f&i and showroom september 2011
DESCRIPTION
The industry’s leading source for F&I, sales and technologyTRANSCRIPT
SEPTEMBER 2011 $10.00
SASALELES S DRDRIVIVERER:: GGAMAME-E-CHCHANANGEGERSRS || ZIZIEGEGLELER:R: P PROROFIFIT T HAHAPPPPENENSS || MAMAD D MAMARVRV:: BBACACK-K-ENEND D BUBULLLLYIYINGNG
A BOBIT PUBLICATION FI-MAGAZINE.COM
SOCIAL MEDIACLAIMS FIRST VICTIMS
ENTROPY KILLSHOW TO REBOOTYOUR F&I PITCH
ROBERT BASSAM’SSURVIVAL STORY
E-CONTRACTINGBITES THE BULLET
SHOWDOWNTHE 5-MINUTETHE 5 MINUTEINTERVIEW STOP
Piecing Together your Aftermarket Product Portfolio.
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© 2011 Innovative Aftermarket Systems L.P. All Rights Reserved.
F&I Software:IAS also offers world-class technology
solutions that create a sensible and pro table turn- ey approach to F&I.
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Get in touch with IAS.
Contact IAS Sales at 800-346-6469 x8989 or www.iasdirect.com for more information.
F&I Products:IAS offers the highest-quality F&I products in the industry and bac s them up with the nest quality administration
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SEPTEMBER 2011 $10.00
SALES DRIVER: GAME-CHANGERS | ZIEGLER: PROFIT HAPPENS | MAD MARV: BACK-END BULLYING
A BOBIT PUBLICATION FI-MAGAZINE.COM
SOCIAL MEDIACLAIMS FIRST VICTIMS
ENTROPY KILLSHOW TO REBOOT YOUR F&I PITCH
DIE HARDROBERT BASSAM’S SURVIVAL STORY
E-CONTRACTINGBITES THE BULLET
SHOWDOWNTHE 5-MINUTE INTERVIEW
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Contents
2 F&I and Showroom September 2011
September 2011 Volume 14, Issue 9
Dealer Profi le
14 Down But Not OutAfter 20 years of steady growth, Easterns Automotive founder Robert Bassam nearly lost it all. Learn how old friends and a new business model put his operation back on track.
Compliance
20 4 Social Media Pitfalls to AvoidSocial media offers great opportunities to market your store, but there are several legal traps inherent to this type of viral marketing.
Finance and Insurance
26 4 Ways to Reenergize Your PitchHave you ever wondered why your performance levels lag? F&I expert offers a remedy for keeping you on your game.
Finance and Insurance
30 The InterviewA fi ve-minute interview can go a long way toward putting customers at ease, and it may even lead to a nice boost in F&I profi t per vehicle retailed.
Technology
34 E-Contracting’s Missing LinkIntegration has been one of the obstacles in the way of the industry’s push toward e-contracting. One technology expert says that will no longer be the case going forward, especially for product providers.
4 Letters
6 Editorial
8 Developments
12 Industry Trends
38 Sales Driver
40 On the Point
42 Legal
44 Bottomliners
47 Ad Index
48 Mad Marv
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.
14
20
26
34
Endorsed as the offi cial publication of the Association of Finance
& Insurance Professionals
COVER PHOTO BY PHOTOGRAPHY BY SUSIE
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© 2011 Innovative Aftermarket Systems L.P. All Rights Reserved.
Contact IAS Sales at 800-346-6469 x8989
or www.iasdirect.com for more information.
SmartPad software runs on the world’s most popular tablets, including the
Apple iPad, most Google Android tablets and the Blackberry Playbook.
IAS’ SMARTPAD TABLET-BASED
TECHNOLOGY IMPROVING SALES
IN DEALERSHIPS NATIONWIDE
IAS F&I PERSPECTIVEwww.iasdirect.com WE’VE GOT IT ALL RIGHT HERE SEPTEMBER 2011
SmartPad shortens the
F&I process and creates sales
opportunities by utilizing an
electronic tablet to gather and
present a customizable array of
information while the customer
is preparing to be transitioned
from sales to F&I.
“SmartPad is a fantastic tool
that provides me information
about my customers which
ultimately saves everyone time,
increases F&I penetration
and produces an overall
PRUH� VDWLV¿HG� FXVWRPHU�´�
said Lindsay Ferrell of Byers
Automotive. “As a dealer, it’s
a huge bonus to be able to
go into my F&I presentation
dealing with happy customers
and ones that I already know
something about so I can tailor
my presentation and, in the end,
LQFUHDVH�),�SHQHWUDWLRQ�´
SmartPad can dynamically
conduct the F&I interview and
electronically deliver results to
managers while the customer
waits to enter F&I. Alerts can
notify the general manager,
or other designee, via text or
email, that a negative situation
has occurred and should be
addressed immediately before
the sale is lost or irreversibly
damaged.
“SmartPad has given our
agency a renewed energy to call
on dealerships and offer key
management the opportunity
to ask survey questions of
their customers before being
WXUQHG� RYHU� WR� ),�´� VDLG�
Frank Phillips of Dealer
Consulting Services, Inc.
in Santa Maria, California.
“In these challenging
WLPHV�� SUR¿WV� DQG� FXVWRPHU�
satisfaction are all time high
priorities for dealerships.
SmartPad affords the dealers
the insight into the customers’
driving habits and alerts them
to ownership risks which
in turn increase F&I sales
penetration. The beauty of this
software is that the dealership
gains this knowledge prior to
F&I involvement in real time.
I N N O V A T I V E A F T E R M A R K E T S Y S T E M S
It gives the F&I manager time to formulate
an approach to maximize sales product
penetrations and if the customer isn’t
FRPSOHWHO\� VDWLV¿HG� ZLWK� WKHLU� H[SHULHQFH��
the dealership is alerted in time to correct
it and turn a negative situation into a
positive one before they drive off to show
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See all that IAS has to offer at the F&I Industry Summit Booth #119 CPF�ſPF�QWV�JQY�[QW�EQWNF�YKP�CP�
iPad2 or Motorola Xoom!
If you’re not using tablet-based technology at your
dealership, you’re leaving money on the table.
FI0911toc.indd 3FI0911toc.indd 3 8/26/11 9:25:35 AM8/26/11 9:25:35 AM
Letters
In With the NewTO JIM ZIEGLER: I left the car business
just over a year ago, but I’ve learned
a great deal from you over the years,
and I wanted to thank you for that.
My 15 years in the car business was
a wild ride, so thanks for giving me a
safety belt — and some high-octane
gas. Best of luck to you in the future
and in your new column for F&I and Showroom.
Steve BissenLa Crescent, Minn.
Don’t Let the Customer ‘Walk’TO GERRY GOULD: Your July 2011 ar-
ticle (“Take A Walk,” Page 34) rec-
ommends that we walk our custom-
ers through the service department,
as well as parts. Shouldn’t this be a
walk to build a value in the dealer-
ship rather than selling a VSC? If I
was a salesman, I wouldn’t appreci-
ate an F&I manager focusing on the
fact that the vehicle my customer is
about to purchase will eventually end
up in the service drive.
Paul BednarzInternational Imports LLC
Tinley Park, Ill.
Paul, you make a good point. We certainly do not want to devalue or create any doubt in the customer’s mind. The service walk is not the walk of doom. When you approach it the way I described in the article, it energizes the sales process. It gives the customer a sense of convenience, confi dence and security in knowing that the dealership is ready for them, whether for routine maintenance or
those unexpected perils of owner-ship they may face down the road. — Gerry Gould
Practical AdviceTO MAD MARV: Having been around
the business for 22 years, I thought
your July column (“It Takes Two,”
Page 37) was spot on. So many
times a dealer will try to shave dol-
lars from the pay plan because it’s
“too rich.” The dealer ends up los-
ing an outstanding employee and,
worse yet, profi t per vehicle retailed
sinks like the Titanic. Keep up the
great work.
Mark F. AnthonyEquity 4 U
Golden Valley, Minn.
TO MAD MARV: Your column last
month, “Call on ‘Line 5’” (Page 52),
was dead on. The only thing missing,
in my opinion, is building a personal
relationship with a lender to add the
products when an exception is need-
ed. It has saved me several times at
month end. Again, Marv, great col-
umn. I really enjoy reading your page
every month.
Steven Ellis via e-mail
Don’t Train, Won’t GainTO CORY MOSLEY: I appreciate the
new-school ideas you share in your
column each month, and I’m a big
fan of training as well. If anyone in
this industry doesn’t believe in train-
ing, they’re in the wrong business. A
perfect example is the fact that some
veteran salespeople can’t produce
more than eight or 10 cars a month
and think it’s OK to stick to their old-
school way of thinking. Same goes
for F&I managers who can’t move
their middles or maximize their
gross. Thanks for the useful advice
each month.
Faith MbaBusiness Manager
Toyota of Greenfi eld and
Ford of Greenfi eld (Mass.)
4 F&I and Showroom September 2011
Vice President Group Publisher, AutoGroup
Sherb Brown
Publisher, Dealer GroupNational Sales Manager
David Gesualdo727-947-4027
Executive EditorGregory Arroyo
Managing Editor / Art DirectorTariq Kamal
Assistant EditorJennifer Washington
Great Lakes Sales ManagerRobert Brown Jr.
Sales & Marketing CoordinatorTracey Tremblay
E-Media and Print Production Manager
Brian Peach310-533-2548
Web ManagerSam Kim
Audience Marketing ManagerTony Napoleone
Chairman Edward J. Bobit
President & CEOTy F. Bobit
Chief Financial Offi cerRichard E. Johnson
Business and Editorial Offi ceBobit Business Media3520 Challenger St.Torrance, CA 90503
Phone: 310-533-2400Fax: 310-533-2503
Change Service RequestedReturn Address:
Bobit Business MediaPO Box 2703
Torrance, CA 90509
Subscription Inquiries888-239-2455
Printed in U.S.A.
If I was a salesman, I wouldn’t appreciate
an F&I manager focusing on the fact that the
vehicle my customer is about to purchase will eventually end up in
the service drive.
FI0911letters.indd 4FI0911letters.indd 4 8/26/11 9:23:08 AM8/26/11 9:23:08 AM
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6 F&I and Showroom September 2011
Rising to defend the industry in the pages of Newsweek, the editor learns that it’s not always easy to explain what goes on in the F&I offi ce. By Gregory Arroyo
T he e-mail arrived at 12:36 p.m.
on Tuesday, July 26. It was
from Gary Rivlin, staff writer
for Newsweek. It read: “I’d love to
talk with you about a piece that has
me getting into the world of dealer-
arranged auto fi nancing.”
My fi rst thought was that nothing
good could come of my participation.
But, as an F&I advocate, I felt com-
pelled to defend our business if that’s
what was needed. I asked Rivlin if he
could tell me what his angle was.
“We’re doing a consumer-oriented
package: things to watch out for,” he
replied. He then quoted a stat from a
report issued by the Center for Re-
sponsible Lending (CRL). The orga-
nization’s numbers appeared to show
that, in 2009, dealers used rate mark-
ups to overcharge consumers to the
tune of $26 billion.
