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4 F&I and Showroom July 2011

July 2011 Volume 14, Issue 7

Dealer Profi le

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

Auto Finance

20 First Quarter Delivers Optimistic OutlookDelinquencies and dollar volume of at-risk loans continued to fall in the fi rst quarter, and auto fi nance sources responded, with shares of loans to credit-challenged buyers increasing by 11.1 percent.

Executive Q&A

28 Under the RadarAlphera 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 fi ve-year-old company.

Finance and Insurance

30 A New Lease on Profi tsF&I trainer breaks down a process for making leasing a win-win for the fi nance offi ce and the dealership.


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

6 Letters

8 Editorial

10 Developments

36 Sales Driver

37 Mad Marv

38 Legal

40 Bottomliners

45 Ad Index

48 Industry Trends

Departments

Features

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 offi ces. 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 fi rst issue. Bobit Business Media reserves the right to refuse nonqualifi ed subscriptions. Please address editorial and advertising correspondence to the executive offi ces 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.

20

28

34

16

Contents Endorsed as the offi cial publication

of the Association of Finance & Insurance Professionals

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Questions to Break ObjectionsTO RICK MCCORMICK: I really enjoyed

your explanation of how the simple

things are the most important to mas-

ter in the F&I department (“Being

Brilliant at the Basics,” June 2009).

In the article, you mentioned 30 ef-

fective questions every F&I manager

should ask of their customers. Can

you give some examples of the types

of questions we should be asking?

Yas AliFinancial Services Manager

Richmond Hill MitsubishiRichmond 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 fi gure out what objections you think you’ll face while working with a customer. Then fi gure out what information you’ll need to overcome that objection and develop questions you can ask your custom-ers that will extract that information. Remember to use open-ended ques-tions 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-ear-lier opportunity.

Developing a list of questions also will ensure that you have good op-portunities 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 “Se-crets 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 TrainingTO JIM RADOGNA: I read your May ar-

ticle (“5 Steps to Compliance”) and,

in Step Four, you mention that some

F&I training programs “cost less

per employee than a box of business

cards.” Can you please point me in

the right direction?

Karen SpadyShaffer 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 train-ing 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 re-quire staff members to pass a certifi -cation test and sign a “code of ethics” to ensure ongoing compliance. Best of luck! — Jim Radogna

Keep ‘em ComingTO 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 em-

ployer’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 HaysFinance Director

Golden Circle Ford Jackson, Tenn.

Letters


Vice President Group Publisher, Auto Group

Sherb Brown

Publisher, Dealer GroupNational Sales Manager

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[email protected]

Executive EditorGregory Arroyo

[email protected]

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Brian Peach310-533-2548

[email protected]

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[email protected]

Audience Marketing ManagerTony Napoleone

Chairman Edward J. Bobit

President & CEOTy F. Bobit

Chief Financial Offi cerRichard E. Johnson

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A nother show, another group

of lenders talking about

how close they were to be-

ing swallowed up by the credit cri-

sis three years ago. The more I hear

these stories, the more I know auto

fi nance 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 Na-

tional Auto Finance Association’s

15th annual conference. First, lenders

have fi nally realized that F&I manag-

ers are fairweather fans. If they’re not

buying, you’ll fi nd someone who is.

I also got the sense that fi nance

sources are no longer looking to

grow by moving outside of their

comfort zones. Instead, they’re look-

ing to pick up market share by adding

more dealers with the types of cus-

tomers they like. That’s good news

if you have a solid lender spread, but

I’m not sure the “I’ll-send-you-four-

good-deals-if-you-buy-this-one” tac-

tic is going to work anymore.

The capital markets also are doing

well, which means there’s money to

lend. What’s driving the auto seg-

ment 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 prob-

lem out there.

Now for the scary part. Several

conference presenters speculated

where this margin-compressed, Inter-

net-driven market is headed. Are we

at the beginning stages of a recovery

or in a race to the bottom? Accord-

ing 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 man-

age their inventory like an invest-

ment 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 any-

one who would listen that the indus-

try was in for a major transformation.

When times were good, the industry

grew too fat and lazy to explore ex-

actly 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 vari-

able, fi xed and semi-fi xed 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 effi cient market. Such mar-

kets are characterized by pricing at

the margins and more effi cient op-

erators. Those who don’t get in line

with this movement will be lost,

Pollak said, but those who do will en-

joy 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 val-

ues and appraisals no longer works.

Instead, he thinks everything should

start with an average retail price. Once

you know that, you can subtract your

profi t objective, reconditioning, trans-

portation and auction fees to come up

with a more dialed-in acquisition cost.

It’s this kind of granular look at pric-

ing that will continue to cut into mar-

gins and drive down profi ts, he said.

In Pollak’s vision of the future,

dealers will no longer be able to op-

erate big, “Main Street” storefronts.

Instead, we will see acre-and-a-half

lots located off the beaten path. In-

house service departments will be

replaced by offsite facilities shared

by multiple dealerships. The family-

owned, single-point store, he added,

will go the way of the family farm.

See, Pollak believes that the al-

batross 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 profi t

made in service or F&I will help.

Then there’s the Internet shopper,

who is making it so those prime loca-

tions are no longer required. Problem

is, dealers simply can’t extract them-

selves 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 Am-

azon.com in the future? I don’t know

about that, but change is needed.

Rime of the Ancient Dealer

Letter From the Editor

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

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In the wake of the US Fidelis

debacle, the Missouri General

Assembly has sent a new bill to Gov. Jay Nixon’s offi ce that aims to

toughen the state’s regulation

of direct-to-consumer sales.

US Fidelis, which left thou-

sands of customers in the lurch

when it fi led for a high-profi le

bankruptcy last year, was

based in St. Louis, a city and state that

remains home to many of these direct-

to-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 compa-

nies using deceptive sales techniques

to sell service contracts to customers.

“This was the No. 1 [issue] gen-

erating complaints to the Attorney

General’s offi ce and the Better Busi-

ness 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 com-

pany was reported to have been using

manufacturers’ names and logos with-

out permission for marketing purpos-

es, 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 15-

mile 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

profi table 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 defi nition of

a service contract to include additive

warranties, and a clarifi cation on a

consumer’s cancellation rights.

“We’re hopeful that this bill will

make people think twice before con-

tinuing with the practices that have

occurred out there over the last cou-

ple of years,” said Stephen McDan-

iel, 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.

FTC Finds Auto Dealers Compliant With Consumer Protection RuleAUTO 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 op-erations to determine the industry’s compliance with its “Holder in Due Course” rule. The agency closed its investigation after fi nding broad compliance among the dealers it

reviewed. The rule in question

preserves consumers’ rights to raise claims and defenses against

purchasers of consumer credit contracts. If a dealer

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 staff-ers 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 obliga-tions under the rule will expand in the near future due to the Dodd-Frank Act. The rule currently does not require dealers to include the notice in credit contracts exceeding $25,000 in the amount fi nanced, 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.

