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4 F&I and Showroom August 2011

August 2011 Volume 14, Issue 8

Dealer Profi le

16 She’s BuyingIt’s been a year since Meade Lexus earned AskPatty.com’s “Seal of Approval,” and the dealer group’s CSI is now approaching 100 percent.

Special Finance

20 Character DevelopmentChris ‘Captain Credit’ Cochran struck gold for Haddad Dealerships with a social media promotion that grew into a standalone special fi nance department.

Special Finance

24 Ending the Cycle Things are looking up for the below-prime segment, but our analyst warns that there still may be trouble ahead for the fi nance companies and dealers who serve that segment.

Executive Q&A

30 A New BreedCarFinance Capital is new to the auto fi nance world, but the people behind the nonprime/subprime fi nance source are not. The editor gets the skinny.

Dealer Executive

34 Buy-Sell Mistakes to AvoidBefore you think about selling or expanding your operation, check out this buy-sell primer for avoiding four possible landmines on the road to a sale.

6 Letters

8 Editorial

10 Developments

14 Industry Trends

36 Sales Driver

38 On the Point

40 Legal

42 Bottomliners

51 Ad Index

52 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.

24

30

34

20

Contents Endorsed as the offi cial publication

of the Association of Finance & Insurance Professionals

COVER PHOTO BY ANTHONY NOWACK

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Questionable FutureTO THE EDITOR: Great editorial (“Rime

of the Ancient Dealer”) in July, Greg.

The industry is changing and we as

dealers must be proactive instead of

reactive. Yes, we’ll face adversity in

the coming year, but I also think we’ll

be presented with equal or greater op-

portunities.

Heidi WilliamsGeneral Sales Manager

Underriner HondaBillings, Mont.

TO THE EDITOR: I thought your July

editorial was right on. I’ve had many

arguments with family and friends

who question the profi ts dealers earn.

What they fail to grasp is the overhead

and property taxes associated with

the prime commercial land on which

dealerships are located. They also fail

to consider what dealerships spend on

utilities, washing 300 cars a day, run-

ning 78 commercial phone lines, and

buying 93 computers at a time. How-

ever, while Dale Pollak may be on to

something, I do believe his vision of

the future is at least 10 to 15 years

away.

Jim DirksAccount Manager

Dealer Direct Services

TO THE EDITOR: Regarding your July

editorial, Pollak certainly has an in-

triguing vision of the future. However,

folks like him won’t be happy until

there’s a Ford vending machine down

the street. What rubs my fur backward

is that business models like his want to

remove the human element. As “Mad”

Marv Eleazer mentioned in the past,

human beings will never change so

much that they’ll hand their emotions

over to technology.

Tom WilsonF&I Director

McDonald Auto GroupCastle Rock, Colo.

Going MobileTO THE EDITOR: Do you know of any iP-

hone apps for F&I Managers, maybe

one that offers a payoff listing of all

the major banks?

Chad MitchellFinance Manager

Studebaker Buick Pontiac GMC, Inc.Richmond, Ind.

Chad, I haven’t heard of anything for an iPhone, but I have heard of business applications for the iPad that they do offer lease-return func-tions and the ability to showcase F&I products.

Mercedes-Benz Financial Services introduced a lease-return iPad tool last year and unveiled in February a software tool that turns the iPad into an interactive F&I product brochure. BMW Financial Services, Warrantech and Innovative Aftermarket Systems also have introduced similar solutions. — Gregory Arroyo

When Opportunity KnocksTO MAD MARV: I’ve been reading F&I and Showroom recently because I

may get a job offer to work as an F&I

manager at a dealership that sells

up to 500 units a month. It currently

employs 10 F&I managers. I have no

prior experience in this fi eld, so I’m

not sure if I should take the position.

The position is commission only. Cur-

rent staffers make between $75,000

and more than $100,000, on average.

What do you think?

Saheb via e-mail

Congratulations on the opportunity, Saheb! With 10 managers in a 500-car store, there is plenty of opportunity for you to excel. Obviously, my advice is to accept the job if offered. Once trained, you will easily exceed your current annual earnings and, depend-ing on your ability and desire to suc-ceed, can become a top performer making a lot more. The dealership obviously sees talent in you or they wouldn’t be considering you. Yes, its commission, but the down months should exceed where you’re currently budgeted, so I would jump in with all four feet. — “Mad” Marv Eleazer

Letters


Vice President Group Publisher, Auto Group

Sherb Brown

Publisher, Dealer GroupNational Sales Manager

David Gesualdo727-947-4027

[email protected]

Executive EditorGregory Arroyo

[email protected]

Managing Editor / Art DirectorTariq Kamal

[email protected]

Assistant EditorJennifer Washington

[email protected]

Great Lakes Sales ManagerRobert Brown Jr.

[email protected]

Sales & Marketing CoordinatorTracey Tremblay

E-Media and Print Production Manager

Brian Peach310-533-2548

[email protected]

Web ManagerSam Kim

[email protected]

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

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Subscription Inquiries888-239-2455

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Printed in U.S.A.

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It was two years ago. I was in Or-

lando for the 2009 F&I Conference

and Expo. It was after hours and I

was at the hotel bar with “Mad” Marv

Eleazer and an F&I manager from

Ohio named Jeremy Addis. Because I

remain a student of this business, it’s

very rare that I’m able to stump you

pros out there. But the stars aligned

that night.

We were talking about how many

products they offer on their menu.

Marv focuses on core products and

doesn’t venture too far into those in-

tangibles. It’s not that he’s opposed to

those newer product categories. He

limits his selections because he knows

his customers’ attention spans are

short when it comes to non-core prod-

ucts. Jeremy holds a similar view.

Key prices were on the rise at the

time, so I asked whether they had ever

considered key replacement. To my

surprise, Jeremy said he had never

heard of such a product. It was my

time to shine, I guess, as I fi lled him

in on what I knew.

I like telling that story because it’s

one of the benefi ts of coming to our

annual conference. Yes, Jeremy picked

up a lot of information, but he shared

some as well. That year, we invited a

representative from the Federal Trade

Commission to talk about the Red

Flags Rule, and Jeremy gave him an

earful. His main complaint was that

the rule was a moving target, making

it diffi cult for dealers to know what to

shoot for.

Jeremy had a point. And by raising

his hand that afternoon, he spoke out

on behalf of his industry. Unfortunate-

ly, I think a lot of you out there have

never had that chance. And that, my

friends, is why we created our confer-

ence — to give F&I professionals a

place to learn, network, pick up new

ideas, product information and be part

of a community.

Yes, those Web training classes are

defi nitely convenient, but I doubt they

can deliver the feeling you get when

you’re at our conference. And after

being at the helm of this magazine

for four years, I know you guys and

gals sometimes feel like you’re on an

island in your dealerships.

