay plans pretty hard lately, but we’re not through with the topic just yet. This month, I’d like to focus on the negotiation aspect because I believe that’s where most pay plan-related problems can be avoided. In the heat of negotiations, we sometimes lose sight of our ultimate goal. Dealers want to create a workable program that fairly compensates the employee while the company retains a handsome profit. F&I managers want a reasonable incentive to keep those profits rolling in. There’s no telling how many pay plans have been formulated over the years, but I’ll bet no two are exactly alike. It all depends on the store. As for me, I’m an ordinary F&I manager who gets paid the old-fashioned way: one deal at a time. I believe that pay plans that promise high incomes and fat guarantees work fine for the first few months of a new hire, but after that they tend to foster apathy. The exception to that is a small store selling less than 30 units a month, because one bad month could really be painful for an F&I pro. I’m not going to sit here and tell dealers how they should pay their F&I managers, nor will I try to teach my fellow F&I managers how to undermine their dealers when discussing pay. There are plenty of so-called experts out there who will do that job for a hefty fee. My goal is to sketch out some common scenarios and raise some points to consider.

Making the Change: There was nothing your last F&I manager — or you as their boss — could do

to pick up his or her production. Now, you and the new employee you hired have to figure out a pay plan, but neither can say whether the current program will fix the situation or turn out to be the cause of it. That’s the time to take a step back, because it’s easy to give away too much in your attempt to fill a vacancy. If the pay plan is too generous and the new guy or gal hits the ground running, you’re bound to have second thoughts every time you have to write a huge check when the producer hits the upper limits of the plan. Hey, I get it. It’s just too difficult to justify the pay. The answer to most situations can be found at the desk of the comptroller. He or she can determine what the maximum payout would be with any given pay program. Whether it’s a percentage of departmental gross or a total dollar amount, be certain to make the adjustments that you can live with so you don’t face this situation again. You may even want to consider incentives and perks that will motivate your manager to give you the extra effort. Doing so will keep employees in the game.

Striking a Balance: On the other

side of the table, the F&I manager must realize that few dealers come to the bargaining table with a blank check. Some F&I managers are only looking for the bigger, better deal, but the career employee looks at adding to the dealer’s bottom line. Whether by training or by nature, they see their position in the store as a support role, and they’re continually searching for ways to enhance the dealer’s philosophy.

Need vs. Want: Just as the dealer must give careful consideration to the design of the pay plan, it is equally important for the F&I manager to consider that you have to strike a reasonable agreement that will keep everybody in business. Oftentimes, F&I managers come to the table with the sharpest of negotiating skills. It’s as if they’re facing a customer. That’s why careful thought must be given to what you want from the dealer. As the store begins to grow and volume is added, be prepared for the dealer to hire an additional staffer to maximize productivity. I know the idea of having to share a piece of the action with a newbie is disappointing, but you have to remember that, as the business grows, so will the opportunities. This is where winners rise to the occasion and do what’s best for the organization. At the end of the day, pay plans — however complicated — should be a win-win for the dealer and the F&I manager. Both ends of the pay spectrum should be discussed and analyzed thoroughly. If the F&I manager hits the outer limits of the program, write that check with pride and remember that you get to keep a pretty good amount yourself. Be certain that the manager doesn’t starve on short months either. Attach a congratulatory note as well. It will amaze you how much more production you will see from your manager. Marv Eleazer is the finance manager at Langdale Ford in Valdosta, Ga. E-mail him at marv.eleazer@bobit.com.

July 2011 F&I and Showroom 37

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6/30/11 4:34:48 PM

Legal

Ready to Strike The leadership may still be up for grabs at the CFPB, but the newly formed consumer watchdog agency will hit the ground running on July 21. By Tom Hudson

s we approach the one-year anniversary of the federal law that established the Consumer Financial Protection Bureau, it’s probably worth recapping the CFPB-related events of the last several months in order to get some idea of how our federal dollars are being spent protecting consumers’ financial interests. Although it is not scheduled to formally assume any regulatory authority until July 21, 2011, the CFPB has launched its Website, www.consumer finance.gov. There you’ll find a video that explains the causes of the financial crisis and how the agency will be a “cop on the beat” to protect consumers. The site also provides links to the CFPB’s blog and social media accounts. As of this writing, the CFPB is still without a director. President Obama hasn’t named anyone yet, and rumors are flying about a possible recess appointment of the agency’s interim director, professor Elizabeth Warren. A nomination in July would leave very little time for a Senate confirmation of the selection before the bureau officially assumes its duties. Despite the lack of a director, the CFPB, its interim director and her team leaders are moving fast to get the agency ready for its July 21 deadline. Some think it’s too fast. And some think there’s too much power in the hands of the director. There are Republican proposals to place the CFPB in Congressional hands by moving the bureau to the Treasury Department and eliminating its status as an independent entity under the Federal Reserve