And there it was: our old nemesis,
the dealer hit piece. The same hit
piece, in fact, that I wrote about in
May. If that was the basis for Rivlin’s
article, I couldn’t help myself.
“Be careful of that $26 billion,” I
wrote. “Although I’m supposed to be
an industry advocate, the consumer
in me questions some of the data
coming out of the CRL recently.”
We agreed to talk the next day. I
took the evening to work on some
talking points. I started by checking
a thread on our F&I Forum that we
started last year in response to an-
other dealers-are-at-it-again article.
I asked forum members for tips they
would provide consumers.
“Learn basic math,” one member
wrote. “$300 per month x 60 months
does not equal $35,000.”
Armed with that gem and a few
others, I called Rivlin the next morn-
ing. We started our conversation with
the CRL’s $26 billion claim. I told
him that the problem with that stat
— and the entire report — is that the
CRL assumes that consumers have
access to the same rates that indirect
lenders provide to dealers, which, as
we all know, is not the case.
I also told Rivlin that dealers work
under a minimum of 15 state and
federal regulations on every deal. In
case he thought I was drinking di-
rectly from the industry’s Kool-Aid
bowl, I added that consumers should
shop their rate and make the F&I of-
fi ce fi ght for their business.
I also told him that, even in Cali-
fornia, lawmakers didn’t ban mark-
ups when they passed the Car Buyer’s
Bill of Rights last decade. Yes, they
set limits on markups, but they also
recognized why dealers charge for
the services they provide consumers.
It was clear Rivlin had done his
homework, too. He quoted an article
published in this magazine back in
2006. It offered advice on how F&I
managers can achieve an average
$1,500 in profi t per retail unit (PRU).
Rivlin wanted to know how much of
that would come from rate markup.
I fi rst explained that $1,500 was a
lofty goal and that most dealerships
are in the $600 to $800 PRU range.
I added that $1,000 PRU was a more
realistic goal.
Rivlin then asked about warran-
ties, prompting me to clarify the dif-
ference between a warranty and a
service contract. He asked about the
product that put the “I” in F&I, then
asked whether it was a good product.
I told him credit insurance was, since
most consumers are underinsured.
He then asked if paint protection
was an insurance product. “Isn’t it
just glorifi ed Turtle wax?” he asked.
Not only is that not a true statement,
I explained, but what consumers are
really getting is a service contract
that says certain benefi ts kick in if
the product fails. Turtle wax, I told
him, makes no such offer.
We covered a lot of ground, and I
felt like I had represented the indus-
try well. … That is, until Rivlin said
he wanted to quote me on that $1,000
goal. Oh, boy. I asked if I could break
down how that number is achieved in
an e-mail, and he agreed. Truthfully,
I was stalling. I wanted to run my
claim by buddy, Mad Marv.
I called Marv the second I hung up
with Rivlin and explained the situ-
ation. We talked for about 20 min-
utes, and his advice helped craft my
response. I don’t have enough room
on this page to share with you what I
wrote, but that’s OK. My response is
not the point of this editorial.
The point is to tell you that it is
sometimes diffi cult to defend what we
do. But I guess I’m tired of our indus-
try having to live in the shadows. The
day is coming when we’ll be forced
out into the open, so let’s make sure
we know our talking points.
What’s My ‘Buy Rate’?
Letter From the Editor
It is sometimes diffi cult to defend what we do. But I guess I’m tired of
our industry having to live in the shadows. The day is coming when we’ll be
forced out into the open.
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Developments
DealerTrack to Sell ALG to TrueCarDEALERTRACK HOLDINGS INC. announced that it has signed an agreement to sell its wholly owned subsidiary, ALG Inc., to TrueCar Inc. As part of the deal, the Lake Success, N.Y.-based dealer services provider will maintain a perpetual, royalty-free license to use certain ALG intellectual property and data in its products and services.
DealerTrack will receive a 15 percent equity interest in True-Car and the option to increase its ownership interest to up to 19.9 percent. And as part of the transaction, structured as a tax-free reorganization, DealerTrack will have the limited right to appoint a director to TrueCar’s board. The sale is expected to close in the fourth quarter.
On Aug. 5, rating agency Stan-
dard & Poor’s downgraded
the value of U.S. debt, send-
ing shockwaves around the world. A
week later, as the Dow Jones Indus-
trial Average continued to alternate
between big gains and losses, Chris
Stinebert said it was too early to know
the full impact on the automotive fi -
nance industry.
What did concern the president and
CEO of the American Financial Ser-
vices Association (AFSA) was what
the new rating would do to the still-
jittery consumer psyche.
“We don’t expect the downgrade
to have a major impact on the auto fi -
nance industry,” Stinebert said. “Our
biggest concern is the impact on con-
sumer confi dence, which could cause
consumers to delay buying vehicles.”
The Dow swung more than 400
points for four straight days the week
after S&P’s downgrade, setting a new
record in the index’s 115-year history.
By the end of the following week, the
Dow recorded eight days with moves
of more than 200 points.
Stinebert said the association
wasn’t surprised by S&P’s actions, as
the 105-year-old ratings agency had
been warning the federal government
about a potential downgrade. What
was encouraging, he added, was that
Moody’s and Fitch Ratings main-
tained their AAA rating of U.S. debt,
and U.S. Treasuries remain strong de-
spite the turbulence.
“The quality of auto fi nance has
been strong and the underlying assets
are well understood,” he said. “Over
time, rates will go up, but only as the
economy improves.”
That was the message the Fed-
eral Reserve sent on Aug. 9 when it
said it would hold short-term inter-
est rates near zero through mid-2013
to keep credit fl owing into the mar-
ket. Whether that will help boost
consumer confi dence remains to be
seen, especially since the Fed failed
to announce any new measures to
stimulate growth.
Three days after the downgrade,
Bandon, Ore.-based CNW Research
reported that its Jitters Index experi-
enced the largest month-over-month
increase since the metric was intro-
duced in 1996. It jumped 6.9 percent
in the fi rst seven days of August vs.
July and 5.5 percent vs. August 2010.
Updating the metric fi ve days later,
CNW reported on Aug. 12 that its
Jitters Index set a new record at 7.91
on a 10-point scale.
The Conference Board wasn’t ex-
pected to update its index until Aug.
30, several days short of F&I and
Showroom’s editorial deadline.
Stinebert said he doesn’t expect
the downgrade to impact the abil-
ity of fi nance sources to access the
asset-backed securities (ABS) mar-
ket for funding, which has been key
to the recovery of the auto fi nance
industry.
“We’ll keep close watch on show-
room traffi c,” he said. “This time of
year is typically busier with the in-
troduction of new models.”
Production Gaps Stall California New-Vehicle SalesIF NOT FOR PRODUCT SHORTAGES and consumers waiting for a drop in the state sales tax, the 19.8 percent jump in California new-car registrations during the fi rst half of 2011 might have been a lot higher. According to the California New Car Dealers Association (CNCDA), new-car registrations increased 4.9 percent during the second quarter — about 15 percent lower than the 19.7 percent year-over-year increase realized in the fi rst quarter.
Offi cials blamed the slowdown on inventory shortages caused by the March 11 earthquake in Japan, and consumers waiting for a 1 per-cent drop in California’s sales tax rate, which took effect July 1.
“Once Japanese auto manufac-turers and parts suppliers ramp up production, the second half of the year should be very good,” said Steve Snyder, CNCDA chairman.
Industry Reacts to S&P Downgrade
8 F&I and Showroom September 2011 PHOTO BY B64
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FI0911develop.indd 9FI0911develop.indd 9 8/26/11 9:03:49 AM8/26/11 9:03:49 AM
Developments
Mark H. Mishler was named chief executive offi cer of Interstate National and its subsidiaries. He will be
responsible for overseeing Inter-state’s executive team and manag-ing the company’s long-term strategic initiatives. Mishler previously served as president and chief operating offi cer of The Warranty Group Inc.
GSFSGroup, a provider and administrator of F&I products and reinsurance structures, named Alan Bond vice
president of national sales. The former national sales director for Allstate Dealer Services will be responsible for developing growth strategies, as well as maintaining and expanding the company’s agent network.
AFS Acceptance, a subprime auto fi nance company, has named Scot Seagrave execu-tive vice president. He
will be responsible for all aspects of loan originations. Seagrave previously served as senior vice president of loan originations for Prestige Financial.
Flagship Credit Accep-tance has appointed Robert Cullinan as senior vice president of sales and marketing. Jeff Haymore also was named vice president and national director of sales. Cullinan has more than 25 years of sales
experience and most recently served as sales director and vice president of sales for CitiFinancial Auto. Haymore brings 15 years of experience, and previously devel-oped and executed sales strategies for companies such as Guardian Warranty, HSBC and Capital One.
Sonic Goes MobileSONIC AUTOMOTIVE INC.
is arming its corporate executives and regional teams with Apple iPads and iPhones equipped with the dealer group’s new mobile reporting app. Based on software designed by MicoStrat-egy Mobile, the new app displays dealership scorecards and provides insights into key metrics, among other features.
The Warranty Group, Lithia Motors Extend VSC DealTHE WARRANTY GROUP
Inc. has announced that Lithia Motors will continue to offer the F&I product provider’s service contract offerings throughout its dealership network. Lithia has been a client of The Warranty Group since 1997.
F&I Express and NAE Ink E-Contracting DealINTERSECTION TECHNO-
logies Inc. has added National Automotive Ex-perts to its e-contracting platform, F&I Express. The partnership will provide NAE dealers with the ability to e-contract and e-rate the company’s full suite of F&I products, ac-cording to the company.
SNAAC Adds E-Signature Feature to WebsiteSECURITY NATIONAL
Automotive Acceptance Corp. (SNAAC) an-nounced the launch of its e-signature tool for its SNAACNow.com Website. The new tool is designed to ensure that car buyers review the accuracy of contracts and other docu-ments before signing.
MaximTrak Launches New Platform for Providers and AdministratorsMAXIMTRAK TECHNO-
logies has launched a new e-contracting plat-form that will connect providers to their dealers through the software company’s F&I menu platform. Called e-TRAK, the turnkey solution also offers electronic rating, signature and registra-tion capabilities.
Exeter Acquired by BlackstoneBLACKSTONE GROUP HAS
acquired Exeter Finance Corp. from Navigational Capital Partners, and also secured a $600 million line of credit to help fuel its expansion plans. Blackstone offi cials said the fi rm will invest up to $277 million in the transaction.
10 F&I and Showroom September 2011
THE OPTION TO ADD
accessories infl uenced 12 percent of all vehicles sold last year, ac-cording to a new study by Fore-sight Research. The fi rm’s “2011 Automotive Ac-cessory Market Report” indicated that 23 per-cent of the 7,459 new-car buyers interviewed
said the availability of accessories infl uenced their choice of dealer as
well. However, the report’s fi ndings showed that only 39 percent of salespeople
made an effort to sell accessories, and fewer than half of deal-ers had accessorized vehicles on display.