Missouri Service Contract Bill Passes Legislature

Developments


FINAD11nae.indd 1 1/4/11 11:31:45 AM

MISSOURI STATE CAPITOL PHOTO BY KTRIMBLE

Jefferson City, Mo.

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FI0711develop.indd 10FI0711develop.indd 10 7/1/11 1:48:47 PM7/1/11 1:48:47 PM

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Developments


W 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 ac-

quisition of Chrysler Fi-

nancial by Toronto-based

TD Bank Group, which

added its existing portfolio

business to the former cap-

tive’s portfolio.

“It’s great to be here in

Chrysler Financial’s home-

town of Farmington Hills to

announce our exciting new

TD Auto Finance brand,

which represents both the

fi nancial stability and re-

nowned customer service

of TD and the deep expe-

rience and partnerships of

the former Chrysler Finan-

cial,” said Thomas F. Gil-

man, the company’s presi-

dent and CEO.

Sources close to the

company said TD Auto

Finance has signed 6,200

U.S. dealers since Decem-

ber. Half of those are new

relationships for the for-

mer captive and about 22

percent are Chrysler deal-

ers. The focus of the initial

lending program will be on

prime buyers, with no spe-

cifi c timeline for adding

subprime, nonprime, leas-

ing or fl oorplan fi nancing

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 overwhelm-

ingly positive.”

TD Auto Finance Open for Business

TD Auto Finance execu-tives Tracy Hackman and Tom Gilman unveiled the new lending unit’s logo to a crowd of auto dealers, civic offi cials and staff.

THE FEDERAL RESERVE

Board (FRB) announced June 20 that auto deal-ers are temporarily not required to comply with certain data collection requirements in the Dodd-Frank Act. Initially, Dodd-Frank amended the Equal Credit Op-portunity Act (ECOA) to require creditors to collect and report information from credit applications made by women- or minority-owned businesses.

The proposed rule falls under the ECOA, also known as Reg. B, and will allow dealers to remain exempt until the fi nal regulations are issued.

Although the Con-sumer Financial Protec-tion Bureau (CFPB) will have the authority to implement this provi-sion of the ECOA, the FRB will maintain the same authority for cer-tain dealers.

Creditors are not obligated to comply with the requirements until the CFPB issues detailed rules to imple-ment 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.

FRB Temporarily Exempts Dealers From Certain Dodd-Frank Requirements

A new Kelley Blue

Book Market In-

telligence 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 con-

sidering decreased from

35 percent in April to 30

percent in May. Consum-

ers also are feeling better

about their current eco-

nomic situation, according

to the study.

Concern about qualify-

ing for an auto loan de-

creased from 27 percent

in January to 17 percent

in May. The study also

showed a 10 percent de-

crease in the number of

respondents who said they

are delaying a vehicle pur-

chase.

If prices remain around

$3.27 per gallon, car shop-

pers likely will not make

major changes in vehicle

consideration criteria, ac-

cording to the study. How-

ever, at the $4 per gallon

price point, 66 percent of

consumers said their vehi-

cle consideration would be

impacted. At $5 per gallon,

90 percent of respondents

said their vehicle consider-

ation would be affected.

Kbb.com Study: Consumers Not Panicking Over Gas Prices


Our loyalty to dealers hasnever wavered.And it never will.

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Call your Chase Regional Manager directly:

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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

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HYUNDAI HAS LAUNCHED

an in-store accessory sales program that will be facilitated by MOBIS Parts America and powered by the Insignia Group’s Web-based accessory sales tools. Through Insignia,

Hyundai dealers will be trained on accessory sales and order manage-ment and have access to performance report-ing and tracking tools, as well as a customer interactive 360-degree vehicle confi gurator.

Ally Financial announced that William Muir, president and head of global automotive

services operations, has post-poned his previously announced retirement and will remain with the company indefi nitely. 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 fi nance and corporate planning. Brown now reports to Michael Carpenter, Ally’s CEO.

Additionally, James Mackey was named Ally’s chief fi nancial offi cer. He will report to Jeffrey Brown and

lead Ally’s fi nancial 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 fi eld 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.

Flagship Buying Below-Prime PortfoliosFLAGSHIP ACCEPTANCE

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

Nonprime Source Opens in California, TexasCARFINANCE CAPITAL LLC,

a new nonprime auto

program nationwide for the remainder of 2011.

GM Finance to Offer Floorplan Financing This YearGENERAL MOTORS CO.

said it plans to launch a fl oorplan fi nancing pilot program through its cap-tive lender, GM Financial, before the year is out. The program is part of GM’s efforts to re-create a full-service captive fi nance company. Dan Berce, the fi nance unit’s president and CEO, said GM aims to provide 10 to 20 percent of the fl oorplan loans to its dealers “within a year or two.” Most of that fi nancing is now pro-vided by the government-controlled Ally Financial Inc., which handled about 82 percent of GM dealer fl oorplan loans in 2010’s fourth quarter.

fi nance source founded by former Triad Financial executives and head-quartered 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

company launched on the West Coast in May and entered the Texas market in June. Company offi cials said the new fi nance source, which is focused on a FICO score range of 550 to 670, will continue to roll out its

Developments


Moves and Hires

FI0711ally_uwc.indd 1 6/14/11 8:45:10 AM

Hyundai, Partners Launch Accessory Sales Programs


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The easy part is to sell you

the car,” Donald Dwan,

general sales manager of

Honda of Tenafl y, 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 cus-

tomer-fi rst culture at the 79-year-old

New Jersey dealership. Maintaining

that image in today’s Internet age,

however, has proven to be far more

complicated.

The two-minute video Dwan ap-

pears 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 Tenafl y.” 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 Tenafl y’s third-generation

owners, Norman Dorf and brother

Jeffrey, have made to compete in the

digital realm.

Two years ago, the dealership de-

cided to eliminate its business devel-

opment center. Veteran salespeople

now handle Internet leads and work

the phones. “We were spending a for-

tune on manning a decent-sized In-

ternet department and we were going

through people all the time,” Norman

Dorf says. “That meant we had the

least experienced people taking calls.

Something just didn’t feel right.”

The Costs of TechnologyThe D&C name has existed in New

Jersey’s Bergen County — one of

the highest per-capita income coun-

ties in the United States — since

1932. That’s when the family opened

a Chevrolet dealership at its County

Road location. In 1971, it became the

state’s fi rst 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 Leh-

man Brothers fi led for bankruptcy in

September 2008. Things could have

been worse for the dealership if not

for the support of the affl uent com-

munity it serves.