Board. They also want to restructure the bureau’s leadership as five commissioners serving staggered terms, with no more than three seats per political party. This isn’t a radical approach — it’s how the Federal Trade Commission and the Securities and Exchange Commission are set up. Other measures to reduce the bureau’s power and independence also have been introduced. Whether the current Republican efforts on the hill will go anywhere is anybody’s guess. Until such time as Warren is replaced, if at all, she will serve as the credit czar and remain the “go-to” person for the CFPB. On March 16, she testified before the House Subcommittee on Financial Institutions and Consumer Credit. She discounted a rules-based approach to financial services oversight, claiming that too many rules bog down the industry and put smaller competitors in the financial products marketplace at a competitive disadvantage. “A simple, straightforward, and consistent presentation of a credit agreement is the best way to level the playing field between consumers and lenders — and among different types of lenders,” she said, in part. Does this mean we might see an auto financing contract that can fit on a postcard? Probably not. But it may lead to abbreviated retail installment contracts for car dealers. Warren spoke of revising or eliminating outdated regulations and disclosures that burden lenders and obscure real credit terms. So far, the bureau’s staff consists of several hundred folks, most of

them lawyers. And whoever is doing the hiring is doing a pretty fair job so far. With the auto sales, finance and lease industries wary that the bureau would be staffed by consumer advocate-type zealots with little experience, the appointments of Leonard Chanin as rule-writer in chief, and of Peggy Twohig as chief-in-charge of non-depository institutions (sales finance companies and dealers) caused folks to dial back the panic meter a couple of notches. Both are regulatory veterans, Chanin with the FRB and Twohig with the FTC. We’ve also learned that Rick Hackett has been tapped to oversee the installment credit business (that includes dealer financing), and that’s good news. He is a veteran, highly regarded consumer credit lawyer who has done credit compliance work for many institutions and, in doing so, has developed a good sense of the businesses he has assisted. You can tell we think a lot of Rick, but make no mistake. He, like Chanin and Twohig, will be dedicated to the bureau’s mission and won’t be any sort of pushover. So, those are some of the highlights from the CFPB’s first months. The events of the next few months will likely prove pivotal, so stay tuned! Thomas B. Hudson Esq. is a partner in the law firm of Hudson Cook LLP and the author of several books, available at CounselorLibrary.com. ©2011 CounselorLibrary.com, all rights reserved. Based on an article from Spot Delivery. Single print publication rights only, to F&I and Showroom magazine. HC# 4814-5772-9033 (7/11).

38 F&I and Showroom July 2011

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Bottomliners Wolters Kluwer Opens Indirect Lending Directory

eBay Motors Launches iPhone App

WOLTERS KLUWER FINANCIAL

iPhone app, a tool designed to allow buyers to bid on or buy cars, parts and accessories, is now available for download. The app’s “My Garage” feature allows users to scan any vehicle identification number (VIN) to automatically add car details or shop the eBay Motors inventory to find vehicle-specific parts and accessories.

Services has launched the Indirect Lending Directory, a listing of more than 600 lenders that accept and use the company’s retail installment contracts. The directory includes national and regional lenders, including local banks and credit unions. To access the directory, visit www.wolterskluwerfs. com/ildirectory.

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THE EBAY MOTORS

KBB Offers Free 30-Day Trial of Quick Values Portal KELLEY BLUE BOOK IS OFFERING A

Reynolds Launches dealerPAD iPad App REYNOLDS AND REYNOLDS HAS

launched dealerPad, an iPad mobile app designed to provide immediate access to customer and dealership information. The app is a mobile version of the technology provider’s Contact Management solution for the ERA dealership management system. For more information, visit www.reyrey.com.

free, no-obligation, 30-day trial for Quick Values, the publisher’s newest valuation product, until July 23. Quick Values was designed to deliver new- and used-car values, trade-in values, as well as wholesale lending and auction values, all updated weekly. For more information, visit www.quick values.com.

Product Feature IAS Releases Tablet-Based Software for F&I IAS HAS ANNOUNCED

the launch of SmartPad, a tablet-based program that utilizes video and multimedia presentations to introduce cusuce cus tomers to products and services available in the service drive and F&I office. Sales personnel can also use the tool to survey customers or to learn more about the

ccustomer. Results can tthen be sent to multtiple departments via ttext or e-mail. The ssoftware is available immediately and will run on popular tablets such as the Apple iPad, most Google Android tablets, and the Blackberry Playbook, according to IAS. For more information, visit www.iasdirect.com.