Report: Accessories Infl uence 12 Percent of Sales
Moves and Hires
t”
weresoo
mat ll
FI0911develop.indd 10FI0911develop.indd 10 8/26/11 9:03:50 AM8/26/11 9:03:50 AM
FI0911develop.indd 11FI0911develop.indd 11 8/26/11 9:03:53 AM8/26/11 9:03:53 AM
12 F&I and Showroom September 2011
Industry Trends
A recent poll revealed that 64 percent of Americans don’t have enough saved to cover a $1,000 car repair or unplanned expense, providing further evidence of the importance of service contracts for budget-minded car buyers.
Economic woes have put a strain
on rainy-day funds. Sixty-four
percent of respondents to an on-
line poll said that if a car repair bill
or any other unplanned expense of
$1,000 were to come up, they wouldn’t
have enough in their savings accounts
to cover it.
Conducted by the National Founda-
tion for Credit Counseling (NFCC),
the survey’s fi ndings make a strong
case as to why a vehicle service con-
tract is critical in today’s economic cli-
mate, as only 36 percent of the poll’s
2,700 respondents said they could foot
a $1,000 repair bill.
According to the National Auto-
mobile Dealers Association’s 2011
“NADA Data” report, acceptance
rates for vehicle service contracts rose
from 37 percent in 2009 to 39 percent
last year, while F&I income rose 15
percent.
The NFCC’s data also revealed
that 17 percent of respondents would
look to friends or family to borrow
money, while another 17 percent said
they would ignore existing fi nancial
obligations to pay for the emergency.
Only 9 percent of respondents said
they would take out a loan or cash ad-
vance on their credit card to pay for an
emergency repair or cost. Researchers
at the NFCC said this could signify a
lack of access to credit.
“Selecting any option other than
taking the money from savings should
be a red fl ag,” said Gail Cunningham,
spokesperson for the NFCC. “People
often say they can’t afford to save,
but the truth is that they can’t afford
not to.”
36% 17% 17% 12% 9% 9%
My savings account
Borrow from friends or family
Disregard other monthly expenses
Sell or pawn assets
Cash advance on my credit card
Take out a loan
Survey SaysIf you needed $1,000 for an unplanned expense, where would you turn to fi nd the money?SOURCE: NATIONAL FOUNDATION FOR CREDIT COUNSELING
New-Vehicle Service Contract Penetration RatesSOURCE: NADA INDUSTRY ANALYSIS DIVISION
VSCs Critical as Rainy-Day Funds Shrink
Note: The NFCC’s July Financial Literacy Opinion Index was conducted via the homepage of the NFCC Website, www.debtadvice.org, from July 1 – 31, 2011, and was answered by 2,667 individuals.
45%
40%
35%
30%
25%
20%
15%
5%
02000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
FI0911trends.indd 12FI0911trends.indd 12 8/25/11 4:13:57 PM8/25/11 4:13:57 PM
D E A L E R S E R V I C E S
FI0911trends.indd 13FI0911trends.indd 13 8/25/11 4:14:00 PM8/25/11 4:14:00 PM
Robert Bassam doesn’t pre-
tend to know everything
about the car business.
The plain-spoken founder
and owner of Easterns
Automotive Group says he was as
surprised as any other dealer by the
2008 downturn. As the bottom fell
out of the economy, he watched as
the used-car empire he spent nearly
two decades building began to crum-
ble around him.
“That’s the only time I was ever
truly scared,” Bassam says now. “I
realized I might lose everything I had
worked for.”
After being forced to close 11 of
16 locations and let go of hundreds of
loyal employees, the group is profi t-
able again. But getting leaner is only
After nearly 20 years of steady growth, Easterns
Automotive founder Robert Bassam almost
lost it all. Learn how old friends and a new
business model put his operation back on track.
By Tariq Kamal
14 F&I and Showroom September 2011
Dealer Profi le
DownOutBut
Not
PHOTO BY PHOTOGRAPHY BY SUSIE
FI0911profile.indd 14FI0911profile.indd 14 8/29/11 10:09:56 AM8/29/11 10:09:56 AM
THANK YOU
1,000,000 contracts sold. The best administration team, agents and dealers in the business. Find out how we do it at www.aulcorp.com or call 800.826.3207.
Service Contracts. It’s What We Do.®
© 2011 Associates Underwriting Limited L.L.C.
FI0911profile.indd 15FI0911profile.indd 15 8/29/11 10:10:01 AM8/29/11 10:10:01 AM
part of the story. Bassam credits his
senior staff, his partnership with
lenders such as Capital One Auto Fi-
nance and a focus on Internet sales
as the main reasons Easterns is still
around today.
Self-Made DealerBassam moved to the nation’s capital
from his hometown of Miami in the
mid-1980s. He was working as a wait-
er when he got into the car business
“accidentally,” reselling a car his fa-
ther bought off the street on a whim.
After selling two more vehicles he
purchased from a Salvation Army
sale, Bassam was hooked. He set up
shop in Arlington, Va., and spent the
next six years building a wholesale
operation. As his volume increased,
he began expanding into larger lots,
inadvertently attracting car shoppers.
“We just needed a place to store
cars,” Bassam says, “but retail cus-
tomers continued to roll in.” The
would-be buyers he spoke with were
looking for quality used cars, and
many had been turned down by area
dealerships.
For Bassam, the trend was too ob-
vious to ignore. “We realized very
quickly that the subprime market was
underserved and mistreated,” he says.
Bassam founded Easterns Automo-
tive Group in 1991 and the business
grew quickly. He was soon book-
ing 100 deals a month with Credit
Acceptance and would expand his
lender spread to include AmeriCredit
Corp. and the now-defunct National
Auto Credit. In 2003, he signed up
with Capital One Auto Finance,
which would become the group’s top
fi nance source.
The Widening ’NetThe business was motoring along
when Bassam’s cousin, Eiman Bas-
sam, joined the operation in 2004. He
had spent several years working up
the ranks at the now-defunct Auto-
Mall Online, an e-commerce site
that was based in the Washington,
D.C., area before it fi led for bank-
ruptcy in 2005.
Eiman’s experience there pro-
vided him with a nice template for
what would become Easterns.com.
“A lot has changed since then,” he
says. “In 2004, Easterns had a Web-
site — not as strong as it is now, but
it was a presence.”
At its height, AutoMall Online
— known more for its mall ki-
osks than its e-commerce strategy
— marketed inventories for about
19,000 dealerships nationwide. Un-
fortunately, the dot-com investment
bubble popped before it was ready
to make its initial public offering.
The most important lesson Eiman
learned there was the impor-
tance of transparency when
marketing online. That’s
why Easterns was quick to
partner with Carfax, and why each
vehicle listed on its site boasts a
link to a vehicle history report and
a minimum of 20 photos.
“Our goal was to answer all ques-
tions before they come in,” he says.
“‘Can we see the Carfax? Is it a one-
owner vehicle? Can you move it to
another location?’ And we found that
people were willing to drive as long
as one or two hours to get the vehicle
they wanted.”
Crisis ModeBy early 2008, Easterns was riding
high. The Website was well estab-
lished, the group’s 500 employees and
16 locations were moving 1,000 units
a month, and annual revenue was in
the $250 million range. A popular ad
campaign featuring pro athletes (see
sidebar, next page) had made East-
erns a household name. But when the
credit crisis took hold, Robert Bas-
sam began to smell trouble.
16 F&I and Showroom September 2011
Dealer Profi le
▲
PHOTO COURTESY EASTERNS
“Our goal was to answer all questions before they come in. ‘Can we see the Carfax? Is it a one-owner vehicle? Can you move it to another location?’ And
we found that people were willing to drive as long as one or two hours to get the vehicle they wanted.”
— Eiman Bassam, Easterns Automotive Group
JULY 2011’S USED-VEHICLE SALES were the best for that month since 2005, according to the latest fi gures from CNW Research. Inde-
pendent dealers such as Easterns Automotive moved 1.667 million used units, an increase of 17.8 percent over July 2010.
Used Sales Surge
4.83 4.49 4.303.76 3.85 3.96
4.50
July 2005
Total U.S. Used-Vehicle Sales (in millions)
July 2006 July 2007 July 2008 July 2009 July 2010 July 2011SOURCE: CNW MARKET RESEARCH
FI0911profile.indd 16FI0911profile.indd 16 8/29/11 10:10:01 AM8/29/11 10:10:01 AM
Our loyalty to dealers hasnever wavered.And it never will.
© 2011 JPMorgan Chase Bank, N.A. Member FDIC
Call your Chase Regional Manager directly:
PRIME • NEAR-PRIME • SUB-PRIME • FLOORPLAN • DEPOSITORY PRODUCTS • COMMERCIAL BANKING SERVICES
Chase knows a thing or two about commitment.
Even in the toughest of times, we’ve been the leader our
dealers can trust. We help them reach their goals and
succeed, with expert advice and the right combination of
financial products. We’ve proudly served the automotive
industry nationally for more than 60 consecutive years—
we are a leader you can rely on.
REED RAFETTO, EAST JEFF JOHNS, MIDWEST REGGIE LINEBARGER, WEST
813.584.3482 614.248.4432 713.483.1141
FI0911profile.indd 17FI0911profile.indd 17 8/29/11 10:10:03 AM8/29/11 10:10:03 AM
FI0911roadvantage.indd 1 8/18/11 11:29:13 AM
“I was buying cars for less,” he says.
“Customers were ready to buy. But the
lenders stopped communicating.”
Things began to unravel fast. Sales
dropped off and diffi cult decisions
had to be made. Bassam started clos-
ing his “boutique” stores and cutting
costs across the board. He garaged
his prized luxury cars in favor of a
Hyundai Accent.
“The fi rst real fall in the business
came in 2008 and 2009,” he says. “I
was a wounded duck.”
That could have been the end, Bas-
sam says, were it not for his highest-
volume lender. He joined Capital One
Auto Finance’s Diamond Dealer pro-
gram, an initiative the company un-
dertook so it could continue offering
fl exible terms and special benefi ts to
a select group of dealers.
Bassam says that, as he continued
to retrench, Capital One’s support
made the difference. He became an
active member of the fi nance source’s
dealer board and was among the fi rst
to sign up for its new prime program
in 2010.
“The word ‘partnership’ is thrown
around a lot,” he says. “True partner-
ships [are formed] in tough times,
when they’re telling you you’re still
OK, that you matter. Now, we’re hav-
ing amazing earnings.”
Road to RecoveryWhen the dust settled, Bassam was
left with his fi ve largest stores and a
new outlook. He has begun to rehire
as much staff as he can support, but
he doesn’t plan to expand again. In-
stead, he will continue to rely on the
willingness of customers to travel
great distances in search of their
next car.
“If I could have one location for
500 customers, I would do it,” he says.
“Look at AutoTrader.com. Their fi rst
search option is ‘50-mile radius.’”
The cousins agree that the Web-
driven megastore model depends on
transparency in all phases, as well
as a quality product. Eighty percent
of the available inventory is Carfax
One Owner-certifi ed, and they rarely
sell trade-ins.
Easterns offers GAP coverage and
a vehicle service contract from War-
ranty Solutions on every purchase.
They’re willing to add the VSC with
no markup, which helps to explain
their 88 percent penetration rate.
“We like to max out the car, not the
payment,” Robert Bassam says.