Now, if the 200 respondents to a

survey one of our competitors con-

ducted is a refl ection of how all deal-

ers feel, then more than half of your

bosses believe that the main purpose

of F&I training is to sell more prod-

ucts. If that’s the case, then let me tell

you why they need you to join us in

Las Vegas.

See, last year we made a big change.

Knowing that being with us in Septem-

ber is quite an investment, we decided

to create an agenda that gave you the

best bang for your buck. We cut down

on our panel discussions, limited our

compliance sessions and began invit-

ing the best trainers in the business

to lead more than 20 educational ses-

sions dedicated to helping you move

more product.

And just check out some of the

names on our agenda this year:

George Angus (Team One Group),

Luis Garcia (Safe-Guard Products),

Gerry Gould (UDS, selected as the

top training outfi t seven years in a row

by Auto Dealer Monthly), Heather

Haynes (JM&A Group), Rick McCor-

mick (now with Automotive Financial

Services), Ron Reahard (Reahard

& Associates), and John Vecchioni

(United Car Care).

David Johnson, social media strate-

gist for Next Generation Dealer Ser-

vices, will be there to talk about social

media marketing. He’ll be joined by

legal expert Brian Casey, who will

talk about the legalities of operating

in the social media realm. Jim Gan-

ther of Mosaic International also will

be there to provide a dealer’s guide to

digital compliance.

Also on the agenda is the maga-

zine’s legal wiz, Michael Benoit. He

will provide an update on the Dodd-

Frank Act, the Consumer Financial

Protection Bureau it created and the

new rulemaking powers the Federal

Trade Commission will assume be-

cause of it.

Cory Mosley, the magazine’s

“Sales Driver” columnist, returns to

talk about new-school training ideas,

which I know is important for those of

you still struggling with the Internet

and Gen-Y era of auto retailing.

And there’s one more surprise: Jim

Ziegler will be at this year’s show.

Yes, “Da Man” will throw in his two

cents about marketing in the digital

age. By the way, check out page 38.

That’s right, Mr. Ziegler is our newest

columnist and he’ll be directing his

message to dealers every month going

forward.

So, do me a favor. Walk this issue

into your dealer’s offi ce and show him

or her this page. We’re going to be

offering one heck of a program, and

I promise you it will be worth every

penny it takes for you to get to Las Ve-

gas. See you there.

Improve Your OddsIn September, the best sales and F&I trainers in the business will converge in Las Vegas for the magazine’s annual conference. Not being there is a gamble you can’t afford to take. By Gregory Arroyo

Letter From the Editor

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A Georgia dealer showed its

support in July for a cus-

tomer segment that will be

at the center of discussions when the

Federal Trade Commission’s “Lis-

tening Tour” arrives in San Antonio

this month.

Teaming up with Ally Financial,

Carl Black Buick GMC — part of

the four-store Car Black Automo-

tive Group — handed out on July

23 $10,000 worth of backpacks and

school supplies to children of mili-

tary personnel at its Roswell, Ga., lo-

cation. “We recognize the toll taken

on families of our ac-

tive duty and National

Guard personnel, and

it’s nice to show our

appreciation for their

sacrifi ces by getting in-

volved in this valuable

community event,” said

Mike Bowsher, dealer principal at

Carl Black.

The industry’s past dealings with

military personnel will be under the

spotlight at the St. Mary’s University

School of Law on Aug. 2, the fi rst

day of the FTC’s two-day round-

table event. Offi cials with the FTC

will host consumer advocates, mili-

tary leaders, dealers and auto fi nance

representatives to discuss consumer

protection issues related to auto sales

and fi nancing.

As a result of the Dodd-Frank

Act, the federal law that created the

Consumer Financial Protection Bu-

reau (CFPB), the FTC will assume

expedited rulemaking authority with

respect to auto dealers. The FTC

launched its Listening Tour to help

it determined where it should focus

its resources when it assumes its new

powers on July 21.

Dealers came under fi re last year

for their treatment of military per-

sonnel and their families during

Congressional proceedings to deter-

mine whether auto retailers should be

exempt from the CFPB’s oversight.

Many of the issues raised during

those discussions will be at the center

of this month’s roundtable.

Industry Preps for Round Two of FTC Roundtables

Developments


On July 23, Carl Black Buick GMC donated $10,000 worth of backpacks and school supplies to children of military families at its Roswell, Ga., location.

PHOTO BY NGOOD

ALG: Used-Vehicle Pricing Bubble Not Just a TheoryTHE MAGAZINE WENT ONE-ON-one in July with ALG’s Eric Lyman to fi nd out if a used-vehicle bubble described in a competing publica-tion is for real. According to the company’s director of residual value solutions, the bubble does exist. When it will burst is anyone’s guess. Here are some excerpts from that July 12 interview:

F&I: So, is this bubble for real?Lyman: Well, as we saw during the downturn, demand for both new and used vehicles really took a hit, with

new-car demand feeling it the most. Coming out of the recession, used demand began to recover faster than new, which is what’s contributed to the existence of this used-car bubble. And as we see that demand shift start to return back to pre-recession levels, we would expect that new-car demand will increase and used demand will soften a bit.

F&I: When do you see this bubble bursting?Lyman: It’s diffi cult to say. But what we’ve done is taken out some value [in our tracking of market values] in anticipation that there will be a correction. By doing this, we won’t have to make a sweeping adjustment to our forecast when the bubble does burst.

F&I: What should dealers be doing now?Lyman: Things vary by region and by brand, but the one thing I can say is that supply will continue to be an issue, which will continue to support higher values. Ultimately, the dealers are going to have to stock their used-car inventory. So, these high wholesale values are a cost of doing business in the cur-rent environment.

To read the full interview, go to fi -magazine.com/bubble-economics.

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The Warranty Group Inc., an underwriter, administrator and marketer of service plans and related

programs, has named Craig Robinson executive vice president for Latin America. Robinson joined the company in 2000 as a business development executive and had previously served as vice president of auto and non-auto third-party administration.

BMW Group named Ludwig Willisch as president of BMW North America. He will take over for retiring

Jim O’Donnell. Willisch most recently oversaw BMW Group’s European sales region and has been working with the company since 1996. He also served as president of BMW M GmbH. Willisch offi cially assumes his new position on Oct. 1, 2011.

Tracey Matura was named general manager of Mercedes-Benz USA’s new U.S.-based sales and

marketing team for the company’s smart products. A 16-year employ-ee with the automaker, she will be responsible for the brand’s distribution, sales and marketing activities. She will report to Michael Slagter, vice president of sales.

Mazda Offers PPM ProgramMAZDA NORTH AMERICAN

Operations (MNAO) launched Mazda Total Advantage (MTA), the company’s fi rst prepaid maintenance program for new, used and certi-fi ed pre-owned Mazda vehicles. The program is only available for 2007 and newer models and is available in one-to-fi ve-year increments on Schedule I and Schedule II maintenance plans. Customers also have the option to fi nance MTA into their vehicle pur-chase through Mazda Capital Services.