The following year wasn’t much

better, but not any worse. “Like ev-

eryone else, we made some adjust-

ments with staffi ng 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 locat-

ed a mere eight miles away, but that

didn’t stop Honda of Tenafl y from re-

cording fi ve 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 spend-

ing a fortune between all the differ-

ent technology companies. And now

I need to pay someone to handle my

Facebook page?”

Those rising costs were the pri-

mary 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 ResetArthur McCracken is Honda of

Tenafl y’s Internet sales manager. He

oversaw the creation of the dealer-

ship’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.


Dealer Profile

Hybrid Dealer

The

Eliminating the business development center could be the death knell for any dealership in today’s

Internet age, but not for Honda of Tenafl y. In fact, it’s had the opposite effect. By Gregory Arroyo

PHOTOS BY DAVID TENG

FI0711profile.indd 16FI0711profile.indd 16 7/1/11 11:42:20 AM7/1/11 11:42:20 AM

“It was a necessary move, overall,

because what we were doing defi nite-

ly wasn’t working — especially fi -

nancially,” 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 tal-

ents 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 di-

vide 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

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 oper-

ated as a one-man department for

the fi rst 30 days after the change, and

he quickly identifi ed the more tech-

savvy salespeople to help him handle

leads. That continued until the sum-

mer, 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 han-

dling 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 ev-

erybody kind of got it.”

By the time it was eliminated,

McCracken’s former department ac-

counted for 18 percent of the dealer-

ship’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 staff-

ers also are converting 10 percent of

the leads they get, and McCracken

has his sights on 15 percent.

Call in the StrategistMcCracken didn’t go it alone. He

had sales strategist and trainer

Cory Mosley, the magazine’s “Sales

Driver” columnist, with him ev-

ery step of the way. Mosley had

worked with the dealership when it

established its BDC and was instru-

mental in formulating the strategy

for the dealership’s new direction.

What McCracken liked about Mosley

was the way he meshed his philoso-

phies with the dealership’s culture.

“When I was going to take over the

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 un-

derstand 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 custom-

ers are arming themselves with.

“You need to know exactly what the

consumer is seeing if you want to pro-

tect gross profi t and regain control,”

says Mosley. “People think ‘control’

is a bad word, but it’s about leading.”

July 2011 F&I and Showroom 17

The hybrid sales department thatArthur 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.


One term Mosley added to the deal-

ership’s lexicon was “price consulta-

tions,” 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 cus-

tomers 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 benefi cial. They allow custom-

ers to rate their experiences and help

dealers identify holes in the process.

Filling the GapsThe work McCracken put forth to cre-

ate Honda of Tenafl y’s BDC wasn’t

all in vain. When the salespeople

came online, having advanced sys-

tems in place allowed management to

identify several procedural gaps that

additional technology could fi ll.

The fi rst new solution was installed

by Sunnyvale, Calif.-based Response-

Logix Inc., which Mosley recommend-

ed. The company’s lead-management

experts equipped the dealership with

software that automates responses to

price-quote requests. In fact, custom-

ers can receive multiple price quotes

within 10 minutes, the baseline Mos-

ley 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 Di-

ego-based Autofusion Corp. “It was

about putting as many mousetraps in

place as we could,” Mosley says. “I

just wanted the Website to give cus-

tomers every reason to buy from the

dealership.”

Site visitors are quickly engaged

by a chat feature provided by Activ-

Engage Inc. Todd Smith, CEO of the

Orlando, Fla.-based company, once

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 spe-

cials and store hours, and can even

connect them to a fi nance manager.

“Here’s a dealer not located on

a main highway, doesn’t have a 40-

acre facility, yet is highly competi-

tive,” Smith says. “And that’s because

they’re good at connecting with their

local audience and because they know

that success goes beyond the sale.”

Weaving everything together was

DealerSocket’s CRM offering. Mc-

Cracken was on the phone with the

company at least once or twice a day

during those fi rst few months to get

the system to mesh with the dealer-

ship’s process and the sales team’s

skill set.

“Ultimately, the CRM is what con-

nects 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 on-

board with everything.”

The dealership’s hybrid sales de-

partment 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 ev-

eryone or in every market. However,

he believes that the connection be-

tween 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 Mc-

Cracken 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 ef-

forts. After that, he’ll begin integrat-

ing 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 ap-

preciate that.”

Mosley also is amazed at what

Honda of Tenafl y was able to accom-

plish. “Nine times out of 10, elimi-

nating 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 pre-

mier highway location or an unlim-

ited, mega-group-supported advertis-

ing budget to be successful. You can

change the rules and still win.”


Dealer Profile

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

“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


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Delinquencies and dollar volume of at-risk loans continued to fall in the fi rst quarter, and auto fi nance 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 fi nance trends from the quarter. By Melinda Zabritski


As the auto fi nance landscape continued to

stabilize in the fi rst quarter of 2011, lend-

ing sources continued to show a higher tol-

erance 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

fi nance 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 vol-

umes 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.

Drop in Delinquencies Lowers At-Risk Loan VolumesVehicle owners did a signifi cantly better job making pay-

ments on time in the fi rst quarter, helping the automotive

fi nance market stabilize more than it had during the year-

ago period.

Thirty-day delinquencies are at their lowest point since

the fourth quarter of 2008, giving lenders a little more lee-

way in their credit decisions. Having dropped 7.95 percent,

30-day delinquencies contracted to 2.52 percent in the fi rst

2.50%2.25%

Bank

2.98%2.67%

Captive

1Q 2010 1Q 2011

1.47%1.42%

Credit union

5.35%4.83%

Finance/other

30-Day Delinquency Rate

5.5%

4.5%

3.5%

2.5%

2.0%

1.5%

1.0%

0

0.73%0.60%

Bank

0.65%0.50%

Captive

1Q 2010 1Q 2011

0.40%0.35%

Credit union

1.75%1.58%

Finance/other

60-Day Delinquency Rate

2.0%

1.5%

1.0%

0.5%

0

Auto Finance

■ 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 year-ago quarter to $25,404.

■ The average loan amount for a used vehicle jumped $397, increasing from $16,636 in the fi rst 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.

1Q 2011: By the Numbers

First Quarter Delivers Optimistic Outlook

PHOTO ©ISTOCKPHOTO.COM / STURMWARNUNG

FI0711experian.indd 20FI0711experian.indd 20 6/30/11 4:35:58 PM6/30/11 4:35:58 PM


FI0511friendly.indd 1 4/27/11 11:37:15 AM


quarter from 2.74 percent a year ago. Sixty-day delinquen-

cies dropped by 13.45 percent in the same period, with the

captive fi nance segment enjoying the largest decline.

In addition, those drops in delinquencies lowered the to-

tal dollar volume of at-risk automotive loans from nearly

$20 billion in the fi rst quarter of 2010 to $16 billion in the

fi rst quarter of this year.