Considering how far some custom-
ers travel, Eiman looks forward to a
time when all phases of the purchase
process can be safely completed on-
line. “We complete the credit app in
the showroom; that’s a privacy re-
quirement,” he says. “But I believe
that, in the future, customers will
choose, buy and fi nance without ever
touching the car.”
Meanwhile, Eiman’s Internet team
works hard to maintain the Website
and Easterns’ social media accounts.
One of his staff members spends most
of her workday updating the group’s
Facebook page and answering cus-
tomer questions via the Website’s chat
feature.
“If you’re not doing the research,
you’re not a good customer,” Robert
says of today’s Internet shopper. “My
family doesn’t even go out to eat be-
fore checking [the restaurant] on Yelp.
We call each customer two weeks af-
ter their purchase and ask if they can
rate us on their favorite site.”
He expects the subprime market to
continue to drive sales going forward.
He wants his managers to continue to
make transparency their No. 1 goal,
even as they respond to whatever
changes lay ahead.
“Robert is driven to succeed,” Ei-
man says. “He thrives on making oth-
er people successful. That leadership
and love got us through some very,
very tough times.”
18 F&I and Showroom September 2011
Dealer Profi le Redskins RidesIN 2003, WASHINGTON REDSKINS linebacker LaVar Arrington was coming off three consecutive Pro Bowl seasons and was among the city’s most popular young athletes. Robert Bassam tapped Arrington (below) to become the fi rst in a
long line of Easterns Automotive Group pitchmen. Other Redskins to appear include running back Clin-ton Portis, wide receiver Laveranues Coles and tight end Chris Cooley.
Stars from other sports, such as Washington Capitals star forward Alex Ovechkin, have joined their ranks in recent years. The commer-cials feature a maddeningly catchy jingle, with the athletes singing (or lip synching) “At Eastern Motors, your job’s your credit.”
The ads are ubiquitous in the D.C. area, and even Bassam is sur-prised to see the effect they’ve had on the local sports landscape.
“When Donovan McNabb was traded to the Redskins in 2010, The Washington Post ran an article asking whether he would star in an Easterns commercial,” he says.
In March, Easterns held “Red-skins Rides,” a two-day mega sale, at FedEx Field. The dealer group sent 100,000 Capital One pre-ap-proved mailers to promote the sale, which moved 140 units. Easterns also showcased some of its many philanthropic efforts, including participation in Operation Second Chance, a charitable organization that offers support for wounded veterans and their families.
“It was an all-in bet,” Bassam says. “You’re putting out a substan-tial amount of money for a two-day event. But it was a success, and we handed out 1,000 care packages for troops at war, as well as a car, and tickets to ’Skins games.”
“If I could have one location for 500 customers,
I would do it. Look at AutoTrader.com. Their fi rst search option is
‘50-mile radius.’”— Robert Bassam,
Easterns Automotive Group
FI0911profile.indd 18FI0911profile.indd 18 8/29/11 10:10:04 AM8/29/11 10:10:04 AM
F&I Programs
FI0911roadvantage.indd 1 8/18/11 11:29:13 AMFI0911profile.indd 19FI0911profile.indd 19 8/29/11 10:10:05 AM8/29/11 10:10:05 AM
FI0911warrantech.indd 1 8/18/11 8:41:54 AM
4Social Media Pitfalls Avoid
It was bound to happen. The tre-
mendous growth in digital and
social media marketing was
simply too diffi cult for govern-
ment regulators to ignore. That’s
why social media ethics are no longer
based solely on personal preference.
It’s now a matter of law.
Take the Federal Trade Commis-
sion’s truth in advertising laws, which
hadn’t been updated since 1980. But
because of the boom in online mar-
keting activities, the FTC is now
actively updating its rules. The agen-
cy’s position, which is shared by state
regulators, is that social media is not
a loophole for deceptive marketing
practices. Regulators are actively en-
forcing rules and cracking down, so
let’s review four key areas your deal-
ership can’t afford to ignore.
Faking ReviewsThe FTC has updated its Guides
Concerning the Use of Endorsements
and Testimonials in Advertising to
require that companies ensure their
online posts are completely accurate
and not misleading. Planting or al-
lowing fake reviews to be posted is
a violation.
Keep in mind that the guidelines
are extremely broad and can apply
to anyone writing reviews on rat-
ing sites such as Google Reviews, or
promoting products via social media
sites, including blogs. For dealers,
companies which promise to improve
your ratings on review sites should be
viewed with skepticism.
Last October, a BMW dealer-
ship in San Antonio suffered serious
damage to its reputation after it was
caught posting fake online reviews.
The culprit was a company the deal-
ership hired to contact customers to
generate actual reviews. After click-
ing on a suspicious reviewer’s profi le,
a customer discovered that the author
had written fi ve-star reviews for nu-
merous dealerships and other busi-
nesses, and not just in San Antonio.
Even worse, all those reviews were
posted on the same day.
The social media sphere offers great opportunities to market your store, but there are several legal traps inherent to this type of viral marketing. Compliance expert reviews
four of them in this digital marketing primer. By Jim Radogna
20 F&I and Showroom September 2011
Compliance
1
to
▲
FI0911compliance.indd 20FI0911compliance.indd 20 8/25/11 4:02:37 PM8/25/11 4:02:37 PM
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A comprehensive VSC for used vehicles with month-to-month payment terms.
Coverage for repair labor costs offered through the Service Department.
Provides a method for developing a personal asset for retirement and estate planning.
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FI0911warrantech.indd 1 8/18/11 8:41:54 AMFI0911compliance.indd 21FI0911compliance.indd 21 8/25/11 4:02:39 PM8/25/11 4:02:39 PM
This is happening every day,
folks, so be wary of the companies
you hire to help you with your digi-
tal marketing efforts. And don’t for-
get your own staff. The FTC recent-
ly charged a California marketing
company with deceptive advertising
after it found employees were posing
as ordinary consumers and posting
positive reviews.
Dealers may face liability if em-
ployees use social media to com-
ment on their employer’s services
or products without disclosing their
relationship with the business. Re-
member, the FTC requires all “ma-
terial connections” between a poster
and the companies they review to
be disclosed. That extends to any
association that could affect the re-
viewer’s credibility.
So, if employees, friends, fam-
ily or vendors post reviews to prop
up a dealership’s online reputation,
they must clearly disclose their re-
lationship with the company. Ad-
ditionally, the reviews themselves
must be an honest opinion based on
a real experience. The FTC’s rules
stipulate that reviewers must never
endorse a product or service that
they have not used personally. Re-
member, it’s all about transparency
and full disclosure.
Failing to follow those guidelines
puts more than your reputation at
risk. It also can result in substantial
penalties. In 2009, then-New York
Attorney General Andrew Cuomo
fi ned a cosmetic surgery practice
$300,000 for ordering its employees
to write fake reviews for its facelift
procedure. Last March, the FTC
ordered a company marketing in-
structional DVDs to pay $250,000
for fake reviews posted by the com-
pany’s affi liate marketers.
The FTC also has indicated that
companies are fully responsible and
liable for any inappropriate actions
committed by their employees, ven-
dors and any advocates they recruit.
The reviewers themselves also may
be held personally liable for state-
ments made in the course of their
endorsements.
Paying for ReviewsThe practice of offering a free oil
change or gas card to a customer in
exchange for a positive survey has
long been frowned upon by manufac-
turers. Their concern is valid. There
are no factory gatekeepers when it
comes to online ratings, and they
know dealers may be tempted to en-
tice customers with some type of in-
centive to get them to post a review.
The good news is there is no law
prohibiting that practice — yet. But
regulations do require that a reviewer
who has been provided with any form
of compensation (e.g., free services,
rewards, incentives, promotional
items, gifts or samples), must fully
disclose the source and nature of any
compensation received.
Advertising on Social Media SitesThe benefi t of trying to “sell” on
social media sites by posting inven-
tory, prices or monthly payments is
an ongoing debate, but many deal-
ers are already doing it. While I have
no opinion on the relative merits of
whether or not to sell on social me-
dia, it’s important to note the poten-
tial implications of these types of
activities.
Social media tends to be a low-
key, casual form of communication,
but that doesn’t mean advertising
regulations don’t apply. In fact, the
FTC recently announced that it was
updating its guide on social media
advertising. First published in 2000,
“Dot Com Disclosures: Informa-
tion About Online Advertising” was
written to inform advertisers that
consumer protection and disclosure
laws would be applied just as strictly
to the digital realm.
So, if inventory is posted or prices
and payments are quoted on social
media, it’s likely that the posts will
be considered advertisements. That
means they are subject to state and
federal disclosure and truth in adver-
tising regulations.
Lack of space is not an acceptable
excuse. If you’re advertising on Twit-
ter, your 140 characters must include
a clear link to any necessary disclo-
sures. A good rule of thumb is to have
any information that could possibly
be construed as advertising reviewed
by upper management or a qualifi ed
professional before it is posted.
Failure to Create a Social Media PolicySocial networking sites, blogs and
video sharing have soared in popu-
larity. Unfortunately, according to an
22 F&I and Showroom September 2011
Compliance
2
34
PHOTO ©ISTOCKPHOTO.COM / DNY59
FI0911compliance.indd 22FI0911compliance.indd 22 8/25/11 4:02:39 PM8/25/11 4:02:39 PM
informal poll conducted by law fi rm
Proskauer Rose, 45 percent of com-
panies have no social media policy at
all. Hopefully, your dealership isn’t
one of them.
Dealerships need to control the in-
formation that’s coming out of their
business. Written policies and proce-
dures must spell out how employees
are expected to conduct themselves
online. If anything, a good policy
can help take the guesswork out of
what is appropriate for employees to
post about a company to their social
networks.
There also are a number of po-
tential legal issues with employees
operating in the social media sphere
that need to be addressed. Claims for
violation of privacy, harassment, dis-
crimination or defamation are a real
risk, and employees can harm a deal-
ership’s reputation by posting contro-
versial or inappropriate comments.
However, employer restrictions on
the use of social media can be tricky.
The National Labor Relations Board
(NLRB) recently issued a complaint
against an Illinois dealership, charg-
ing management with unlawfully
terminating an employee for making
critical comments about the store on
Facebook. While some unprofession-
al and inappropriate conduct may
not be protected, the intersection of
social media and the National Labor
Relations Act is an evolving area of
the law.
The best way to protect your deal-
ership from legal trouble is to estab-
lish formal policies for your staff.
But remember, creating a policy also
means creating a training program to
educate employees about appropriate
social media use and disclosure. Hav-
ing both is the only way your policies
will be legally defensible.
Jim Radogna is president of Dealer Compliance Consultants Inc., a San Diego-based provider of training and compliance solutions. He can be reached at [email protected].
September 2011 F&I and Showroom 23
Dan Kilian and Kristina Reid of Meade Lexus in Southfi eld, Mich., are using social media to raise the dealership’s online profi le. But they also have taken steps to remain compliant, adding links to any required disclosure statements.
FI0911compliance.indd 23FI0911compliance.indd 23 8/25/11 4:02:42 PM8/25/11 4:02:42 PM
“Service Contracts, GAP, Etch, CPO, PPM – all from one source. That’s why we use Resource.”
“When the manufacturer rep drives up to my store, they see their name. When Resource pulls up, they see mine. That’s what I’m talking about.”