GM Offers Auto Insurance in Oregon, WashingtonCAR BUYERS IN OREGON

and Washington who purchase a 2010-2012 Chevrolet, Buick, GMC or Cadillac vehicle before Sept. 6 will receive a free one-year insurance policy from MetLife Auto & Home. The policy, which

includes both liability and physical damage cover-age, covers the vehicle and anyone who drives it with the owner’s permis-sion for the full year, according to General Motors.

Prestige Gets $150 Million Funding FacilityPRESTIGE FINANCIAL

Services Inc. has estab-lished a $150 million funding facility with Wells Fargo Securities, which will fund the Salt Lake City-based auto fi nance company’s con-sumer lending activities. The facility has a renew-

able one-year term and will assist Prestige in growing its loan port-folio and completing periodic asset-backed securitizations, according to the company.

Eos Group Supplying VSCs to Tuttle-ClickTHE 16-STORE TUTTLE-CLICK

Automotive Group will now offer Eos Group Inc.’s service contracts at its stores in Southern Cali-fornia and Arizona. The magazine’s 2007 F&I Deal-er of the Year announced in July its deal with Eos, which targets vehicle owners who didn’t opt

for a service contract at the time of purchase.

GWC, Southern Auto Finance Announce PartnershipGWC WARRANTY CORP.

and Southern Auto Finance Co. have forged a strategic alliance to offer GWC service contracts and GAP through SAFC dealers. The partner-ship, according to GWC offi cials, will aid in the F&I product providers expansion into 12 ad-ditional states in the next 12 months.

PEN AddsMaximTrakOPEN DEALER EXCHANGE’S

Provider Exchange Net-work (PEN) announced that MaximTrak’s F&I menu and reporting system is now integrated into the company’s e-contracting platform. The integration now allows MaximTrak to offer its dealer network electronic rating capabilities, forms and contract origination.

Developments


GARRET LACOUR, CO-

founder and former CEO of IAS, launched RoadVantage, an aftermarket company that offers dealer-ships traditional after-market programs with 90 days of free consum-

er warranty offerings. RoadVantage’s product

offerings include key replacement, tire-and-wheel protection, GAP, wind-

shield, interior/exterior protection and a multi-shield offering.

IAS Co-Founder Launches New Company

Moves and Hires


FI0811dealertrack.indd 1 7/21/11 9:12:35 AM


If any of these six vehicles are on your lot, their features, depreciation values, availability and incentives should sell themselves.

C ar shoppers are being told to

wait until after the summer to

get the best deal on a new ve-

hicle, but the NADAguides’ “Second

Quarter Car Buyers Market Report”

identifi es six vehicles that offer cus-

tomers the best bang for their buck.

The slowly recovering economy,

fl uctuating gas prices and uncertain

vehicle availability have put a new

emphasis on sustained value. In the

second quarter, these six vehicles

offered low depreciation and sev-

eral other features high on buyers’

wish lists:

■ 2011 Acura TL: Selected for its

19 percent fi rst-year depreciation rate,

Acura’s Total Luxury Care roadside

assistance and more.

■ 2011 Dodge Challenger R/T: Selected for its 8 percent fi rst-year

depreciation rate, fi nancing incen-

tives, $1,000 bonus cash and more.

■ 2011 GMC Terrain SLE-2: Se-

lected for its 16 percent fi rst-year de-

preciation rate, low customer fi nanc-

ing and its 46 days-supply.

■ 2011 Hyundai Azera Limited: Selected for its 21 percent fi rst-year

depreciation rate, Hyundai’s Trade-

In Value Guarantee and more.

■ 2011 Toyota Tacoma Double Cab V-6: Selected for its 10 percent

fi rst-year depreciation rate, Toyota

Care roadside assistance and more.

■ 2011 Toyota Venza I-4 AWD: Selected for its 12 percent fi rst-year

depreciation rate, customer fi nancing

incentives and Toyota Care.

Vehicles chosen for this list touted

a fi rst-year depreciation rate of 21

percent or less, a competitive MSRP

and manufacturer warranty, fi nanc-

ing incentives, high safety ratings

and additional features.

This Summer’s Hottest Models

Industry Trends

Vehicle Price Days-supply Financial Incentives Manufacturer’s

warrantyNHTSArating

Additional incentives

2011 Acura TL

$35,305 62 1.9%/36 mos.; 2.9%/48 or 60 mos.

4 years/50,000 miles Not rated N/A

2011 Dodge Challenger R/T

$29,895 541.9%/36 mos.;

2.9%/48 mos.; 3.9%/60 mos.; 5.9%/72 mos.

3 years/36,000 miles ★★★★

$1,000 bonus cash

2011 GMC Terrain SLE-2

$26,300 462.9%/36 mos.;

3.9%/48 mos.; 4.9%/60 mos.; 5.9%/72 mos.

3 years/36,000 miles ★★★★

6 mos. free OnStar service

2011 Hyundai Azera Limited

$30,095 103 Assurance Trade-in Value Guarantee

5 years/60,000 miles ★★★★★

$1,500 value coupon

2011 Toyota Tacoma Double Cab V-6 Manual

$26,145 53 N/A 3 years/36,000 miles ★★★★ N/A

2011 Toyota Venza I-4 AWD

$28,575 79$500 Cash or

0%/36 mos.; 1.9%/48 mos.; 2.9%/60 mos.

3 years/36,000 miles ★★★★ N/A

Days-supply of inventory as of the end of May 2011 with the exception of the Dodge Challenger (inventory as of June 15, 2011). Financial incentives stated are based on California data.

FI0811trends.indd 14FI0811trends.indd 14 8/2/11 10:04:05 AM8/2/11 10:04:05 AM

FI0811dealertrack.indd 1 7/21/11 9:12:35 AMFI0811trends.indd 15FI0811trends.indd 15 8/2/11 10:04:07 AM8/2/11 10:04:07 AM

She’sBuying

Having exited the eco-

nomic downturn

relatively unscathed

and realizing how it

changed the game for

marketers, Ken Meade decided to get

a better understanding of his custom-

er base. What the owner of Meade

Lexus discovered was an opportuni-

ty to improve how his Lakeside and

Southfi eld, Mich., Lexus dealerships

treated a segment that accounts for

60 percent of his business.

It wasn’t Gen Y, Gen X or even

baby boomers that Meade identifi ed

as his best customers; it was women.

The discovery led Meade to call on

Jody DeVere and her AskPatty.com

certifi cation program. His goal was

to have every customer-facing asso-

ciate — from his service and mar-

keting departments to his front-end

staffers — trained on the fi ner points

of retailing to his female customers.