Lenders Ease Loan CriteriaIn 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 in-

creased from 9.71 percent in the year-ago quarter to 10.57

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 refl ected in average credit scores. For new-vehicle

fi nancing, the average credit score fell to 766, 10 points

lower than in the fi rst 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 MarketDespite all the buzz about the sluggish economy caus-

ing consumers to hold on to their vehicles longer, loan

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 year-

ago period.

Among lenders, loan age for banks and captive lenders

dropped, while the average loan age for credit unions and

fi nance companies increased. Finance companies showed

the largest spike, moving from 28.64 months in the fi rst

quarter of 2010 to 30.82 months in the fi rst quarter.

Loan age for all risk tiers except for subprime, which

jumped by 1.22 months, experienced a drop from the fi rst

quarter of 2010 to the fi rst quarter of this year. Loan age

fell 1.82 months for superprime customers, 0.69 months

for prime customers and 0.76 months for nonprime cus-

tomers. Loan age for the deep subprime segment plum-

meted by 6.25 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 to-

ward higher-end credit customers.

Auto Finance

1Q 2010

100%

80%

60%

40%

20%

0

New-Vehicle Financing by Risk Segmentation

1.4%5.7%9.7%

13.2%

69.9%

1Q 2011

2.0%6.2%

–4.7%

+11.1%10.6%

13.7%

65.6%

44.8%

Deepsubprime

8.5%

Subprime

7.8%

Nonprime

3.1%

Prime–6.2%

Superprime

Year-Over-Year Change in Risk Distribution

50%

40%

30%

20%

10%

0

-10%

28.1 27.629.4

27.7 26.526.828.6

30.8

Bank Captive

1Q 2010 1Q 2011

Credit union Finance/other

Average Loan Age by Lender Type

35

25

15

5

0

32.5

26.230.231.4

27.7 27.0 26.625.9 27.225.4

Deepsubprime

Subprime Nonprime Prime Superprime

Average Loan Age by Risk Segmentation

35

25

15

5

0

1Q 2010 1Q 2011

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.

▲


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Financing and Monthly Payments Remain FlatThere was little change in loan characteristics, with

monthly payment, loan length and amount fi nanced stay-

ing relatively stable. The average loan amount for a new

vehicle increased by a mere $8 to $25,404 in the fi rst quar-

ter, while the average used-vehicle loan increased by $397

to $16,636 in the fi rst quarter of this year.

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 in-

creased from 57 months to 58 months.

Continued Expansion Rests on the EconomyThe 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 sus-

tained 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 [email protected].

Auto Finance

Top 20 Lenders by Market ShareTHE 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 fi rst 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%

2 Wells Fargo Dealer Services 6.07%

3 Toyota Financial Services 5.23%

4 Chase Automotive Finance 4.27%

5 Honda Financial Services 3.8%

6 Ford Motor Credit 3.44%

7 Capital One Auto Finance 2.8%

8 Bank of America 1.91%

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%

Average Amount Financed

$30K

$25K

$20K

$15K

$10K

$5K

0

$16,239 $16,636

Used

$25,396$25,404

New

1Q 2010 1Q 2011

Average Monthly Payment

$500

$450

$400

$350

$300

$250

$341 $343

Used

$462 $460

New

1Q 2010 1Q 2011

PHOTO ©ISTOCKPHOTO.COM / MONKEYBUSINESSIMAGES

Ally 9.44%

Wells Fargo 6.07%

Toyota 5.23%

Chase 4.27%

Santander 1.56%

Nissan Infiniti 1.8%

Bank of America 1.91%

Fifth Third Bank 1.57%

Capital One 2.8%

Ford 3.44%

Honda 3.8%All others58.11%


mailto:@bobit.com

When traditional loan financing doesn’t cover the F&I products your customer wants, your deal isn’t at a loss. Save-A-Deal provides alternative funding solutions for F&I products not covered by vehicle financing to ensure customers can afford the aftermarket programs they need. Realize F&I profits and save your deal today with quick, 72 hour funding with no dealer cancellations.

Get your customer the financing they need. Call 877-404-6823 or visit www.saveadeal.com for more information.

THIS DOESN’T HAVETO BE YOUR CUSTOMER

FI0711charter.indd 1 6/27/11 11:05:20 AMFI0711experian.indd 27FI0711experian.indd 27 6/30/11 4:36:47 PM6/30/11 4:36:47 PM

http://www.saveadeal.com

UnderF

ounded in 2006, Alphera

Financial Services has oper-

ated under the radar, quietly

expanding its portfolio and

growing its dealer count in

the shadow of BMW Financial Ser-

vices. 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 fi nance

company.

F&I: Talk about the down-turn and how it impacted your operations.

Isele: Like everyone, we were affect-

ed by the credit crunch and the lack of

liquidity, however, we did not exit the

marketplace. We bumped our credit

profi le 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.

F&I: Things were better last year, I take it.Isele: It was a great year for us in

terms of profi tability and volume.

This year we’re ahead of our volume

target, profi tability is exceeding our

plan, and credit losses are below fore-

cast. So we’re going to hit our volume

projections this year, but if it comes

down to volume or profi tability, we’ll

choose profi tability.

F&I: You guys have kind of operated under the radar, haven’t you?

Isele: When we fi rst came to market,

we were only allowed to sell the Al-

phera name. The fact that we were a

division of BMW was totally hush-

hush. What we found pretty quickly

was that saying we’re a division of

BMW actually helped us when we

were in front of dealers.

We also operated with some restric-

tions in those fi rst 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?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 Fi-

nancial Services, which covers BMW

Group products, including new and

used, motorcycles, Mini and Rolls-

Royce. We basically fi nance every-

thing else, from Kia’s to Maseratis.

F&I: Are you looking to sign more dealers?Isele: Not necessarily. However, we

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.

F&I: What customer or vehicle profi le are you looking to fi nance?

Isele: We’ve redefi ned ourselves. We

really bought down into subprime

when we fi rst came to market, but

we found, as others did, that it takes

a signifi cant amount of energy to col-

lect that business. As a result we de-

cided to move toward a more luxury

experience.

Right now we’re about 70 per-

cent used and our mileage ceiling is

90,000 miles at inception. The rea-

son our used percentage is so high is

we’re not going to compete against

the new-car rates offered by cap-

tive fi nance 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

28, so put that on your calendar. What

the JD Power award did was provide

legitimacy to our program and busi-

ness 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.

F&I: What were the keys to earning that accolade?Isele: It’s a combination of things.