“They gave me a website that features my QCertified used cars – at no charge. Seriously!”
FI0911compliance.indd 24FI0911compliance.indd 24 8/25/11 4:02:44 PM8/25/11 4:02:44 PM
[email protected]. 312.560.9182 Visit us at thewarrantygroup.com/automotive
“We wanted our own prepaid maintenance program. They private labeled one, just for us.”
“F&I, fixed, variable - Resource is our training solution.”
“I like immediate cash flow from my service contract sales. The First Extended dealer obligor model makes it happen.”
“I bought this store with my reinsurance dividends. Now my kids have their store, and I have mine. Best of all, Resource managed everything.”
FI0911compliance.indd 25FI0911compliance.indd 25 8/25/11 4:03:19 PM8/25/11 4:03:19 PM
Reenergize
It happens to every F&I man-
ager in every dealership. When
you’re fresh from a seminar or
workshop, your presentation and
pitch are reenergized and your
customers are responsive to the new
strategies you picked up. But over
time, the effectiveness of the lessons
learned begins to fade. Why is that,
right? Well, it has to do with the law
of entropy.
If you don’t remember the concept
from your high school physics class-
es, entropy, in its simplest defi -
nition, is the “inevitable
and steady deterioration
of a system or society.”
So, how do you prevent
this from happening to your F&I
pitch? Well, I recently read that 86
percent of fresh knowledge learned
will be lost in 90 days if it is nei-
ther reinforced nor used consistently.
So, the challenge for F&I manag-
ers is to fi gure out how to keep that
energy level up and maintain that
passion for the products you offer.
So, let’s review four exercises that, if
followed, can help you break the law
of entropy.
Step 1: How You Start Determines How You FinishSpend the fi rst 30 minutes of each
day practicing your skills, setting a
few goals for yourself and read-
ing something inspirational.
Not only will this energize
you as you start the day, it
will keep the things you
Have you ever wondered why your performance levels lag? The magazine’s resident expert knows the answer, and offers a remedy for keeping you on your game. By Rick McCormick
26 F&I and Showroom September 2011
Finance and Insurance
4 Ways to
Your Pitch
FI0911pitch.indd 26FI0911pitch.indd 26 8/26/11 8:54:47 AM8/26/11 8:54:47 AM
_ulf
_tates
_inancial
_ervices
Your F&I offerings are incomplete without GSFSGroup®.
is to switch to us, contact Tony Orozco at 713-580-3023 or [email protected].
Agent and dealer inquiries welcome.
GSFSGroup® is a registered trademark of Gulf States Financial Services,Inc.
Visit us at the 2011 F&I Conference at Booth #314
Gulf States Financial Services (GSFS) is an expert reinsurance administrator with national coverage and a 29-year history of success. We provide a nationwide suite of participation programs – Dealer Obligor, Dealer-Owned Warranty Company, NCFC, CFC and Retro.
Our products include Vehicle Service Contracts, GAP, Pre-Paid Maintenance, Credit Insurance and Tire & Wheel. In addition, our dealers benefit from a highly effective training support team designed to generate dealer revenue. To find out how easy it
FI0911pitch.indd 27FI0911pitch.indd 27 8/26/11 8:54:51 AM8/26/11 8:54:51 AM
can’t control, such as the economy,
from impacting your performance.
You also have to dedicate your-
self to putting what you learned
— whether from a workshop or an
article — into practice every day.
That means never cutting corners. It
means staying with the process on a
daily basis. It means training for your
next customer interaction the same
way professional athletes train before
a sporting event, as the skills you
practice regularly will fi nd their way
into your game.
Step 2: Create Your Own MomentumGood F&I managers wait for good
things to come their way. They wait
for the banks to provide more fl exible
terms. They wait for more favorable
deals and better opportunities for
profi t. Great F&I managers are indi-
viduals who take the limited oppor-
tunities they have and look for ways
to maximize them.
So, to see an increase in overall
profi t and income, you must fi rst in-
crease the level and consistency of
your training activity. So, be proac-
tive and study the products you offer
and their benefi ts to your custom-
ers. Doing so will not only increase
your appreciation of the benefi ts your
products offer, it will lead to a more
convincing presentation.
Spending time in the service de-
partment is another great way to
learn the true value of your products.
There you’ll see what consumers are
seeing, including what repairs, both
minor and major, they’re paying for,
and how much they cost.
Take a recent visit I made to a Toy-
ota store. While in the service area,
I overheard a customer explaining to
a service rep that the keyless remote
on his Toyota Camry was no longer
working. It turned out the receiver
inside the dash was bad. A new re-
ceiver cost $550. After factoring in
labor costs, the bill to get the remote
system to work again added up to
$1,000. That’s the kind of informa-
tion that will improve your chances
of turning a “No” into a “Yes.”
Step 3: Get Out of the TunnelAs trainer, I’ve been fortunate to be
able to meet some of the most tal-
ented F&I managers in the country.
I know it’s diffi cult for many of you
to fi nd time to leave the store to meet
with other professionals in your fi eld.
Well, I’m here to tell you that you
need to make time to get out to an
industry event, like the magazine’s
annual conference, or join a social
media group like the magazine’s
F&I Forum.
On the forum are some seasoned
professionals who can provide great
insight into how to be productive and
how to produce at a high level. Col-
lectively, there’s got to be a hundred
years of experience on the forum, so
take a moment to read some of the
posts and become an active member.
I can’t tell you how energizing it
is to be able to exchange ideas with
other F&I pros. These people can be
goldmines of information, so take
the time to step outside of your world
and reach out to others in your fi eld.
Remember, never stop learning. Read
everything you can fi nd about pre-
senting and selling intangibles.
One of the most formidable public
speakers today is a gentleman named
Michael Hingson. Despite being blind,
he was a very successful computer
sales executive with an insatiable thirst
for knowledge. But that’s not what
makes him an inspiration. See, he was
working in his offi ce in Tower One of
the World Trade Center on 9/11, and
he and his loyal guide dog led dozens
of people to safety just minutes before
the building collapsed.
What I fi nd motivating about
Hingson’s story is his refusal to stay
inside the tunnel of his limitations.
That’s how you need to approach
your career.
Step 4: If It Hurts, “S-T-R-E-T-C-H” YourselfWherever I go, the No. 1 question I’m
28 F&I and Showroom September 2011
Finance and Insurance
The only person you need to worry about is yourself.
Comparing yourself to another person’s success can be deceiving and can some-
times leave you satisfi ed with less than your best.
PHOTOS ©ISTOCKPHOTO.COM / GILAXIA
FI0911pitch.indd 28FI0911pitch.indd 28 8/26/11 8:54:53 AM8/26/11 8:54:53 AM
asked is, “What is everyone else do-
ing?” Well, I’m here to tell you that
the only person you need to worry
about is yourself. Comparing your-
self to another person’s success can
be deceiving and can sometimes
leave you satisfi ed with less than your
best. So, don’t make that mistake.
Look, you know where you stand
and what you’re successful at, so
work to outdo yourself. If your ac-
ceptance rate for service contracts
is at 47 percent, why not make 50
percent your goal for the next three
months. Your fellow F&I managers
at the dealership might be at 35 per-
cent, but remember that you’re not
competing against them. So, energize
your production by working to beat
your personal best.
My favorite story from sales guru
Zig Ziglar is the one he tells about his
days as a door-to-door salesman. He
was making a sales call and sitting on
the front porch of the house he was
visiting was an older gentleman and
a whimpering dog. Ziglar asked what
was wrong with the dog and the gen-
tleman answered, “He’s sitting on a
nail.” Ziglar responded with another
question: “Why does he keep sitting
on the nail?” The man’s response
was incredibly insightful: “Because
it doesn’t hurt enough for him to get
up and do something about it!”
Does performing at a level that’s
less than your best hurt yet? Well
then, break free from that trap, stretch
yourself and defy the law of entropy.
Don’t let time drag you down. Instead,
do the things you need to keep your
performance levels up and watch your
profi ts and income do the same.
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].
FI0411wisefi.indd 1 3/25/11 8:30:54 AM
September 2011 F&I and Showroom 29
FI0911pitch.indd 29FI0911pitch.indd 29 8/26/11 8:54:54 AM8/26/11 8:54:54 AM
InterviewThe
Some F&I managers dislike
it, others swear by it. Some
say it’s the single most im-
portant part of the F&I
process, and they won’t
deliver a vehicle without it. What
we’re talking about here is the cus-
tomer interview.
Only you can decide whether the
extra fi ve minutes per customer is
worth your time. If it is, then it’s
worth doing it right. Let’s delve into
the customer interview and highlight
a couple of must-haves for making it
work for your dealership.
Perception Is EverythingF&I managers who favor the custom-
er interview prefer it be done in the
showroom, either at an empty offi ce
or at an empty table. The key is that
it be done outside of the F&I offi ce,
as it allows the customer to remain in
his or her comfort zone.
Whether based on past experiences
or stories they’ve heard from friends,
customers perceive the F&I offi ce as
the place where buyers have their pay-
ment and rate bumped. To them, F&I
is where they are lied to and pressured
into buying products they don’t want.
At the very least, they know they will
have to sign piles of paperwork.
So, if that’s how customers feel
about the F&I offi ce, how could they
A fi ve-minute interview can go a long way toward putting customers at ease, and it may even lead to a
nice boost in F&I profi t per vehicle retailed. F&I trainer
breaks down the process. By Don Geroni
30 F&I and Showroom September 2011
Finance and Insurance
PHOTOS ©ISTOCKPHOTO.COM / MICHAEL DELEON
FI0911interview.indd 30FI0911interview.indd 30 8/25/11 4:09:59 PM8/25/11 4:09:59 PM
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Visit Safe-Guard in Booth 212 at the F&I Conference & Expo.
FI0911interview.indd 31FI0911interview.indd 31 8/25/11 4:10:03 PM8/25/11 4:10:03 PM
FI0411ally_uwc.indd 1 3/31/11 11:11:10 AM
possibly be in the the right state of
mind to listen to everything the F&I
manager has to say? The good news
is that those walls of resistance can
be broken. And the best time to do
that is when the salesperson has a
signed purchase order, a customer
application and a credit report.
Once those items have been col-
lected, the F&I manager should go
out to the customer and introduce
himself or herself. Be sure to pro-
vide your name and title while shak-
ing hands with your customers and
congratulate them for their purchase.
Then, ask them if they will join you
for a quick discussion.
First, list your responsibilities as
F&I manager, which includes com-
pleting and reviewing his or her pa-
perwork and assisting with his or her
fi nancing options. You also want to
make sure you tell the customer that
your job is to get him or her on the
road as quickly as possible. Doing
this sets a realistic time expectation
for the entire process, which is key to
keeping customers in a listening and,
hopefully, buying mood.
This nonconfrontational, down-
stream approach will work wonders
for your dealership’s customer sat-
isfaction index. Customers feel re-
laxed and in control, and they will
more likely have a positive impres-
sion of you.
Keys to an Effective InterviewNow that you have permission to
begin the process, it’s time to start
the interview. The benefi t of the in-
terview is it can provide a wealth of
information about the customer if
the right questions are asked. It can
help you set the terms of a service
contract or prepaid maintenance
program. You’ll also learn whether
the sale is a straw purchase and if a
demo ride was taken.