“With any marketing, it’s impera-

tive to understand your audience, their

needs and their buying habits,” Meade

says. “If we know women communi-

cate differently — that they make

decisions in different ways — it only

makes sense to tailor our messages to

them in a way that complements that,

in ways they can relate to.”

Founded in 1989, Meade’s two-

store dealer group became the fi rst

auto retail operation in Michigan to

be certifi ed by AskPatty.com. The

group’s Lakeside store, located off

the Highway M-59 — one of the busi-

est freeways in the Detroit metro area

— rolls, on average, 60 new and used

vehicles per month. The Southfi eld

location, situated near the

Northland Center Mall —

one of the oldest shopping

centers in North Ameri-

ca — also enjoys a good

deal of foot traffi c.

Since completing the

training, the group’s cus-

tomer satisfaction index has

improved to almost 99 percent. Cus-

tomer loyalty also is reaching new

heights. Michaela Reardon, service

manager for the Lakeside location,

attributes the improvement to one

realization the dealership made after

completing the AskPatty.com train-

ing. “We learned that 70 percent of

buying decisions are made by fe-

males,” she says.

The AskPatty WayReardon’s comment is one of the many

truths DeVere has passed along to the

more than 500 businesses AskPatty.

com has certifi ed since its founding

in 2006. Another truth DeVere’s pro-

gram preaches is that women tend

to communicate through body lan-

guage, which can be problematic for

men. The problem, she says, is that

men tend to avoid direct eye contact

for extended periods of time.

“Women interpret that to mean that

the man is not trustworthy because he’s

shifting his eyes,” she says. “There are

a lot of different, subtle skills

we teach that help people

become more effective

communicators.”

AskPatty.com takes

several different ap-

proaches to bridging the

gap between the “way

business has always been

done” and the way female custom-

ers would prefer it to be done. The

auto research site accomplishes that

through online interactive video

training and topic-specifi c Webinars.

Clients also receive advertising sup-

port and a co-branded microsite.

Dealers who sign up for the certifi -

cation program are given 60 days to

complete the initial training. In that

time, clients are assigned a support

team, including a regular account

manager, a social media specialist

and a marketing consultant. DeVere

says dealerships will begin employ-

ing the lessons learned within the

third month of training.

AskPatty.com isn’t just about cer-

tifi cation, either. It also doubles as

It’s been a year since Meade Lexus earned AskPatty.com’s “Seal of Approval,” and the dealer group’s CSI is

now approaching 100 percent. By Jennifer Washington


Dealer Profile

shifting his ey

a lot o

we

be

c

s

p

gap

busin

done” and th

e Southfi eld

the

—

g

e

s-

has

ercent Cus-

PHOTOS BY ANTHONY NOWACK

FI0811profile.indd 16FI0811profile.indd 16 8/2/11 10:11:32 AM8/2/11 10:11:32 AM

an online resource for women, pro-

viding a range of advice — from

selecting a mechanic and collision

center to auto and tire dealers. The

site also offers a dealer rater, forums

where site visitors can seek out ad-

vice, a “Get a Quote” section, a di-

rect link to a AAA-approved auto

repair center and more.

“The training is about creating a

culture that makes women feel com-

fortable,” she says. “It’s also about

creating marketing and advertising

that women respond to.”

DeVere says businesses who sign

up aren’t necessarily looking for

quick profi ts, but rather a new way

to appeal to their female customers.

That means eliminating several as-

sumptions that have lingered in the

industry, such as assuming female

customers aren’t knowledgeable

about the vehicles they want or how

to maintain them.

Another misconception DeVere

and her team works to correct is

that every female customer is mar-

ried and that they need to consult

with their husband before making a

fi nal decision.

Demonstrating what she’s learned,

Meade’s Reardon says a simple ques-

tion works a lot better than assum-

ing. “You’re going to get answers

back,” she says.

Men Buy, Women ShopMeade Lexus completed the certifi -

cation program on Aug. 2, 2010. And

when it renewed its partnership with

AskPatty.com on June 16, it remained

the only dealership in Michigan to

garner the AskPatty “Seal of Ap-

proval.” Meade says that separating

his two stores from the competition

is a nice bonus, but getting certifi ed

was more about meeting the compa-

ny’s objectives of always improving

on customer service.

“We are constantly on the look-

out for new methods of improving

our services to our customers,” says

Meade, whose customer base is made

up of individuals with credit scores in

the mid-700s. “So, when we became

aware of this program, we immedi-

ately thought this was one of those

ways to improve.”

One of the things to come out of

the training was the realization that

the dealership’s hottest selling vehi-

cle, the Lexus RX 350 crossover, was

a favorite among its female custom-

ers. Sales staffers also learned that

women typically take 17 weeks to

make a buying decision, a realization

that stunned even Meade’s female

associates. And female customers

shopping the Internet take even lon-

ger, says Kate Houlihan, Lakeside’s

sales manager.

Through AskPatty.com, the deal-

ership’s sales staffers learned that fe-

male customers can take twice as long

to make a buying decision if they’re

shopping on the Internet. Houlihan,

however, thinks she has fi gured out a

way to shorten her female customers’

decision-making process.

“Provide the information that

they’re asking for and do it in a time-

ly basis,” she says.

But not all the lessons learned

through AskPatty.com’s training

were related to women. For instance,

Kristina Reid and Dan Kilian, mem-

bers of the dealer group’s marketing

team, realized they weren’t taking

advantage of everything the Internet

had to offer.

“We had a very minimal Internet

presence at the time — a few men-

tions on some third-party sites and

some links that appeared on our own

Websites,” Reid says. “By taking ad-

vantage of tools such as social net-

working, social bookmarking, video

and photo sharing, user reviews, and

more, we have signifi cantly enhanced

our online growth and marketing

reach. The results have been great.”

Certifi cation also has been a big

help to the group’s male staff mem-

bers. Keith Baer, Lakeside’s business

manager, recalls an incident in which

a female customer requested a female

August 2011 F&I and Showroom 17

Above, Keith Baer, Meade Lexus of Lakeside’s business manager, and Kate Houlihan, Lakeside’s sales manager, were surprised to fi nd that women take about 17 weeks to make a buying decision. At left, Dan Kilian and Kristina Reid, members of Meade Lexus’ marketing team, have improved the dealer’s online presence since completing the training.


salesperson. The male salesperson

who had approached her was not only

able to tell her the dealership was

certifi ed by AskPatty.com, but that it

also co-hosted a site with the Thou-

sand Oaks, Calif.-based company.

“The customer didn’t have a prob-

lem with that and the salesman was

able to sell her a car using the Ask-

Patty training,” says Baer.

For Baer, who has spent his entire

13-year industry career at Meade

Lexus, the training only served to

confi rm what he always knew about

working with a customer in the F&I

offi ce — that customers appreciate a

low-pressure approach when it comes

to the F&I presentation.