We have 14 dedicated Alphera sales

and marketing managers nation-

wide 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 deal-

ers the ability to fund themselves

within 24 hours of keying in some

information. It automatically edits


Executive Q&A

the

Isele

Radar

FI0711qa_alphera.indd 28FI0711qa_alphera.indd 28 6/30/11 4:29:20 PM6/30/11 4:29:20 PM

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 fi ve-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 fi rst 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 fl oorplan fi nancing?Isele: We are a full-spectrum com-

mercial lender, so we have fl oorplan,

real estate, mortgages and term notes.

Our fi nance portfolio is modest now

but growing. Now, we also provide

fl oorplanning to independent dealers,

which is a new twist for us. We fi rst

like to build a relationship on the retail

side. Once we have earned the trust

and confi dence of the dealer, verifi ed

their fi nancials and growth plans, we’ll

move forward with fl oorplan fi nancing.

F&I: So, what’s the ultimate goal?Isele: Well, we really would like to

become a captive fi nance 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 be-

come either a private label fi nancing

organization or a captive for an OEM

— not a domestic make, but a low-

volume import brand.

Quite frankly, there are some

strange bedfellows out there between

OEMs and banks that are not provid-

ing the level of service that is expect-

ed. I think the J.D. Power award put us

back on the radar, and manufacturers

want the service we can provide to

their customers.


FI0711qa_alphera.indd 29FI0711qa_alphera.indd 29 6/30/11 4:29:22 PM6/30/11 4:29:22 PM

A New Lease on

ProfitsA

s the economy and

the auto fi nance land-

scape continues to im-

prove, 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

profi tability and make the return of

leasing a positive for your dealership,

the F&I offi ce must develop inten-

tional and effective strategies.

Different Payment Type, Same Approach The misconception is that lease cus-

tomers aren’t interested in protect-

ing their vehicles. After all, it’s not

their vehicle; they are just “renting”

it for a short period of time. Unfor-

tunately, 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 inten-

tional 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

By all accounts, leasing is back, but that doesn’t

mean your F&I profi ts have to suffer. F&I trainer

breaks down a process for making leasing a win-win

for the fi nance offi ce and the dealership.

By Rick McCormick



PHOTO ©ISTOCKPHOTO.COM / SKYAK

FI0711leasing.indd 30FI0711leasing.indd 30 6/30/11 4:33:17 PM6/30/11 4:33:17 PM

FI0411wisefi.indd 1 3/25/11 8:30:54 AM





F&I managers are always thinking

of what to say next. Great F&I man-

agers, however, are thinking of what

to ask next! And the more needs dis-

covery questions you ask, the more

you’ll fi nd out why your customer

needs your product.

Your questions will extract the

need for your products, but custom-

ers won’t buy if they haven’t discov-

ered that need for themselves. That’s

why your intentional needs-discov-

ery process must center on how your

products will protect them from the

hidden costs of leasing. And remem-

ber, nothing hurts customer satisfac-

tion more than fi nding out they’re on

the hook for an unexpected cost at

lease end.

What’s In Your ContractThe manufacturer’s wear-and-use

guidelines provide a perfect start-

ing 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 exces-

sive 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 prod-

ucts you offer cover all the possible

issues your customers could face

throughout the life of the lease.

Filling in the GapsSimply asking, “What do you like

about leasing?” can help you uncover

exactly what the customer does and

doesn’t know about the responsibili-

ties that come with a leased vehicle.

For instance, they may not be aware

that if they have to replace a fl at 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, espe-

cially since you are leasing this ve-

hicle. 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-

IT MAY SEEM LIKE A BOOM, BUT the recent pickup in leasing is more of a correction. The indus-try 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 man-ages NADA Used Car Guide’s edi-torial and data services, believes

leasing will stay within the 20 to 25 percent range going forward, which would be a healthy per-centage for the industry.

Products ideal for a lease include excess wear-and-tear coverage, interior and exterior protection, tire-and-wheel pro-tection, key replacement, dent-and-ding protection, prepaid maintenance and windshield protection.

Lease Share of New-Vehicle Sales

2010 2011

24.1%22.6%

23.7%24.5% 23.7%24.5% 24.2%23.1%

March April May June2011: June 1–15 only

SOURCE: CNW RESEARCH


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

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 depart-

ment. 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.

That customer was excited that the

coverage had saved them money in

the fi rst 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.

The Road to ConsistencyProducing a consistent profi t on lease

transactions is defi nitely challenging.

Aside from breaking through those

misconceptions about leasing’s im-

pact on F&I production, some manu-

facturers now provide some cover-

age at lease end — and many even

include GAP at no charge. Luckily,

there’s been an infl ux of new ancil-

lary products that address the perils

of leasing that some of the more tra-

ditional products don’t.

Also in the favor of auto dealer-

ships is the fact that F&I managers

are the most adaptive and talented

closers in the store. They have adjust-

ed to a changing customer and tighter

lending guidelines. They have over-

come 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 produc-

tion. But, with the right approach and

a slew of new ancillary products, you

can make leasing a profi table 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 [email protected].


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.

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

PHOTO BY GREGORY ARROYO





If 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 spe-

cifi c 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 con-

sumer 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?” re-

sponses. 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 of-

fering 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 pur-

chase the VSC in the F&I offi ce.

Creating awareness is critical to

gaining a purchase commitment,

but it can be diffi cult 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 offi ce at

the time of purchase?

To visually create a need for a VSC

in the F&I offi ce, you need to send

your customer on a service walk-

through. Ideally, it should be per-

formed by the sales consultant after

the F&I manager is introduced and

while he or she is getting the paper-

work ready.

Guided TourThe service walk can be one of the

most infl uential steps on the road

to the sale. Many salespeople don’t

like this step, but the reality is a ser-

vice tour adds value to the sales pre-

sentation 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 impor-

tant 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 con-

sultant to point out that the store’s

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 sup-

plies each month — also lets the

customer know that your dealer-

WTake a

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

The service walk can be one of the most infl uential 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.

PHOTO ©ISTOCKPHOTO.COM / LEEZSNOW

FI0711service.indd 34FI0711service.indd 34 6/30/11 4:23:11 PM6/30/11 4:23:11 PM

ship is armed for more than just

oil changes and tire rotations.

Back in the BoxThe 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 ser-

vice 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 fi rst: If your sales con-

sultant has not taken the customer on

the tour, call him or her into your of-

fi ce to do so.

F&I manager: Did your sales con-

sultant 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 fi rst oil change.

Scheduling that fi rst oil change

gets the customer thinking about how

they’ll maintain and service their ve-

hicle. It’ll also remind the customer

of the thousands of dollars the deal-

ership invested to keep the parts de-

partment well-stocked and the ser-

vice department well-equipped.