More importantly, the interview
will provide the F&I manager with
the information he or she needs to
obtain lender approval, which is our
primary goal. It also can plant the
seed for the sale of F&I products.
More important, you’ll have the op-
portunity to use the three most im-
portant words on the road to a sale:
“You told me …” Those three little
words can be critical to overcoming
an objection when you get the cus-
tomer into the F&I offi ce to present
your menu. Here are some examples
of what I mean:
1Service contract: “You know, I’m
surprised. You told me earlier that
you are going to put 15,000 miles per
year on the vehicle, and you plan to
keep it for fi ve years. That means you
will be out of the factory warranty
in two-and-a-half years. So what it is
about the service contract that con-
cerns you?”
2Prepaid maintenance: “You told
me earlier that maintenance was
important to you. What is it about
the prepaid maintenance program
that concerns you?”
3Appearance protection: “You
told me earlier that keeping your
vehicle looking showroom-new was
important. What is it about the ap-
pearance protection (or dent pro-
gram) that concerns you?”
4Credit life insurance: “You told
me earlier that in the event of your
death, you want your spouse to receive
the title. What is it about the credit life
insurance that concerns you?”
I have had the privilege of man-
aging and training hundreds of F&I
managers through the years, and
I can tell you that the only way the
interview works is if it is conducted
100 percent of the time with 100 per-
cent of your customers. But that also
requires a 100 percent commitment
among the staff — from your dealer
to your sales manager and the rest of
your team.
Yes, there are times when there
is a backup of customers waiting to
get into the F&I offi ce, which makes
sticking with the showroom inter-
view diffi cult. And sometimes, in a
rush to get the customer on the road,
the salesperson may be the reason
the interview is skipped. Whatever
the cause, your dealership could be
leaving money on the table.
Look, it takes about 15 seconds
for the F&I manager to walk to the
salesperson’s desk and less than fi ve
minutes to conduct the interview.
If you buy into this process and get
everyone committed to making it
happen on every deal, you could see
a nice increase in your store’s F&I
profi t per vehicle retailed.
Don Geroni serves as the national sales and F&I trainer for PermaPlate Inc. He also served as the national director of F&I training for Auto-Nation Inc. E-mail him at [email protected].
32 F&I and Showroom September 2011
Finance and Insurance
The customer interview should take no more than fi ve minutes. You can
gather customer information, set service contract terms and deter-
mine if a sale is a straw purchase.
FI0911interview.indd 32FI0911interview.indd 32 8/25/11 4:10:03 PM8/25/11 4:10:03 PM
Meet the man behind the dealer, the customer and VehicleOne.
Independent agent Brian Gaines knows what it takes to do business—honesty, dependability and some serious elbow grease. When times are tough and vehicle sales are hard to come by, maximizing PVR on every vehicle is critical. VehicleOne delivers protection for vehicles and increased revenue for dealers like the York Automotive Group in Indiana. And like Brian, VehicleOne supports his dealers and their customers with over 30 years of automotive coverage experience.
Meet your own Brian Gaines.Call 1-248-263-4498 to find your local independent UWC agent. Or visit universalwarranty.com for more information.
©2011 Universal Warranty Corporation
Meet the man behind the dealer
“ You have to work harder to go above and beyond what everyone else is doing.”
FI0411ally_uwc.indd 1 3/31/11 11:11:10 AMFI0911interview.indd 33FI0911interview.indd 33 8/25/11 4:10:05 PM8/25/11 4:10:05 PM
FI0711charter.indd 1 6/27/11 11:05:20 AM
E-Contracting’s Missing Link
The auto fi nance industry’s
decade-old push toward
e-contracting has served
as a nice template for F&I
product providers. How-
ever, there is one step providers may
be able to skip, a prospect that could
speed up the delivery of the paperless
future both segments envision for the
F&I offi ce.
The F&I product segment is where
the auto fi nance industry was a decade
ago in its drive toward e-contracting.
Web portals that allowed dealers to
submit credit applications ruled the
day, as they do currently for today’s
product providers. Advancements in
how business applications are de-
signed and distributed, however, are
speeding up the F&I product indus-
try’s progress. That progress also
raises the prospect of F&I managers
being able to book all product and fi -
nance contracts without ever having
to leave their dealership management
system (DMS).
The Birth of e-ContractingThe concept of e-contracting was
born in the late 1990s. At that time,
fi nance sources began introducing
online credit apps. It wasn’t until se-
cure Internet connections were devel-
oped that these online credit systems
fl ourished. One of the fi rst compa-
nies to come online with such a sys-
tem was Household Finance Super-
highways. Like other trailblazers, the
company developed a single-lender
Website that could receive credit
applications.
These sites also became great
dealer communication platforms for
fi nance sources, especially for cap-
tive fi nance companies. Aside from
being able to distribute new rates,
captive fi nance companies used them
to deliver service bulletins and host
loyalty-building dealer contests. The
goal was to load these credit portals
with as much content as possible to
keep their dealers from visiting their
competitors’ sites.
The single-lender sites worked
Integration has been one of the obstacles in the way of the industry’s push toward e-contracting. One technology expert says that will no longer be the case going forward, especially for product providers. By Mark Virag
34 F&I and Showroom September 2011
Technology
PHOTO ©ISTOCKPHOTO.COM / OKEA
FI0911technology.indd 34FI0911technology.indd 34 8/25/11 4:13:30 PM8/25/11 4:13:30 PM
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 AMFI0911technology.indd 35FI0911technology.indd 35 8/25/11 4:13:32 PM8/25/11 4:13:32 PM
great, but they were ineffi cient. F&I
managers were forced to learn pro-
cedures for submitting credit apps
for each platform. This is the stage
at which product providers now fi nd
themselves, and the challenge will
undoubtedly be the same.
The main problem with the portal
sites is that F&I managers must rekey
basic information about the customer
for each site they visit to price a prod-
uct. And once they’ve done that, they
are forced to switch back to the DMS,
input the products selected and then
check the fi gures before printing the
fi nance contract. It’s true that most
F&I professionals can price products
by memory, but that may not be feasi-
ble in the near future as the list of rat-
ed F&I products continues to grow.
The biggest issue with having doc-
uments prepared on separate systems
is the lack of integration and cross-
checking. There are provider portals
available today that can read from
the DMS, which eliminates the need
for rekeying. However, only a few of
these platforms can push product in-
formation back to the DMS. Linking
through certifi ed and even “hostile”
integration has been a great short-term
solution, but there is a better way.
Detour AheadThe next logical step for F&I prod-
uct providers would be aggregator
platforms. When DealerTrack intro-
duced its credit platform early last
decade, you would think the con-
nected fi nance companies benefi ted
the most. They did, but not without
some grumbling.
Yes, DealerTrack’s credit platform
did put those fi nance sources a mouse
click away from hundreds of F&I
managers, but it also erased the edge
some sources had gained through
their portal sites. The biggest fear
among fi nance sources in those days
was they would be commoditized by
the credit aggregation systems. It was
for that reason that a group of cap-
tives got together to form RouteOne
in 2002.
F&I product providers, especially
those affi liated with fi nance compa-
nies, know that story well. But their
biggest concern is that aggregator
platforms will foster price compari-
sons, which is why many simply
won’t play that game unless they can
control the rules.
Two things can alter the path of
providers and technology companies
alike: service-oriented architecture
(SOA) and Web services. SOA re-
fers to a design approach in which
components are created with concise
interfaces, with each component per-
forming a distinct set of related func-
tions. A Web service is a way to de-
liver a company’s solutions from an
SOA system.
What a Web service represents to
providers is a way to make portal
functionality available to outside sys-
tems such as — you guessed it — the
DMS. It also represents a cost-effec-
tive way to organize IT resources, as
a Web service offers more options to
providers on how they deliver their
services. They can expose the servic-
es to multiple menu systems, connect
directly to a DMS, or allow a provid-
er to join a network hosting multiple
dealer systems.
In the dealership environment, Web
services will allow product prices and
fi nance rates to be presented over the
DMS in a controlled environment. It
also will allow all contract forms to
be prepared by the DMS.
At present, the DMS supports plain-
paper contracting by means of a virtu-
al forms library. Using Web services,
these forms can be prepared in real-
time by the provider, allowing dealer-
ships to deliver an electronic funding
package to the fi nance source. F&I
managers also will be able to book
product contracts automatically.
This isn’t science fi ction. The net-
works and services are already in
place, and DMS providers are ac-
tively putting the other pieces of this
“e-puzzle” together. In fact, my com-
pany was founded specifi cally for
this purpose.
The main benefi t of this scenario
to F&I managers is that they can per-
form duties on one system. Providers
benefi t from various cost savings,
including the ability to change rates
automatically. The benefi t to a car
buyer is if they scrape a rim driving
off the lot, that road hazard contract
they purchased will already have
been booked by the time they took
delivery of the vehicle. And this is
why it’s critical that your dealership
familiarizes itself with e-contracting,
because this future isn’t far off.
Mark Virag is the managing direc-tor of Provider Exchange Network. He can be reached at [email protected].
36 F&I and Showroom September 2011
Technology
1995Finance sources deploy private systems for credit approval.
1999Single-lender credit systems offer “portals,” i.e., Websites.
2001 DealerTrack becomes “aggregator” for multiple fi nance sources.
2002RouteOne founded as captive-friendly aggregator.
2005 Aggregators begin to develop e-contracting.
2009ODE founded to develop e-contracting for DMS.
Evolution of Online Credit
This isn’t science fi ction. The networks and services are already in place, and
DMS providers are actively putting the other pieces of this “e-puzzle” together.
FI0911technology.indd 36FI0911technology.indd 36 8/25/11 4:13:32 PM8/25/11 4:13:32 PM
Are you ready for the Automotive Industry Event of the Year?
For the first time ever we will hold our NADA Convention and Expo in conjunction with the ATD Convention and Expo in Las Vegas, Nevada! Mark your calendar for February 3-6, 2012, to reap the benefits outlined below.
We promise: � Exciting new exhibits
� Workshops on the most recent trends and best practices with topics featuring the latest from facility construction to everything internet.
� A respected line-up of speakers, including:
t Sergio Marchionne, CEO Chrysler LLC
t Aron Ralston, survivalist and inspiration for the film 127 Hours
t George W. Bush, 43rd President of the United States and Founder, George W. Bush Foundation
� Valuable face time with the manufacturers
� A New Social Connection Zone complete with Twitter Wall
We deliver: � Comprehensive on-line resources
� Money-saving early bird registration
� 3 bonus workshop sessions on Friday
� Exhibit time all day, every day
� The Industry’s Premier Marketplace featuring the latest technologies and trends
Registration and Housing to open online at www.nadaconventionandexpo.org
Voice of the Dealer…
FI0911technology.indd 37FI0911technology.indd 37 8/25/11 4:13:34 PM8/25/11 4:13:34 PM
12 4
338 F&I and Showroom September 2011
Sales Driver
The magazine’s sales columnist continues with his call for change in Part 1 of a two-part series on creating sales momentum at your store. By Cory Mosley
I have worked with a lot of talented
people in this business, many of
whom went on to be key leaders
within their organizations. Recent
conversations with some of those
individuals and the completion of
an important project inspired me
to write this month’s column. You
may not like what I have to say,
but, hopefully, it will act as a catalyst
for change.