Meade Lexus has more than held

its own the last two years and contin-

ues to see modest increases in sales

and F&I income despite stiff com-

petition from Cadillac and Lincoln

stores in the area. The service depart-

ment would also like to continue to

see increases, which is why Reardon

embraced the training she and her

staff received from AskPatty.com.

“Women dread the whole service

experience,” Reardon says. “To sell

the benefi ts of why you need to main-

tain the car [to women], it’s not nec-

essarily about price. It’s about ‘Why

do I need this?’”

Staying on TargetArranging the training schedule

wasn’t easy, but Meade and his man-

agement team committed themselves

to making sure all customer-facing

staffers were trained by DeVere’s

team. Because Baer’s and Houlihan’s

F&I and sales teams all have comput-

ers at their desks, their departments

were able to take the training whenever

they weren’t working with a customer.

“They would take one or two mod-

ules, and, if a customer came in, they

would just take a break,” Baer says.

“Most people completed the modules

in a day or two.”

Between the two dealerships, about

85 employees completed the training

in about a month’s time. To get the

entire service department trained,

computer stations were set up to al-

low staffers to review lessons at a

designated time. “We blocked their

schedule and made it a priority,”

Reardon says. “Most people fi nished

within about three hours.”

Like most dealerships, successful

implementation of any new process

or strategy must start from the top. It’s

clear that’s how things run at Meade

Lexus, especially since Meade’s of-

fi ce sits in the center of the showroom

at his Southfi eld location. His offi ce’s

location also provides a sense of just

how involved he is in everything that

goes on in the dealership.

“There is an understanding that

when the company succeeds, the

individuals succeed,” Meade says.

“There is a lot of teamwork going

on and I think our employees feel a

sense of camaraderie as a result.”

AskPatty.com is not for dealerships

that need it, says DeVere. Rather, the

program works best for dealers who

understand how important women

are to their bottom lines and market

share growth, which, she adds, was

the case with Meade Lexus.

“Women are a big category. We’re

talking about a large demographic

breakdown of age groupings and

economics,” she says. “You can’t just

market to ‘women.’ You have to mar-

ket to the segment of women in your

local market appropriately.”


Dealer Profile

Top 10 Ways to Lose a Female Car Buyer 1 Don’t listen.

2 Assume that all women are soccer moms.

3 Assume that the man is actually buying the car.

4 Talk down to them.

5 Assume that women are not knowledgeable about vehicles or maintenance.

6 “Profi le” women that are single or come in alone.

7 Assume that all women are married.

8 Ask them to check with their husbands fi rst.

9 Don’t have a clean play area for children.

10 Assume you know what they’re looking for.

Michaela Reardon, service man-ager, says the training her depart-ment received from AskPatty.com

has defi nitely made a difference in how staffers approach women. In

a good month, her department will see about 500 cars rolling through

the lanes, or about 23 cars per day.


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Chris ‘Captain Credit’ Cochran struck gold for

Haddad Dealerships with a social media

promotion that grew into a standalone special fi nance department.

By Tariq Kamal


With only six years

in the business,

you might sus-

pect that Chris

Cochran’s rapid

ascent from sales associate to fi nance

director for all three stores in the

Pittsfi eld, Mass.-based Haddad Deal-

erships family was a matter of good

luck, a bad economy or both. Cochran

won’t deny that timing played a part,

but most of his success is the result of

hard work and one very good idea.

It almost didn’t happen. A Pitts-

fi eld native, Cochran fi rst sold cars

for owner George Haddad before

starting college in 2000. After gradu-

ating, he left New England to study

chiropractic medicine at a school in

Iowa. Unfortunately, funds ran out

before he could complete his degree,

and he soon found himself back in

his hometown.

Cochran decided to get back into

the car business. He fi rst worked at

a local used-car lot, then put in a

call to Haddad when he heard they

were hiring. He was hired as an F&I

manager at Haddad Toyota in Au-

gust 2006 before being promoted to

general sales manager at the Subaru

store. And when the opportunity

came to direct F&I for all three deal-

erships from the Toyota franchise,

Cochran didn’t hesitate.

“I wanted to be in the fi nance de-

partment,” he says. “F&I is fast-paced.

It requires cognitive thinking.”

Trial By FireCochran moved into the F&I offi ce in

the summer of 2007, just months be-

fore the credit crisis would derail the

industry. A year earlier, Haddad was

booking used units at 150 percent loan

to value. By 2008, they were lucky to

still be in business. Cochran says the

key to survival was the dealer group’s

three principal lenders: Toyota Motor

Credit, Hyundai Motor Finance and a

local credit union.

“They saw us through,” Cochran

says. “But even working in the fi -

nance offi ce, my income was capped

on others’ motivations.”

He felt that Haddad was missing

out by not marketing to the subprime

segment. As the economic picture

worsened, he decided to take matters

into his own hands. With no market-

ing budget to work with, Cochran

turned to Facebook.

He created a page around a cartoon

Character

FI0811sf_profile.indd 20FI0811sf_profile.indd 20 8/2/11 10:15:11 AM8/2/11 10:15:11 AM

The “Captain Credit” Facebook page has garnered 349 friends since Haddad Dealerships’ fi nance director, Chris Cochran, launched it in 2008. The initial success of the platform was enough to convince management to create a separate ad budget and, in the coming months, a separate lot for subprime sales.

superhero he named “Captain Cred-

it.” His primary superpower? Get-

ting subprime customers approved

for loans. “It was quick,” Cochran

says. “Suddenly, we were selling four

or fi ve cars a month because of Cap-

tain Credit.”

Building On SuccessWith his no-cost social media cam-

paign bringing in new customers,

Cochran was able to convince man-

agement to give him a marketing

budget. He spent the money on bill-

boards and bus, radio and newspaper

ads, and, fi nally, a full vinyl wrap

on his Toyota Tundra. Before long,

Captain Credit was moving 15 units

per month at an average of $2,100

per deal, including up to $900 on the

back end.

Cochran didn’t take his hit cam-

paign for granted. He immersed

himself in the world of special fi -

nance, reaching out to lenders such

as AmeriCredit Corp., Exeter Fi-

nance Corp., Auto-Use and Santand-

er. He also sought out new ideas on-

line, which is how he found trainer,

consultant and F&I and Showroom contributor Rob Hagen.

“Up to that point, it was trial and

error,” Cochran says. “Then I started

e-mailing Rob, just asking questions

and picking his brain.”

Hagen remembers the exchanges

well. “Dealers need a way other than

price to market themselves against

their competition,” he says. “Chris

markets Haddad’s reputation and

their position in the community.”

Hagen and David Johnson, co-

founders of Next Generation Dealer

Services, were among the fi rst train-

ers to push social media as a dealer

marketing tool. He believes the format

will prove to be especially effective

among credit-challenged car buyers.