With sales and fi nance working

together to create awareness, you’re

getting closer to gaining a commit-

ment from the customer to purchase

a service contract or prepaid mainte-

nance plan. Now let’s review a couple

of word-tracks to hammer the mes-

sage home:

1Prepaid Maintenance: Schedul-

ing the customer’s fi rst oil change

is the perfect lead-in for presenting a

prepaid maintenance program. Here’s

how it works:

F&I manager: Now that you’re set

up for your fi rst oil change, you have

an opportunity to take advantage of

our prepaid maintenance program.

May I share the benefi ts with you?

Customer: Sure.

2Vehicle 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 ben-

efi cial 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 depart-

ment, 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 certi-

fi ed technicians keeps nearly $15,000

worth of tools in their toolboxes, and

our parts department stocks an av-

erage 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 fi lters. 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 train-ing at Clearwater, Fla.-based United Development Systems. He can be reached at [email protected].


Walk

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

FI0711service.indd 35FI0711service.indd 35 6/30/11 4:23:15 PM6/30/11 4:23:15 PM



Does life in the car business really mean working ‘bell to bell’? Is good talent really that diffi cult to fi nd? Sales columnist offers Part One of his take on how to fi x one of the industry’s biggest problems. By Cory Mosley

During 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 inabil-

ity 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 man-

ager, the twice-fi red salespeople and

a fresh-from-rehab fi nance manager

on his third tour at the dealership.

When I asked why this was happen-

ing, the client said, “It’s hard to fi nd

people.”

That answer, along with “This is

the car business,” are two of the all-

too-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 ScheduleThe 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 out-

ings and countless other pursuits.

Is the bell-to-bell lifestyle the only

way to successfully run a car dealer-

ship? Is the end-of-the-month frenzy

to roll more vehicles and get deals

done the only option for maximiz-

ing sales?

One of the fi rst 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 al-

lowed employees to take two Satur-

days 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 sched-

ules 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 dealer-

ship 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. LeadersThere are probably people out there

more qualifi ed 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 lead-

ers are self-improving. They realize

that their team must fi rst 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 de-

fault, but what they really do is man-

ifest followers. Managers simply

have subordinates.

Let’s review a few typical charac-

ter differences between leaders and

managers:

■ An approach of calculated

change vs. stability.

■ Vision vs. objectives.

■ Personal charisma vs. formal au-

thority.

■ 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 anony-

mously 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 Au-

tomotive Training, a company focused

on new-school techniques, products

and services. He also is the creator of

the “Control Your Sales Destiny” semi-

nar series. E-mail him at cory.mosley@

bobit.com.

Challenging the Status Quo

Sales Driver

FI0711salesdriver.indd 36FI0711salesdriver.indd 36 6/30/11 3:23:05 PM6/30/11 3:23:05 PM

I 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 work-

able program that fairly compensates

the employee while the company

retains a handsome profi t. F&I man-

agers want a reasonable incentive to

keep those profi ts 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-fash-

ioned way: one deal at a time. I be-

lieve that pay plans that promise high

incomes and fat guarantees work

fi ne for the fi rst few months of a new

hire, but after that they tend to fos-

ter 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 un-

dermine their dealers when discuss-

ing 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.

1Making 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 fi gure out a pay plan,

but neither can say whether the cur-

rent program will fi x 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 fi ll 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 up-

per limits of the plan. Hey, I get it. It’s

just too diffi cult to justify the pay.

The answer to most situations can

be found at the desk of the comptrol-

ler. 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.

2Striking a Balance: On the other

side of the table, the F&I man-

ager must realize that few dealers

come to the bargaining table with

a blank check. Some F&I manag-

ers are only looking for the bigger,

better deal, but the career employee

looks at adding to the dealer’s bot-

tom 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.

3Need vs. Want: Just as the deal-

er must give careful consider-

ation 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 nego-

tiating 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 staff-

er to maximize productivity. I know

the idea of having to share a piece

of the action with a newbie is disap-

pointing, 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. At-

tach a congratulatory note as well.

It will amaze you how much more

production you will see from your

manager.

Marv Eleazer is the fi nance manager at

Langdale Ford in Valdosta, Ga. E-mail

him at [email protected].

It Takes Two

Mad Marv


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

FI0711madmarv.indd 37FI0711madmarv.indd 37 6/30/11 4:34:48 PM6/30/11 4:34:48 PM


FI0711mosley.indd 1 6/22/11 12:31:16 PM


Legal

A s we approach the one-year

anniversary of the federal

law that established the Con-

sumer Financial Protection Bureau,

it’s probably worth recapping the

CFPB-related events of the last sev-

eral months in order to get some idea

of how our federal dollars are being

spent protecting consumers’ fi nan-

cial interests.

Although it is not scheduled to for-

mally assume any regulatory author-

ity until July 21, 2011, the CFPB has

launched its Website, www.consumer

fi nance.gov. There you’ll fi nd a video

that explains the causes of the fi nan-

cial crisis and how the agency will be

a “cop on the beat” to protect con-

sumers. 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 fl ying about a possible recess ap-

pointment of the agency’s interim di-

rector, professor Elizabeth Warren. A

nomination in July would leave very

little time for a Senate confi rmation

of the selection before the bureau of-

fi cially assumes its duties. Despite

the lack of a director, the CFPB, its

interim director and her team lead-

ers 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 elimi-

nating its status as an independent

entity under the Federal Reserve

Board. They also want to restruc-

ture the bureau’s leadership as fi ve

commissioners serving staggered

terms, with no more than three seats

per political party. This isn’t a radi-

cal approach — it’s how the Federal

Trade Commission and the Securi-

ties and Exchange Commission are

set up.

Other measures to reduce the bu-

reau’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 re-

placed, if at all, she will serve as the

credit czar and remain the “go-to”

person for the CFPB. On March 16,

she testifi ed before the House Sub-

committee on Financial Institutions

and Consumer Credit. She discount-

ed a rules-based approach to fi nan-

cial services oversight, claiming that

too many rules bog down the indus-

try and put smaller competitors in

the fi nancial products marketplace at

a competitive disadvantage.

“A simple, straightforward, and

consistent presentation of a credit

agreement is the best way to level the

playing fi eld between consumers and

lenders — and among different types

of lenders,” she said, in part.

Does this mean we might see an

auto fi nancing contract that can fi t

on a postcard? Probably not. But it

may lead to abbreviated retail install-

ment contracts for car dealers. War-

ren 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, fi nance and

lease industries wary that the bureau

would be staffed by consumer advo-

cate-type zealots with little experi-

ence, the appointments of Leonard

Chanin as rule-writer in chief, and

of Peggy Twohig as chief-in-charge

of non-depository institutions (sales

fi nance 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 fi nancing), 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 Cha-

nin 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 fi rst 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 fi rm of Hudson Cook LLP and

the author of several books, available

at CounselorLibrary.com. ©2011 Coun-

selorLibrary.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).