40 F&I and Showroom July 2011

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September 26-28, 2011 Las Vegas Hilton

www.IndustrySummit.com

The F&I Conference and Expo, Special Finance Conference and Vehicle Service Contract Administrators Conference Have United for

We’ve combined three of the auto finance industry’s most powerful conferences! Join hundreds of F&I professionals at this unparalleled annual gathering to get the information, training and new contacts you’ll need to succeed in the year ahead!

“Without question, the most valuable event for F&I managers and directors, general managers — and some very smart dealer principals I know — has become the F&I Conference in Las Vegas. The staff and sponsors have produced, without question, the best single information venue in the industry.” — George Angus, Team One Research and Training

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Ag e n d a Keynotes, and Execu , Leadershtive Progra ip informatim o inside! n

6/30/11 9:39:48 3:21:46 AM PM

September 26-28, 2011 Las Vegas Hilton

www.IndustrySummit.com

Executive Leadership Program Monday, September 26, 2011

10:00AM – 4:00PM

12:30PM – 4:30PM

8:00AM – 4:00PM

AFIP Certification Program

Control Your Sales Destiny

This two-part course was designed to provide the regulatory and legal knowledge F&I professionals need to excel and a strong foundation for industry-specific ethical practices. Additional charge applies

Buy Here, Pay Here for Franchised Dealers

Leading sales trainer Cory Mosley’s new seminar series was designed to maximize front-line profits by leveraging new-school training principles. Additional charge applies

Peritus Portfolio Services’ Rod Heasley and special guest Kenneth Shilson, founder of the NABD, tackle the subject of adding a BHPH operation to a new-car dealership. Additional charge applies

Keynote Speakers Monday, September 26, 2011

Tuesday, September 27, 2011

5:10PM – 6:00PM

9:10AM – 10:10PM

2:00PM – 3:00PM

No Shortcuts: Building a Sustainable Auto Franchise

After the Storm: Rebuilding the Automotive Industry

The Future of Dealer-Assisted Financing

Capital One Auto Finance’s Kevin Borgmann will share his analysis of industry trends and his vision for a successful franchise in the new economy.

John Gray of Experian Automotive will discuss how some dealers and lenders were able to prevail through the downturn and make the most of the recovery.

NADA’s 2011 chairman, Stephen Wade, will outline the association’s efforts on behalf of dealers and provide an up-to-date report on the state of the industry.

6/30/11 3:21:46 PM

F&I Conference and Expo Agenda Monday, September 26, 2011 8:00AM – 5:00PM

Registration Open 5:10PM – 6:00PM

12:30PM – 2:00PM

10:15AM – 11:15AM

Exhibit Hall Open (Lunch served)

Workshop: How Did We Do? Update on the Frank-Dodd Act

2:00PM – 3:00PM

Afternoon Keynote Address: Stephen Wade, NADA

11:30AM – 12:30PM

3:05PM – 4:05PM

Workshop: Game Changers: 3 Can’t-Miss Closes

Panel Session: Executive Panel

11:30AM – 12:30PM

3:05PM – 4:05PM

Workshop: Marketing in the Digital Age

Tuesday, September 27, 2011

Workshop: Out With the Old: New-School Training Ideas

12:30PM – 2:00PM

7:00AM – 8:00PM

4:30PM – 5:30PM

2:00PM – 3:00PM

8:00AM – 9:00AM

Workshop: Best Practices for F&I Managers and General Agents

Workshop: Lights, Camera, Action! Training With Video Technology

Exhibit Hall Open (Breakfast served)

4:30PM – 5:30PM

2:00PM – 3:00PM

9:00AM – 9:10AM

Welcome to Industry Summit

Panel Session: Captive Lenders Roundtable

Workshop: Profits and Pitfalls: Joining the Social Media Revolution

9:10AM – 10:10AM

5:30PM – 7:30PM

3:05PM – 4:00PM

Networking Reception in Exhibit Hall

Workshop: How to Create a Virtual F&I Office

Evening Keynote: Kevin Borgmann, Capital One Auto Finance 6:00PM – 7:30PM

Welcome Reception

Registration Open

Opening Keynote Address: John Gray, Experian Automotive 10:15AM – 11:15AM

Panel Session: The Idea Exchange: Trainers’ Best Practices for Sales and F&I 11:30AM – 12:30PM

Wednesday, September 28, 2011 7:30AM – 5:30PM

3:05PM – 4:00PM

Registration Open

Workshop: Fixing the Desk at Your Dealership

8:00AM – 9:00AM

4:00PM – 5:30PM

Exhibit Hall Open (Breakfast served)

Workshop: 10 Habits of Highly Successful F&I Managers

9:00AM – 10:10AM

11:30AM- 12:30PM

10:15AM – 11:15AM

Workshop: A Dealer’s Guide to Digital Compliance

Exhibit Hall Open (Lunch served)

Panel Session: F&I Managers Roundtable

Reception in Exhibit Hall Times and topics are subject to change. Stay tuned to IndustrySummit.com!