See, in today’s marketplace, “little
by little” isn’t the answer. Neither is
“moving at a glacial pace.” Reaching
a dominant position requires massive
action. The following are the fi rst
four of nine ideas that, if successfully
implemented, will create the momen-
tum you need to do just that:
Get feedback from your sales team: At my company, we offer something
called “Breakthrough Consulting.”
It’s designed to identify the major
roadblocks preventing a dealership
from reaching the next level. First, I
gather the sales team alone in a room.
With no managers present, they are
free to tell me what’s really happen-
ing at the dealership. It also allows
me to extract their ideas for getting
increased results.
I started in the showroom myself,
and I’ve been consulting long enough
to know the difference between com-
plaints and actual challenges. The
truth is that some of the best ideas for
moving the sales department forward
rest in the minds of your sales team.
Unfortunately, many great ideas for
inventory, pricing, pay plans, incen-
tive plans, marketing and even cost
cutting fall on deaf ears because the
decision maker is too ego-driven to
accept recommendations from their
subordinates.
Remember, successful salespeople
are good for more than just writing
deals and mastering the meet and
greet. Most of them have creative
ideas that are not solely focused on
increasing their income. In fact,
many sales professionals simply want
to have a role in the dealership’s suc-
cess. So, why not start weekly meet-
ings to discuss new ideas or create a
process by which ideas can be sub-
mitted for serious consideration?
Get rid of the sacred cows: I’ve writ-
ten it before and I’ll write it again:
Expand or become expendable. If
my 66-year-old mother is texting, e-
mailing, Facebooking and tweeting,
then there is no excuse for salespeo-
ple and managers not being able to do
the same. Properly using the CRM
system or surfi ng the Web to educate
yourself on the information your cus-
tomers are fi nding online should be a
daily job requirement.
I can’t tell you how many times
I’ve seen capable sales, fi nance and
service managers — including sales
professionals — sink a dealership.
Decision makers need to look in the
mirror and be honest, because it’s
critical that they put more energy into
those who are committed to enhanc-
ing the business rather than those
who simply will not step up.
Sweep away the bureaucracy: Just
like the sacred cows, the bureaucra-
cy and red tape has got to go. “Nim-
ble,” “quick” and “responsive” need
to become the new adjectives in your
life, as death by meeting and paraly-
sis by analysis will kill even the best
of intentions.
To increase the level of communi-
cation across the dealership, the “us
vs. them” mentality that manifests
in the sales, fi nance and service de-
partments must be eliminated. And
don’t just talk about an open-door
policy; literally unscrew the doors
from their hinges, reengage your
passion for the business and reignite
that fi re within your sales and man-
agement teams.
Don’t recycle talent: I’m all for
recycling when it comes to bottles,
cans and paper, but not when it
comes to employees. One of my cli-
ents has a manager on his fourth tour
at the dealership. He was fi red at the
end of the three previous go-arounds.
Do yourself a favor and don’t make
the same mistake.
I’ve often said that the length of
your tenure in the business has no
bearing on how competent and skilled
you are. You read right — none! I’ve
met second-year managers who could
run circles around the so-called vet-
erans. And by utilizing personality
profi ling, tweaking the pay plan and
work schedule, and participating in
a real training and development pro-
gram, you too will be able to attract
and retain the talent that you’ll need
to dominate in the future.
Cory Mosley is principal of Mosley Auto-
motive 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 corey.mosley@
bobit.com.
4 Operational Game-Changers
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1
2
4
3
40 F&I and Showroom September 2011
On the Point
‘Da Man’ says it’s time for dealers to stop believing in the fl awed logic that says it’s impossible to make a profi t in today’s Internet age. By Jim Ziegler
T here are so many defeatists in
our industry telling you that
it’s impossible to make gross
profi ts on car deals because of com-
petition and the information avail-
able to today’s car shoppers. Person-
ally, I think that’s ridiculous. I refer
to those naysayers as the “prophets of
low profi t.”
As a general manager, dealer prin-
cipal or general sales manager, there
are several adjustments you can
make to the way you negotiate with
customers that will dramatically in-
crease your profi tability. Let’s review
four simple changes that can have an
immediate impact:
Stop apologizing for making a profi t: Full price is a fair price, es-
pecially on new cars and trucks.
Dealers are operating with less than
6 to 8 percent markup on new cars
and trucks, while furniture and jew-
elry stores are allowed to mark up
their products 300 percent without a
complaint.
The root of most blown deals and
lost profi ts is a premature discussion
about fi gures. Salespeople, you need
to stop this, because what you’re re-
ally doing is giving away all the profi t
before management is even aware of
the customer or the deal.
Stop qualifying on anything but income and credit: The main reason
you’re not as profi table as you should
be is because your salespeople —
and, in some cases, even your man-
agers — are overqualifying custom-
ers with all of the questions they’re
asking. By asking questions that are
basically designed to fi nd out why
they can’t buy, all you’re doing is dis-
qualifying your customer rather than
qualifying.
So, instead of fi nding out how
much they’d like to pay, how much
they have budgeted and how much
they want for their trade, try asking
your customers if they can afford the
vehicle they want and whether their
credit report agrees.
Think about it: Are customers real-
ly going to tell you the highest amount
they can pay, or the least they’ll take
for their trade-in? Remember, cus-
tomers have a strategy, too.
Profi t is a state of mind: The big-
gest problem with asking too many
questions is it tends to saturate the
salesperson’s mind with every rea-
son why the deal won’t get done.
That kind of thinking tends to rub
off on the sales manager, who then
gets gun shy about pulling the trig-
ger on the deal.
Think about this: Isn’t it amazing
how much higher our current gross
per unit is these days because of the
shortage of quality used vehicles?
Customers are paying a premium for
pre-owned cars, which allows us to
hold a higher profi t, right? My ques-
tion to you is: Why weren’t you able
to do that all along? Well, because it’s
all about one’s mental state.
See, it’s important that customers
see our numbers before we delve too
deeply into what they want to pay.
Try this line: “Mr. Customer, we pre-
fer to make the fi rst proposal to you.
Let’s wait and see what management
offers before you tell me what you
have in mind.”
No matter what they believe or say,
customers are going to want to nego-
tiate. And you can bet they brought
their “A” game to the table. See,
there’s no such thing as a no-haggle
dealership. Every deal moves the
numbers somewhere, even if it’s just
a second look at the trade.
Never ask how much they want to put down: Down payment is the
key to profi t and getting more deals
approved. Never ask a customer how
much down payment they have. In-
stead, tell them how much they need
before you hear their number. Here’s
an example of what I mean:
“Mr. Customer, as you know, the
banks in our community and ABC
Captive Credit would like to see 20
percent cash down for preferred and
premium fi nancial programs. In your
case, we’d like to get a check for
$3,824.”
By using this method, customers
will negotiate your number down
instead of you having to bump their
number up. It’s also a much more
customer-friendly approach.
Again, most blown deals are the
result of sales staffers being afraid of
the numbers or overqualifying cus-
tomers. Remember, every deal has a
heartbeat with a rhythm and a pulse,
so you know when it’s still alive and
when you’ve lost it. The key is con-
fi dence, because a lack of it is like
blood in shark-infested water. So, be
sure of yourself and follow the advice
I laid out, because it really is OK to
make a profi t.
Jim Ziegler is the president of Ziegler
SuperSystems Inc. E-mail him at jim.
Beware False Prophets of Profi t
FI0911onthepoint.indd 40FI0911onthepoint.indd 40 8/25/11 4:12:07 PM8/25/11 4:12:07 PM
FI0911ziegler.indd 1 8/18/11 8:45:29 AMFI0911onthepoint.indd 41FI0911onthepoint.indd 41 8/25/11 4:12:09 PM8/25/11 4:12:09 PM
FI0411uds.indd 1 3/23/11 4:27:37 PM
Legal
42 F&I and Showroom September 2011
The magazine’s legal wiz shares a textbook case on what not to do when spot delivering a vehicle. By Tom Hudson
T he editor sent me a few ques-
tions and points raised in a re-
cent discussion among mem-
bers of an F&I Facebook group. The
topic: spot deliveries. Rather than go
point by point, I thought I’d share
an e-mail a dealer friend of mine
shared with me. See, my friend has a
friend who is a lawyer. Evidently, that
lawyer friend sometimes represents
consumers in cases against car deal-
ers. He also sometimes represents
dealers. In the case I’d like to share
with you, he was recommended to a
consumer by a dealer who wanted to
“level the playing fi eld” with a com-
petitor. The following, albeit slightly
edited, is what the lawyer wrote:
I’m reproducing the lawyer’s letter
here for a couple of reasons. First,
dealers need to know that there
are lawyers representing consumer
plaintiffs who are very knowledge-
able — and often more knowledge-
able than dealers — about the laws
that apply to the sale and fi nancing
of cars. Second, this letter serves as
a good checklist for how not to ex-
ecute a spot delivery transaction.
These transactions are diffi cult
to do properly, which requires good
documentation, a thorough under-
standing by the dealer of the laws
and regulations governing them, and
full disclosure to the customer about
what’s happening. Spot deliveries
are no place for abusive practices
like those described above. They are
risky enough when they are done
properly and ethically.
The practice of spot deliver-
ing cars raises issues under fed-
eral law as well as state law, and
the rules vary from state to state.
If you haven’t already done so, you
should thoroughly review your spot
delivery forms and procedures with
your lawyer. That’s unless you enjoy
stroking big checks to your custom-
ers’ lawyers.
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. ©Counselor
Library.com 2011, all rights reserved.
Based on an article from Spot Delivery.
Single print publication rights only,
to F&I and Showroom magazine. HC#
4840-0728-8074 (9/11).
Spotting by the Book
he dealer of the laws delivery forms and procedures with
car when they had no right to do so and are now offering it for sale), coercion and duress (they made her take a rental and a check for trade allowance), breach of contract (consumer not in default), wrongful repossession, breach of the peace, unfair and deceptive collection practices and resulting intentional infl iction of emotional distress. And, concurrently with the civil complaint, I told them I’m fi ling with the Federal Trade Commission for
violations of the Fair Credit Reporting Act, fi ling with the North Carolina Attorney General for improper conditional delivery (didn’t put the customer out on a dealer tag), and then with the state DMV for violations of NCGS 20-294 (4), (5) and (6) (fraud on customer, illegal repo, unfair and deceptive acts and practices).The dealer already tried to institute his arbitration clause on me and I said he could discuss that on a summary judgment motion. Some of the above will stick. I also might include the third-party fi nance company as a defendant. I’ve also mentioned that the complaint will get publicity with regional papers, news outlets and the Internet.
point by point, I thought I d share ers. He also sometime
Atvtcdoil
Thclsusticothenew
ABC Legal Services
Dear Friend,
I’ve got a textbook case of what not to do. A dealer
attempted a conditional “spot delivery” but put
the customer out on a generic installment contract
with no “unwind” language. It also had the dealer
identifi ed as “seller/creditor.” The third-party fi nance
company refused the deal and reassigned it to the
dealer. The dealer then forcefully repossessed the
vehicle six days before the fi rst payment was due.