Ready to StrikeThe 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

FI0711legal.indd 38FI0711legal.indd 38 7/1/11 1:00:20 PM7/1/11 1:00:20 PM

http://www.consumer

FI0711mosley.indd 1 6/22/11 12:31:16 PMFI0711legal.indd 39FI0711legal.indd 39 7/1/11 1:00:21 PM7/1/11 1:00:21 PM

FIC06-44summit_6pp.indd 1 6/30/11 9:39:48 AMFI0511cudl.indd 1 4/12/11 5:10:16 PM


Bottomliners

IAS HAS ANNOUNCED

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

customer. Results can then be sent to mul-tiple departments via text or e-mail. The software is available

immediately and will run on pop-ular tablets such as the Apple iPad, most Google Android tablets, and the Blackberry Playbook, accord-ing to IAS. For more information, visit www.iasdirect.com.

IAS Releases Tablet-Based Software for F&I

Wolters Kluwer Opens Indirect Lending DirectoryWOLTERS KLUWER FINANCIAL

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

Reynolds Launches dealerPAD iPad AppREYNOLDS 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 provid-er’s Contact Management solution for the ERA dealership manage-ment system. For more informa-tion, visit www.reyrey.com.

eBay Motors Launches iPhone AppTHE EBAY MOTORS

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 identifi cation number (VIN) to automatically add car details or shop the eBay Motors inventory to fi nd vehicle-specifi c parts and accessories.

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

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 val-ues, trade-in values, as well as wholesale lending and auction values, all updated weekly. For more information, visit www.quickvalues.com.

Product Feature

uce cus

cttts

immediately

FI0711bottom.indd 40FI0711bottom.indd 40 6/30/11 3:21:43 PM6/30/11 3:21:43 PM

http://www.wolterskluwerfs

http://www.reyrey.com

http://www.quick

http://www.iasdirect.com

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 fi nance 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

Agenda, Keynotes, and Executive Leadership Program information inside!

FIC06-44summit_6pp.indd 1 6/30/11 9:39:48 AMFI0711bottom.indd 41FI0711bottom.indd 41 6/30/11 3:21:46 PM6/30/11 3:21:46 PM

http://www.IndustrySummit.com


Monday, September 26, 2011 8:00AM – 4:00PM

Control Your Sales DestinyLeading sales trainer Cory Mosley’s new seminar series was designed to maximize

front-line profi ts by leveraging new-school training principles. Additional charge applies

10:00AM – 4:00PM

AFIP Certifi cation Program 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-specifi c ethical practices. Additional charge applies

12:30PM – 4:30PM

Buy Here, Pay Here for Franchised Dealers

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

Monday, September 26, 2011 5:10PM – 6:00PM

No Shortcuts: Building a Sustainable Auto Franchise

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.

Tuesday, September 27, 20119:10AM – 10:10PM

After the Storm: Rebuilding the Automotive Industry

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.

Tuesday, September 27, 20112:00PM – 3:00PM

The Future of Dealer-Assisted Financing

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.

Executive Leadership Program

Keynote Speakers

Register now at IndustrySummit.com or cFIC06-44summit_6pp.indd 2-3 6/30/11 9:34:16 AMFI0711bottom.indd 42FI0711bottom.indd 42 6/30/11 3:21:46 PM6/30/11 3:21:46 PM


Monday, September 264:30PM – 5:30PM General Session: State of the Special Finance Industry6:00PM – 7:30PMNetworking Reception

Tuesday, September 278:00AM – 9:00AMExhibit Hall Open (Breakfast served)9:00AM – 9:45AMEducation Session: The Search for Inventory9:00AM – 9:45AMFinance Company/Vendor Presentations10:00AM – 11:15AMEducation Session: Marketing Best Practices: Dealer Panel10:15AM – 11:00AMFinance Company/Vendor Presentations11:30AM – 12:15PMEducation Session: Maximizing Deal Structure

11:30AM – 12:15PMFinance Company/Vendor Presentations12:30PM – 2:00PMExhibit Hall Open (Lunch Served)1:45PM – 2:30PMFinance Company/Vendor Presentations2:00PM – 3:30PM Education Session: Legal Jeopardy2:45PM – 3:30PMFinance Company/Vendor Presentations3:45PM – 4:15PMEducation Session: Finding Exceptional Performers3:45PM – 4:15PMFinance Company/Vendor Presentations4:45PM – 5:30PMEducation Session: Sales Processes That Produce4:45PM – 5:30PMFinance Company/Vendor Presentations5:30PM – 7:30PMNetworking Reception in Exhibit Hall

Wednesday, September 288:00AM – 9:00AMExhibit Hall Open (Breakfast served)9:00AM – 11:00AMEducation Session: Call Center Best Practices: Dealer Panel9:00AM – 12:15PMFinance Company/Vendor Presentations11:30AM – 12:30PMEducation Session: Standout Finance Companies12:30PM – 2:00PMExhibit Hall Open (Lunch served)2:00PM – 2:45PMEducation Session: Avoiding Funding Follies4:00PM – 5:30PMReception in Exhibit Hall

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

Monday, September 26, 2011 8:00AM – 5:00PMRegistration Open5:10PM – 6:00PMEvening Keynote: Kevin Borgmann, Capital One Auto Finance6:00PM – 7:30PMWelcome Reception

Tuesday, September 27, 2011 7:00AM – 8:00PMRegistration Open 8:00AM – 9:00AMExhibit Hall Open (Breakfast served)9:00AM – 9:10AM Welcome to Industry Summit 9:10AM – 10:10AM Opening Keynote Address: John Gray, Experian Automotive10:15AM – 11:15AM Panel Session: The Idea Exchange: Trainers’ Best Practices for Sales and F&I11:30AM – 12:30PM Workshop: 10 Habits of Highly Successful F&I Managers11:30AM- 12:30PMWorkshop: A Dealer’s Guide to Digital Compliance

12:30PM – 2:00PM Exhibit Hall Open (Lunch served) 2:00PM – 3:00PM Afternoon Keynote Address: Stephen Wade, NADA 3:05PM – 4:05PM Panel Session: Executive Panel3:05PM – 4:05PMWorkshop: Out With the Old: New-School Training Ideas4:30PM – 5:30PM Workshop: Best Practices for F&I Managers and General Agents4:30PM – 5:30PMPanel Session: Captive Lenders Roundtable5:30PM – 7:30PM Networking Reception in Exhibit Hall

Wednesday, September 28, 2011 7:30AM – 5:30PM Registration Open 8:00AM – 9:00AM Exhibit Hall Open (Breakfast served)9:00AM – 10:10AMPanel Session: F&I Managers Roundtable 10:15AM – 11:15AM Workshop: Creating Interest When the Customer Says ‘No’

10:15AM – 11:15AMWorkshop: How Did We Do? Update on the Frank-Dodd Act11:30AM – 12:30PM Workshop: Game Changers: 3 Can’t-Miss Closes11:30AM – 12:30PMWorkshop: Marketing in the Digital Age12:30PM – 2:00PM Exhibit Hall Open (Lunch served) 2:00PM – 3:00PM Workshop: Lights, Camera, Action! Training With Video Technology2:00PM – 3:00PMWorkshop: Profi ts and Pitfalls: Joining the Social Media Revolution3:05PM – 4:00PM Workshop: How to Create a Virtual F&I Offi ce3:05PM – 4:00PMWorkshop: Fixing the Desk at Your Dealership4:00PM – 5:30PM Reception in Exhibit Hall

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

F&I Conference and Expo Agenda

Special Finance Conference Agenda

r call 800-576-8788 today! Turn the page for registration and hotel

information!