“Historically, those customers have

visited the dealership for more infor-

mation,” Hagen says. “By spending

time with people, you kept them from

visiting other dealerships. Now, they

can connect with dealers like Chris


The “Captain Credit” Facebook page h d 349 f i d i H dd d D l hi ’

DevelopmentIt’s not advertising.

We’re not tracking leads. The point is to have a presence, to be there

when your friends and their friends need a car.


FI0411ally_uwc.indd 1 3/31/11 11:11:10 AM

Auto Finance Market Trends: 2009 vs. 2010 (New- and Used-Vehicle Sales)

on Facebook. They can ask ques-

tions about credit repair, payments,

vehicles, etc. They view him as an

authority and want to do business

with him.”

Cochran took the advice to heart.

“It’s not advertising,” he says. “We’re

not tracking leads. The point is to

have a presence, to be there when your

friends and their friends need a car.”

With 349 friends as of press time,

word will likely continue to spread

quickly.

Moving Up the RanksCaptain Credit now represents 10 per-

cent of Haddad Dealerships’ revenue.

That’s a respectable fi gure for many

special fi nance departments, but not

good enough for Cochran. His goal is

to get to 30 percent.

The fi rst step will be moving from

his offi ce inside Haddad Toyota to

an adjacent lot, the former home of a

GMC dealer. “We’ll move in as soon

as we get the license,” Cochran says.

“We won’t call it ‘Captain Credit,’

because we don’t want to discour-

age walk-in traffi c, but it will be ‘The

Home of Captain Credit.’”

Cochran envisions a lot fi lled with

rows of special fi nance units. And

like a fi rst-year college football coach

drawing up plays for his predecessor’s

recruits, Cochran is moving whatever

metal the dealerships have on hand.

That includes high-mileage trade-

ins and off-lease units that Haddad

would have sent directly to wholesale

in years past. Ultimately, he wants

complete control of the inventory.

“What I really want at the new lot

is a service tech dedicated to Captain

Credit,” Cochran says. “Recondition-

ing, repair, whatever it takes to stock

the lot.”

At September’s 2011 Industry Sum-mit, Chris Cochran will join “Mad” Marv Eleazer’s panel of top F&I professionals, and Next Generation Dealer Services’ David Johnson will be on hand to lead a social media workshop. Visit www.IndustrySummit.com for details.


Cochran is fl anked by F&I manager Ken Kaczenski (left) and sales manager Doug Hakkinen on the Haddad Toyota lot. An adjacent lot, the former home of a GMC franchise, was recently leased by Haddad Dealerships to serve as a standalone used-car lot for Captain Credit customers.

Indicator 2009 2010 Change

Average total number of accounts at year end 74,383 80,567 +8.3%

Average outstanding principal balances at year end $835,677,909 $896,909,319 +7.3%

Average origination FICO (dollar weighted) 538 537 ‐0.2%

Average amount fi nanced $12,209 $13,223 +8.3%

Average term (mos.) 50 53 +6.0%

Average loan-to-value ratio 117% 111% ‐5.1%

Average contract rate (dollar weighted) 21.80% 21.46% ‐1.6%

Average dealer reserve $458 $479 +4.6%

Annualized 30-day account delinquency 4.18% 3.53% ‐15.6%

Annualized 30-day dollar delinquency 4.22% 3.41% ‐19.2%





Annualized net charge‐off rate (dollars) 8.87% 6.77% ‐23.7%

Average annualized repossession rate (units) 13.37% 11.52% ‐13.8%

FOR THEIR LATEST INDUSTRY REPORT, THE NATIONAL Automotive Finance (NAF) Association and Benchmark Consulting International polled 26 national fi nance companies to fi nd out which direction the market was headed at the end of last year. Analysts found marked

improvement in the number of accounts, amount fi nanced, terms, delinquencies, charge-off and repos-session rates and more. The average loan-to-value ratio, however, continued to decline, slipping by more than 5 percent from the prior year.


http://www.Industry

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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 AMFI0811sf_profile.indd 23FI0811sf_profile.indd 23 8/2/11 10:15:18 AM8/2/11 10:15:18 AM

FI0811warrantech.indd 1 7/7/11 8:46:46 AM

CycleR

ecent data points to it and

the atmosphere at two re-

cent auto fi nance-related

conferences confi rmed it:

nonprime auto fi nance is

back. But how long will it last? And

how soon will the lessons learned

during the credit crisis three years

ago be forgotten?

From the speaker presentations to

the positive vibes fl owing through-

out the exhibit hall at the National

Automotive Finance (NAF) Asso-

ciation’s Below-Prime Conference

in Fort Worth, Texas, in June, the

mood of the nonprime auto fi nance

industry is as upbeat as I’ve seen in

the last 15 years.

The same was true at the Nation-

al Alliance of Buy Here, Pay Here

Dealers (NABD) Conference in Las

Vegas in May. And that’s in spite of

the supply shortage of used vehicles,

which has resulted in higher prices at

both wholesale and retail.

Expanding Once AgainRenewed interest among institu-

tional investors is driving the auto

fi nance industry’s improved mood.

The deep-pockets of this community

is once again making their millions

of dollars available to fi nance com-

panies; in fact, here are three recent

examples:

■ In March, Prestige Financial Services Inc. completed a $222

million asset-backed securitization

(ABS) transaction at a favorable fund-

ing rate and interest rate, followed by

a $150 million deal with Wells Fargo

Securities on a warehouse line of

credit in July.

■ GM Financial/AmeriCredit Corp. completed a $1 billion securitization

in June at favorable interest rates and

credit enhancement requirements, the

third transaction the company has

completed this year.

■ A number of experienced man-

agement teams have successfully se-

cured funding from investment bank-

ers to begin new companies. Notable

mentions are Flagship Acceptance Corp., led by auto fi nance industry vet-

eran Michael Ritter, and CarFinance

Things are looking up for the below-prime segment, but our analyst warns that

there still may be trouble ahead for the fi nance

companies and dealers who serve that segment.

By Jim Bass


Endingthe

PHOTOS BY GREGORY ARROYO

Scot Seagrave, formerly with Prestige Financial, says the company is looking

to grow its market share by adding more dealers, not by venturing out-

side of its preferred credit spectrum.

FI0811sf_bass.indd 24FI0811sf_bass.indd 24 8/2/11 10:20:56 AM8/2/11 10:20:56 AM

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“I bought this store with my reinsurance dividends. Now my kids have their store, and I have mine. Best of all, Resource managed everything.”



Capital, which has four former Triad

Finance Corp. execs, including

founder Jim Landy, at the helm. Word

is that more companies will enter the

market before the end of the year.