The vehicle was titled in the customer’s name, with
the lienholder shown as the third-party fi nance
company. That means the dealer wasn’t even the
correct repossessing party. I’ve talked with the
regional manager who said the customer agreed to
settle (duress and coercion … it was either take the
dealer’s offer or walk).
I’ve already told them my civil complaint starts at
false imprisonment (they blocked in her car), assault
and battery (they tried to let the air out of the tires
while she was in the car), conversion (they took her
FI0911legal.indd 42FI0911legal.indd 42 8/25/11 4:10:39 PM8/25/11 4:10:39 PM
FI0411uds.indd 1 3/23/11 4:27:37 PMFI0911legal.indd 43FI0911legal.indd 43 8/25/11 4:10:41 PM8/25/11 4:10:41 PM
Bottomliners
BOOTH420
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44 F&I and Showroom September 2011
JM&A Offers Short-Term Coverage Plan JM&A GROUP HAS LAUNCHED TERM
Care Select, a new plan designed for leases and short-term vehicle own-ers. The new program offers pre-mium mechanical failure protection on most mechanical components, as well as wear-and-tear coverage on items such as brake pads, batteries and headlamps. The product will be available to dealers through Fidelity Warranty Services Inc., according to the company. For more information, visit www.jmagroup.com.
VisionMenu Now Offers PRU Reporting
VISION MENU INC.
now offers a new reporting tool that will make a strong case for why a menu should be used. The new feature equips the company’s Vision-
Menu Plus and Vision Report offerings. It is designed to track a dealership’s dollars per retail unit when a menu is and isn’t used, and the percentage of menus and disclosures that are printed. For more information, visit www.visionmenupro.com.
Universal Offers VSC Financing for GWC DealersGWC WARRANTY DEALERS NOW
have an alternative fi nancing op-tion for customers who don’t qual-ify to have their service contract included in their vehicle fi nancing. Called The Zero Plan, the new offering was developed through a partnership between GWC and Universal Lenders LLC. It offers interest-free fi nancing on GWC service contracts and can be used to fi nance other ancillary products. For more information, visit www.the-zero-plan.com.
DealerTrack to Support Dodd-Frank ComplianceDEALERTRACK HAS ADDED NEW
functionality to its DealerTrack Performance Suite that is designed to help dealers comply with the Dodd-Frank Wall Street Reform Act and Consumer Protection Act. Both laws became effective on July 21, 2011. The enhancements are available at no additional charge to dealerships on the DealerTrack credit application network, ac-cording to the company. For more information, visit www.dealertrack.com/compliance.
Product Feature
MPi Offers Vehicle Inspection Mobile AppMPI HAS RELEASED A NEW VEHICLE
inspection program designed to work on an iPhone or iPod touch. Billed as a sales tool, EDGE Mobile is designed to allow service advi-sors to perform a walk-around inspection before the repair order has been entered into the dealer-ship management system. It also provides service advisors with access to a list of recommended services and repairs the customer
declined on prior visits. The app offers three best practice inspec-tion templates, one of which is de-signed to help advisors note any dents or dings when a vehicle is dropped off, according to MPi. For more information, visit www.mpi-edge.com.
FI0911bottom.indd 44FI0911bottom.indd 44 8/25/11 3:58:09 PM8/25/11 3:58:09 PM
© 2011 Innovative Aftermarket Systems L.P. All Rights Reserved.
Contact IAS Sales at 800-346-6469 x8989 or www.iasdirect.com for more information.
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F&I Software:IAS also offers world-class technology solutions that create
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F&I Products:,$6�RIIHUV�WKH�KLJKHVW�TXDOLW\�),�SURGXFWV�LQ�WKH�LQGXVWU\�DQG�EDFNV�WKHP�XS
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,$6�RIIHUV�FRPSHWLWLYHO\�SULFHG��EHVW�LQ�FODVV�),�SURGXFWV�and software - all fully insured and eligible for reinsurance.
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Products
46 F&I and Showroom September 2011
As part of our team you will enjoy:• Outstanding earnings
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If you are driven to succeed and want the opportunity to take the fast-track to career satisfaction, please apply online at www.jmfamily.com. Click on the careers home-page and search for the F&I Specialist opening.
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F&I SpecialistDistrict & RegionalManager Positions
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Established 1984
I’m Dave Mathews, President & CEO of UCC.
Over 27 years, I have built a company of value.
My experienced team will help your agency with:
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Vehicle Service Contracts ��Prepaid Maintenance ��Theft Deterrent
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Get Connected!F&I and Showroom readers are among the nation’s best-informed automotive
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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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FI0911index.indd 46FI0911index.indd 46 8/25/11 4:09:28 PM8/25/11 4:09:28 PM
September 2011 F&I and Showroom 47
Allstate Dealer Services 904-992-6185 allstatedealerservices.com 13American Financial & Automotive Services 800-967-3633 afasinc.com C4AUL Corp. 800-826-3207 aulcorp.com 15CARLAW Auto Dealer Suite 877-464-8326 counselorlibrary.com 47Charter Warranty 877-404-6823 saveadeal.com 35Chase • chase.com 17Chem Etch Manufacturing Inc. 877-564-2565 chemetchmfg.com 46CNA National 800-345-0191, ext. 720 cnanational.com C2Dealerlink 800-890-8850 DealerLink.us 23Friendly Finance Corp. 800-872-2877 friendlyfi nancecorp.com 39GSFS Group 713-580-3023 [email protected] 27Innovative Aftermarket Systems (IAS) 800-346-6469, ext. 8989 smartdealerproducts.com 3, 45JM&A Group 800-553-7146 jmagroup.com 46NAC (National Auto Care Corp.) 800-548-1875 nacsolution.com 7NADA Convention & Expo • nadaconventionandexpo.org 37National Automotive Experts 800-810-8859 nationalautomotiveexperts.com 9Protective 800-794-5491 protectiveassetprotection.com 5Reahard & Associates Inc. 866-REAHARD go-reahard.com 1Resource Automotive 312-560-9182 thewarrantygroup.com/automotive 24-25Ristken Software Services 800-368-9680 ristken.com C3RoadVantage 855-762-8268 roadvantage.com 19Safe-Guard 800-742-7896 safe-guardproducts.com 31TD Auto Finance 800-200-1513 tdafdealer.com 11United Car Care 800-571-6412 unitedcarcare.com 44, 46United Development Systems Inc. (UDS) 800-282-1154 UDSDealerServices.com 43Universal Warranty Corp. 248-263-4498 universalwarranty.com 33Warrantech 800-723-1154 warrantech.com/auto 21Wise F&I 800-849-1080 WiseFandI.com 29Ziegler Super Systems 800-726-0510 ZieglerSuperSystems.com 41
we are.
FI0411hudco.indd 1 3/28/11 2:30:36 PM
Ad Index
FI0911index.indd 47FI0911index.indd 47 8/25/11 4:09:30 PM8/25/11 4:09:30 PM
48 F&I and Showroom September 2011
Mad Marv
Last month, it was the dreaded ‘Line 5’ call. Now, our in-the-trenches columnist ponders the dynamics of rehashing deals and enhancing back-end approvals. By Marv Eleazer
Nothing irritates me more than
a lender that won’t bend its
guidelines when an exception
is needed to deliver a vehicle. Even
more irritating is when a customer
wants a back-end product and the
lender won’t budge.
Over the years, I have taken my
frustration out on more than a few
reps and lender buyers over this is-
sue. I’ve thrown their contracts in
the dumpster, cursed them on the
phone and banished them from my
store. It’s true; my pride has gotten
the best of me over the years. In fact,
I’m amazed I haven’t completely
alienated some of the people I’ve
taken to task. Then again, the cool
name the editor gave my column
wouldn’t work as well if I had been
any other way.
So, why did I behave so badly?
Well, I was trained to believe that
strong-arming lenders was the only
way to get what I wanted. I guess I
felt that the louder and more obnox-
ious I was, the faster buyers would
give me what I wanted — even if it
was just to get me off the phone.
The truth is that my ranting and
raving only showed that I failed to un-
derstand my lender’s business model.
So, let’s make sure that doesn’t hap-
pen to you.
Guidelines vs. Rules: Let’s be clear,
guidelines aren’t the same as rules.
It’s imperative that you know the dif-
ference before I explain what each
term means to an F&I manager.
See, guidelines are stated points a
lender believes — based on its inter-
nal analysis — must be reached for
a loan to achieve its intended profi t
yields. Guidelines typically cover
loan term, book value limitations,
back-end product allowances and
monthly payment caps, among oth-
ers. They can be stretched, bent and
even trumped.
Rules, on the other hand, are non-
negotiable. No amount of shouting
will change them. We’re talking
about hard-and-fast loan limits, such
as vehicle age and type, miles, mini-
mum amount fi nanced, back-end
product price caps or minimum in-
come requirements.
The reason guidelines and rules
exist is so the lender can expect a
reasonable return on its investment
while maintaining good loan perfor-
mance. There’s no way a lender can
remain in business if it caved to every
demand, so don’t expect exceptions
on every deal.
Back-End Exceptions: Every lender
has varying tolerance levels, so make
it your business to know each lender
individually. And as I wrote last
month, you must pick your battles
when asking for back-end excep-
tions. They should be used wisely and
prudently.
You also have to remember that,
even within a lending institution,
opinions on the business vary. And
that’s why supervisors are important.
If you truly believe you have a viable
deal and the buyer isn’t budging, give
his or her boss a call. It could save
the deal.
Rehashing a Callback: When re-
hashing, it’s critical that you return to
the table with something you didn’t
have before, such as more cash down
or a vehicle that’s a better fi t with
the lender’s program. Remember,
we can’t assemble an F&I presenta-
tion until the lender and dealer have
agreed to an acceptable deal struc-
ture, so it’s vitally important you
learn the various lender guidelines.
The key is to be sensible and ap-
proach the buyer with good reasons
why they should buy the deal. That’s
why I’ve created the following six
keys to rehashing a deal:
■ Be familiar with the lender’s
guidelines and rules before calling to
rehash.
■ Be familiar with the customer’s
situation.
■ Be sure there isn’t any more cash
or trade equity.
■ Be sure the customer’s monthly
debt-to-income ratio is within the
lender’s guidelines.
■ Be sure there is no co-signer.
■ Be sure there isn’t any more in-
come.
The truth is, sometimes a simple re-
quest is all it takes. Captives like Ford
Motor Credit rely heavily on payment,
so you can often get an increased pay-
ment call from them simply by asking
for it. The lesson there is, never take
the lender’s initial callback as gospel.
Pick up the phone and ask!
Look, whether you think so or not,
your buyers aren’t looking for every
reason to turn down your deals. In
fact, it’s quite the opposite. They have
quotas to meet, too, so give them ev-
ery reason to believe your deal is a
buyable one.
Marv Eleazer is the fi nance manager at
Langdale Ford in Valdosta, Ga. E-mail
him at [email protected].
Be the Buyer
FI0911madmarv.indd 48FI0911madmarv.indd 48 8/25/11 4:11:43 PM8/25/11 4:11:43 PM
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