FIC06-44summit_6pp.indd 2-3 6/30/11 9:34:16 AMFI0711bottom.indd 43FI0711bottom.indd 43 6/30/11 3:21:48 PM6/30/11 3:21:48 PM

2011 Registration Pricing

Official Conference Hotel


Type Early Bird Rate(on or before Aug. 26)

Regular Rate (after Aug. 26 and onsite)

Full Conference Pass — Dealer Includes access to all F&I educational sessions,

exhibit hall, meals and receptions $695 $795

Full Conference Pass — Agent Includes access to all F&I educational sessions,

exhibit hall, meals and receptions$695 $795

Full Conference Pass — Finance Company Includes access to all F&I educational sessions,

exhibit hall, meals and receptions$695 $795

Industry Pass — Manufacturer/Supplier Includes access to all F&I educational sessions,

exhibit hall, meals and receptions $745 $845

Spouse Pass Includes access to all meals and receptions $250 $350

Groups of fi ve 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 Certifi cation / Basic or Senior $460

Control Your Sales Destiny (lunch included) $299

Las Vegas Hilton3000 Paradise Road, Las Vegas, NV 89109Call 800-732-7117 by September 2, 2011 to register at the special conference rate of $125/night!

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

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

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!

Visit IndustrySummit.com or call 800-576-8788 today!

FIC06-44.11

FIC06-44summit_6pp.indd 4 6/30/11 9:39:50 AMFI0711bottom.indd 44FI0711bottom.indd 44 6/30/11 3:21:49 PM6/30/11 3:21:49 PM



Ad IndexCompany Phone Web Page

Association of Finance & Insurance Professionals (AFIP) 817-428-2434 afi p.com 31

Ally Auto 877-357-8477 (option 6) allyblueprinta.com 15

American Financial & Automotive Services 800-967-3633 afasinc.com C4

AUL Corp. 800-826-3207 aulcorp.com 19

CARLAW Auto Dealer Suite 877-464-8326 counselorlibrary.com 45

Charter Warranty 877-404-6823 saveadeal.com 27

Chase • chase.com 13

Chem Etch Manufacturing Inc. 877-564-2565 chemetchmfg.com 46

CNA National 800-345-0191, ext. 720 cnanational.com C2

Continental Warranty Inc. 215-512-5596 continentalwarrantyltd.com 46

CUDL 877-744-2835, ext. 2334 CUDL.com 40

Dealerlink 800-890-8850 DealerLink.us 29

Friendly Finance Corp. 800-872-2877 friendlyfi nancecorp.com 23

Industry Summit 800-576-8788 industrysummit.com 41-44

Innovative Aftermarket Systems (IAS) 800-346-6469, ext. 8989 smartdealerproducts.com 5, 47

JM&A Group 800-553-7146 jmagroup.com 2-3

Mosley Automotive Training • mosleyautomotive.com 39

NAC (National Auto Care Corp.) 800-548-1875 nacsolution.com 9

National Automotive Experts 800-810-8859 nationalautomotiveexperts.com 11

Protective 800-794-5491 protectiveassetprotection.com 7

Reahard & Associates Inc. 866-REAHARD go-reahard.com 1

Resource Automotive 312-560-9182 thewarrantygroup.com/automotive 24-25

Ristken Software Services 800-368-9680 ristken.com C3

TD Auto Finance 800-200-1513 tdafdealer.com 21

United Car Care 800-571-6412 unitedcarcare.com 33, 46

Wise F&I 800-849-1080 WiseFandI.com 31

we are.

FI0411hudco.indd 1 3/28/11 2:30:36 PM

FI0711index.indd 45FI0711index.indd 45 7/1/11 11:41:40 AM7/1/11 11:41:40 AM


Products

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I’m Dave Mathews, President & CEO of UCC.

I learned the value of hard work by working hard.

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

sales and fi nance professionals.

FI07-02.11

To advertise in the next issue of F&I and Showroom, contact David Gesualdo at 727.947.4027 or [email protected].

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http://www.UnitedCarCare.com


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A new study reveals fi ve reasons why some car buyers still dread the dealership experience, as well as fi ve areas dealers can focus on to improve customer satisfaction.

Be it negative or positive, feed-

back can be a very good thing.

Customer reviews help

dealers fi gure 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 com-

plaints 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 Car-

Gurus users in a six-month span.

For each dealer review submitted,

consumers rated their experience

on a scale of one to fi ve stars and

were asked to provide written com-

ments. Of the reviews analyzed, 34

percent had one- or two-star ratings.

Ten percent of reviews had three

stars and 56 percent were awarded

four or fi ve stars.

Poor communication and deceptive

business practices such as bait-and-

switch routines were the top com-

plaints among the negative reviews

examined for the study. Friendly

service and quick responses to online

leads were cited most often in posi-

tive 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 fi ve compliments.

Overall, results sug-

gested that a car dealer’s

candor and responsiveness

carry signifi cant weight

with an Internet shopper

and can make or break a

sale — sometimes even be-

fore the consumer meets the

dealer in person. As the in-

formation age progresses and more

car buyers take time to research pric-

ing, vehicle availability and sales tac-

tics online, they will continue to put a

premium on a dealership experience

that rewards those efforts.

5 Reasons Customers Love or Hate Their Dealers

Industry Trends

Top 5 Reasons Consumers Love Car Dealers

1 Friendly, professional service

2 Fast response

3 Accurate answers

4 Clean dealerships, clean car interiors

5 Good prices

Top 5 Consumer Complaints About Car Dealers

1 No response

2 Bait and switch

3 Communications disconnect

4 Unsatisfactory customer service

5 Time wasted

PHOTO ©ISTOCKPHOTO.COM / ELENATHEWISE

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.

FI0711trends.indd 48FI0711trends.indd 48 6/30/11 4:33:44 PM6/30/11 4:33:44 PM

Solved.

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

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F&I and Showroom July 2011

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