The fact that below-prime port-

folios performed well through the

credit crisis and ensuing recession is,

in my opinion, the driving force be-

hind these new investments — well,

that and the fact that higher yielding

investments are always attractive to

investors. Whatever the reason, it’s all

good news for the industry. Finance

companies now have the funds to pur-

chase the paper, while dealers have

more options to place that paper than

they’ve had in the last two years.

However, having been around this

industry for a while and observing

several cycles fi rsthand, I’m already

a bit nervous about the competitive

landscape. It seems inconsistent,

doesn’t it?

Fear of a ReplayThings are moving in the right direc-

tion. My concern is that, as in most

cycles, the industry and investors will

soon throw caution to the wind.

Here’s how things are playing out

based on my analysis of the current

cycle: Investors see an opportunity to

earn higher yields on their funding

of the nonprime segment, and, led

by respected institutions, begin to

invest more and more funds. That’s

when the “herd” syndrome sets in

among investors, which eventually

leads to an oversupply of capital in

the market.

Then, particularly for publicly

funded or private equity-funded

companies, the pressure to put a lot

of business on the books and gain

market share intensifi es. And, as you

know, the more fi nance companies

there are, the more competitive the

purchasing programs become at the

dealer level. That’s exactly what hap-

pened in 2006 and 2008, when dealer

advances and term lengths spun out

of control.

Basically, companies were offer-

ing higher prices for fi nance paper

that was dropping in credit quality.

Dealers were able to shop fi nance

contracts around and receive multi-

ple bids from the fi nance community,

and loan-to-value (LTV) ratios of 140

percent or higher and terms of up to

84 months on higher priced vehicles

became commonplace.

About the only thing that didn’t get

out of control was dealer participa-

tion, which was, more or less, held in

line by the regulatory climate. Oth-

erwise, that too would have spun out

of control.

Those were some highly profi table

years for knowledgeable dealers, but

they ended up hurting fi nance com-

panies. Ultimately, those fast times

would hurt dealers as well. Looking

at the 2009-2010 period, LTVs were

more likely to be less than 100 per-

cent, while average loan terms were

greatly reduced. Underwriting guide-

lines also were tightened on items

such as debt-to-income and payment-

to-income ratios.

Many franchised and independent

dealers found that they could no lon-

ger access fi nancing for the below-

prime customer, while the fi nance

sources they once relied on were

forced to curtail production due to

the loss of the secondary market for

ABS securitizations.

The equity investment community

also retreated from anything with

the term “subprime.” Was the auto

fi nance community to blame? No.

It was the out-of-control subprime

mortgage industry, which tarnished

everything associated with that term.

Holding the LineUnderwriting standards are currently

holding up well, which will result in

acceptable loss statistics on the pa-

per fi nance companies are currently

originating. However, pressure is

building to amass larger portfolios of

loans, generate higher profi ts for in-

vestors and increase market share.

Manufacturers also are desperately

trying to increase their production

and are offering favorable terms to

qualifying customers through their

captive fi nance companies. Enticed

by attractive rebates, cash-back offers


The capital markets are running again. Driving the auto segment,

says Amy Martin, a senior director at Standard & Poor’s, is prime

and subprime auto.

Underwriting standards are currently holding up well. However, pressure is build-ing to amass larger port-folios of loans, generate

higher profi ts for investors and increase market share.


and low-cost fi nancing, customers set

on purchasing a used vehicle are be-

ing driven to the new-vehicle lot.

So, you can expect fi nance compa-

nies — particularly those serving the

nonprime and subprime segments —

to slowly loosen underwriting stan-

dards in the quest for more business.

This will be accompanied by higher

LTVs and longer terms. What will in-

evitably follow, perhaps within a year

or so, is a rise in defaults, reposses-

sions and portfolio losses.

Once that begins to happen, the in-

vestment community will once again

begin pulling back. This will mani-

fest itself in ABS securitizations with

higher interest rates and greater cred-

it enhancement, increasing the cost

of fi nancing for auto fi nance com-

panies. Providers of warehouse lines

of credit also will become more cau-

tious, raise their rates and underwrite

more carefully. Equity investors also

will fl ee the subprime auto fi nance

arena again, signaling the move into

the negative part of the cycle.

What can prevent this from hap-

pening? First, auto fi nance compa-

nies must maintain their discipline by

holding quality standards on credit

requirements, LTV percentages and

terms of fi nance. If some competitor

decides to “buy” the market, let them

fi re up the rockets and burn out by

themselves. That’s the discipline that

is required by the companies who are

in business for the long haul.

There are some wise CEOs in this

industry that understand the causes

of cycles like the one we experienced

and will choose not to participate.

Their companies may not reach the

heights of the high fl yers, but they

will stay in business during the low

parts of the cycle.

Am I advocating a 1950s-like, fi -

nancially conservative atmosphere

with sleeve garters and green eye-

shades? No, but this is a season to

responsibly enjoy the good times and

do the things that keep those good

times rolling as long as possible.

Will holding the line on credit

pricing harm dealers? Not in the long

run. The emphasis at the dealership

should be on obtaining a fair price

for the vehicle and securing a suf-

fi cient down payment from the cus-

tomer to enable subprime companies

to reasonably and prudently purchase

fi nance contracts.

If all of that happens, losses will

remain in an acceptable range, the in-

vestment community will continue to

show interest in the subprime arena,

and the entire system — from car buy-

ers to the securitization bondholders

— will be better off. This will allow

interest in the investment community

to be sustained. So, the solution is

fairly simple. And although it is al-

most impossible to defeat economic

cycles, we should try our best to do

just that.

Jim Bass is CEO of Auto Acceptance Corp., treasurer of the NAF As-sociation and a licensed CPA. He is a frequent speaker at industry events and a leading voice for the subprime, nonprime and BHPH segments. E-mail him at jim.bass@special-fi nance.com.


Jack Tracey, the NAF Association’s executive director, says the credit crisis proved to investors how well the auto fi nance industry operates.


New BreedI

n 1989, he founded Triad Finan-

cial. And after a two-year stint

at another independent fi nance

source, Jim Landy is at it again.

This time, he’s opened up a new

fi nance company in Irvine, Calif.,

called CarFinance Capital. It repre-

sents a new breed of fi nance sources

that are rising from the ashes of the

Great Recession.

F&I: I keep hearing that nonprime remains a problem for dealers. Why is that?

Landy: The market is de-

frosting a bit, but the problem

with nonprime is you need

scale, which means you need a lot of

capital. That’s not the case with deep

subprime. You don’t need scale and

you can get to cash-fl ow neutral a lot

sooner. So, that tends to thin out po-

tential partners for the nonprime seg-

ment. We’re starting to see a couple

of banks drop down into that space a

bit, but a dealer needs a few sources

to be effective and banks tend to be

inconsistent in the category.