Workshop: Creating Interest When the Customer Says ‘No’

Special Finance Conference Agenda Monday, September 26 4:30PM – 5:30PM

11:30AM – 12:15PM

Finance Company/Vendor Presentations

General Session: State of the Special Finance Industry

12:30PM – 2:00PM

6:00PM – 7:30PM

1:45PM – 2:30PM

Exhibit Hall Open (Lunch Served)

Wednesday, September 28 8:00AM – 9:00AM

Exhibit Hall Open (Breakfast served) 9:00AM – 11:00AM

Networking Reception

Finance Company/Vendor Presentations

Education Session: Call Center Best Practices: Dealer Panel

Tuesday, September 27

2:00PM – 3:30PM

9:00AM – 12:15PM

8:00AM – 9:00AM

Exhibit Hall Open (Breakfast served) 9:00AM – 9:45AM

Education Session: The Search for Inventory 9:00AM – 9:45AM

Finance Company/Vendor Presentations 10:00AM – 11:15AM

Education Session: Marketing Best Practices: Dealer Panel 10:15AM – 11:00AM

Finance Company/Vendor Presentations 11:30AM – 12:15PM

Education Session: Maximizing Deal Structure

Education Session: Legal Jeopardy 2:45PM – 3:30PM

Finance Company/Vendor Presentations 3:45PM – 4:15PM

11:30AM – 12:30PM

Education Session: Standout Finance Companies

Education Session: Finding Exceptional Performers

12:30PM – 2:00PM

3:45PM – 4:15PM

2:00PM – 2:45PM

Finance Company/Vendor Presentations 4:45PM – 5:30PM

Education Session: Sales Processes That Produce

Exhibit Hall Open (Lunch served) Education Session: Avoiding Funding Follies 4:00PM – 5:30PM

Reception in Exhibit Hall

4:45PM – 5:30PM

Finance Company/Vendor Presentations 5:30PM – 7:30PM

Times and topics are subject to change. Stay tuned to IndustrySummit.com!

Networking Reception in Exhibit Hall

r call 800-576-8788 today! FI0711bottom.indd 43

Finance Company/Vendor Presentations

Turn the page for registration and hotel information! 6/30/11 6/30/11 3:21:48 9:34:16 PM AM

September 26-28, 2011 Las Vegas Hilton

www.IndustrySummit.com

2011 Registration Pricing Type

Early Bird Rate

Regular Rate

(on or before Aug. 26)

(after Aug. 26 and onsite)

$695

$795

$695

$795

$695

$795

$745

$845

$250

$350

Full Conference Pass — Dealer

Includes access to all F&I educational sessions, exhibit hall, meals and receptions

Full Conference Pass — Agent

Includes access to all F&I educational sessions, exhibit hall, meals and receptions

Full Conference Pass — Finance Company Includes access to all F&I educational sessions, exhibit hall, meals and receptions

Industry Pass — Manufacturer/Supplier Includes access to all F&I educational sessions, exhibit hall, meals and receptions

Spouse Pass

Includes access to all meals and receptions

Groups of five or more from the same company are eligible for a discount! Call 800-576-8788 for details.

Executive Leadership Program (Open to Full Conference Pass holders only) Buy Here, Pay Here for Franchised Dealers

$49

AFIP Certification / Basic or Senior

$460

Control Your Sales Destiny (lunch included)

$299

Official Conference Hotel Las Vegas Hilton 3000 Paradise Road, Las Vegas, NV 89109 Call 800-732-7117 by September 2, 2011 to register at the special conference rate of $125/night!

Hotel Block Raffle Don’t forget to book in the Industry Summit room block to be eligible for the Hotel Block Raffle Drawings which will be announced during the conference! Only Industry Summit attendees registered and staying in the official conference block at the Las Vegas Hilton are eligible to win.

FIC06-44.11

Use your smartphone’s code reader to scan this box. You’ll be led directly to the Industry Summit site and all the latest updates!

The Industry Summit Mobile App is Coming to a SmartPhone Near You. Details Coming Soon!

Visit IndustrySummit.com or call 800-576-8788 today! FIC06-44summit_6pp.indd FI0711bottom.indd 44 4

6/30/11 6/30/11 9:39:50 3:21:49AM PM

Ad Index Company Association of Finance & Insurance Professionals (AFIP) Ally Auto

Phone

Web

Page

817-428-2434

afip.com

877-357-8477 (option 6)

allyblueprinta.com

American Financial & Automotive Services

800-967-3633

afasinc.com

AUL Corp.

800-826-3207

aulcorp.com

CARLAW Auto Dealer Suite

877-464-8326

counselorlibrary.com

Charter Warranty

877-404-6823

saveadeal.com

•

chase.com

877-564-2565

chemetchmfg.com

800-345-0191, ext. 720

cnanational.com

215-512-5596

continentalwarrantyltd.com

877-744-2835, ext. 2334

CUDL.com

Dealerlink

800-890-8850

DealerLink.us

Friendly Finance Corp.

800-872-2877

friendlyfinancecorp.com

Industry Summit

800-576-8788

industrysummit.com

41-44

800-346-6469, ext. 8989

smartdealerproducts.com

5, 47

800-553-7146

jmagroup.com

2-3

•

mosleyautomotive.com

800-548-1875

nacsolution.com

National Automotive Experts

800-810-8859

nationalautomotiveexperts.com

Protective

800-794-5491

protectiveassetprotection.com

Reahard & Associates Inc.

866-REAHARD

go-reahard.com

Resource Automotive

312-560-9182

thewarrantygroup.com/automotive

24-25

Ristken Software Services

800-368-9680

ristken.com

TD Auto Finance

800-200-1513

tdafdealer.com

United Car Care

800-571-6412

unitedcarcare.com

33, 46

Wise F&I

800-849-1080

WiseFandI.com

Chase Chem Etch Manufacturing Inc. CNA National Continental Warranty Inc. CUDL

Innovative Aftermarket Systems (IAS) JM&A Group Mosley Automotive Training NAC (National Auto Care Corp.)

we are.

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July 2011 F&I and Showroom 45

FI0711index.indd 45

7/1/11 11:41:40 AM

Products

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www.UnitedCarCare.com 1-800-571-6412

Get Connected! F&I and Showroom readers are among the nation’s best-informed automotive sales and finance professionals.

FI07-02.11

To advertise in the next issue of F&I and Showroom, contact David Gesualdo at 727.947.4027 or david.gesualdo@bobit.com. 46 F&I and Showroom July 2011 FI07-02getconnect.indd 1

FI0711index.indd 46

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FI0711index.indd 47

7/1/11 11:41:44 AM

Industry Trends

5 Reasons Customers Love or Hate Their Dealers A new study reveals five reasons why some car buyers still dread the dealership experience, as well as five areas dealers can focus on to improve customer satisfaction.

e it negative or positive, feedback can be a very good thing. Customer reviews help dealers figure out what their clients want; they also help dealers avoid the pitfalls of using techniques that might drive shoppers away. Auto research and shopping Website Car Gurus.com recently conducted a study to determine the top complaints customers have about car dealerships, as well as the main reasons they left the store happy. The study examined 1,000 dealership reviews posted by CarGurus users in a six-month span. For each dealer review submitted, consumers rated their experience on a scale of one to five stars and were asked to provide written comments. Of the reviews analyzed, 34 percent had one- or two-star ratings. Ten percent of reviews had three

According to a study published earlier this year by R.L. Polk and AutoTrader, 71 percent of vehicle shoppers start their shopping process online — more than double the rate of any other information source.

stars and 56 percent were awarded four or five stars. Poor communication and deceptive business practices such as bait-andswitch routines were the top com-

Top 5 Reasons Consumers Love Car Dealers

plaints among the negative reviews examined for the study. Friendly service and quick responses to online leads were cited most often in positive consumer reviews. Other complaints against dealers included customers who felt their time was wasted or received poor customer service. Accurate answers, clean showrooms and good prices rounded out the top five compliments. Overall, results suggested that a car dealer’s candor and responsiveness carry significant weight with an Internet shopper and can make or break a sale — sometimes even before the consumer meets the dealer in person. As the information age progresses and more car buyers take time to research pricing, vehicle availability and sales tactics online, they will continue to put a premium on a dealership experience that rewards those efforts.

Top 5 Consumer Complaints About Car Dealers

Friendly, professional service

No response

Fast response

Bait and switch

Accurate answers

Communications disconnect

Clean dealerships, clean car interiors

Unsatisfactory customer service

Good prices

Time wasted

48 F&I and Showroom July 2011

FI0711trends.indd 48

6/30/11 4:33:44 PM

Solved.

Technology exists to solve problems. But to solve a problem, you must first understand it.

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