F&I: So, where is CarFinance operating?Landy: We operate where most of the

commercial banks stop and the deep-

er subprime guys begin — in the high

600s to the mid-500s. That represents

a third of the market, so it’s a lot of

the current traffi c at dealerships.

F&I: So, how did it all happen? Landy: We started in early 2009. And

by “we,” I mean myself and Dennis

Morris, our chief operating offi cer.

We knew there was a need,

so we put our heads together

and, by early 2010, leased

an offi ce and started putting

in full days. At that point,

we were building our infra-

structure and reaching out to

folks we had worked with in

the past. But at that point, the

capital markets were still closed.

In late 2010, a good friend of mine

introduced us to Perella Weinberg

Partners, a privately owned asset

management and corporate advisory

fi rm. We got along really well and had

a similar take on the market. It took a

few months to put everything togeth-

er, then we hit the streets in May.

F&I: In California, correct?Landy: That’s right. Then we opened

in Texas the month after. Right now

we have seven reps in California

and fi ve in Texas. We’re focused on

executing our strategy in those two

CarFinance Capital is new to the auto fi nance world,

but the people behind the nonprime/subprime fi nance source are not.

The editor gets the skinny. By Gregory Arroyo


Executive Q&A

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now we’re up to 30 employees, 25

to 26 of whom are former Triad em-

ployees. So, our team is strong, and

there is a lot of continuity.

F&I: How disappointed were you when Triad bowed out of the indirect channel in May 2008?

Landy: We had an outstanding group

of people at Triad in 2005 and Ford

Motor Credit was a wonderful parent

company.

After I left in May 2005, the com-

pany ran into some issues in terms of

asset quality, which made it diffi cult

for them to make it through the cycle.

I think the fact that the servicing plat-

form remains in place says a lot about

the team we had. I’m very proud of

founding that organization.

F&I: So, what happened, exactly?Landy: There was some mispricing,

but the economic crisis was pretty

tough. A lot of it was the mortgage

contagion, which gave anything

“subprime” a negative connotation.

And then you hear “securitization”

and it’s like a double negative.

It’s taken a while for folks to real-

ize that there wasn’t one auto secu-

ritization where the investor didn’t

get paid. I think once people started

to understand that not everything

tanked like mortgage, things started

to improve.

This business is about execution,

and I think we’re certainly maturing

as an industry in that respect. When

we fi rst started in the early ’90s, we

states, but we expect to be in Ari-

zona, Washington, Oregon and Colo-

rado by the end of the year.

F&I: You mentioned Dennis, a former colleague of yours at Triad. Who else did you bring with you and how much did having your former team in

place help when you entered into discussions with Perella?

Landy: It helped a lot. In fact, I would

describe the launch of CarFinance as

more of a restart of Triad. So, aside

from Dennis, there’s John O’Dowd,

who was the director of risk at Tri-

ad. We also have Jeff Butcher, who

served as CFO at Triad. And right


Executive Q&A

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had a good idea of how the asset was

going to perform, but we really didn’t

have a fi rm idea. We learned a little

bit during the 2001 downturn and

we learned even more between 2007

and 2009. So, now we have two down

cycles of data with which to work.

F&I: What’s your origination target this year, and what’s your current dealer count?

Landy: I would say $100 million this

year and about $450 million the fol-

lowing year. As for dealers, we have

350 today and we hope to double or

triple that by the end of the year.

F&I: How would you characterize your buying strategy?

Landy: We want to be predictable.

We want the dealer to have all the

confi dence in the world that the cus-

tomer profi le we fi nanced last week

will be fi nanced the following week.

We’re also focused on funding speed,

being fl exible and customer service.

We know that some dealers are just

coming back into the nonprime mar-

ket, which isn’t an exact science. So,

our reps help educate dealership per-

sonnel on the nuances of qualifying

these customers.

And because I know your readers

are focused on F&I as a profi t center,

I want to let them know that we’ve

carved out a ‘back-end’ advance —

depending on the tier — of up to

$2,000 solely for service contracts

and GAP for the F&I offi ce.

F&I: What is your mileage limit?Landy: Our limit is 80,000 miles.

But we’ll be very fl exible for dealers

who consistently send us custom-

ers. So, if you have an eight-year-old

vehicle that has 90,000 miles, we’ll

help you. But it’s a two-way street.


We want to be predictable. We want the dealer to have

all the confi dence in the world that the customer profi le we fi nanced last

week will be fi nanced the following week.



4Buy-Sell Mistakes T

he industry’s dealer

count defi nitely took a

hit through the economic

downturn, with the Na-

tional Automobile Deal-

ers Association estimating that more

than 3,000 dealerships shut their

doors from 2008 to 2010. What you

may not realize is that while market

challenges may have signaled the end

for some, they also created a nice op-

portunity for many to expand their

current operations.

Whether you’re in the market to

buy or sell a dealership, it’s important

to understand which pitfalls to avoid

if you’re planning to step into the fast-

moving buy-sell arena anytime soon.

In a recent Compli Webinar, Mark

Johnson, president of MD Johnson

Inc., a dealer-centric fi nancial ad-

visory services fi rm, discussed how

many mistakes in buy-sell situations

could be avoided with due diligence

and a little transparency. Here’s a

sampling of points to consider from

that Webinar.

Mistake No. 1:Communication BreakdownA breakdown in communication

between dealer principals and their

key staffers is a common problem.

Owners are often afraid

to tell their people what

they’re planning to do, which

can be a huge source of problems.

Remember, your people will fi g-

ure out what you’re doing no mat-

ter how secretive you think you’re

being, especially in the age of so-

cial media. And if you don’t get

out in front of what’s being said,

rumors can spread quickly.

Just remember to be upfront

with your key staffers and make

sure they know how you will ac-

complish your task, the amount

of documentation you will need

and who will be involved. Selling a

dealership takes a lot of work and

you need to have everyone on the

same page to ensure you are produc-

tive, successful and able to properly

execute the deal.

Mistake No. 2:Inadequate Data AccumulationAccumulation of key data in a single

place is a process that’s been used by

banks and law fi rms for years. Un-

fortunately, the same can’t be said

for most auto dealers. You need to

accumulate every single piece of due

diligence prior to putting your oper-

ation on the market. This is the key

to driving — and keeping — your

sale price.

Remember that every document

you give a buyer after you negoti-

ate a price could change the terms,

so make sure all the information is

disclosed upfront. Conduct an ex-

haustive search of all due diligence

pieces, get them posted and have the

buyer take a look prior to negotiating

any sort of deal.

An example of a typical contract

that sellers should make available

and buyers should ask for are the

dealership’s computer-related con-

tracts. Let’s say the dealership uses

ADP or Reynolds and Reynolds. If

the buyer doesn’t need the system,

it can cost him between $100,000 to

$150,000 in penalties and fees to get

out of the assumed obligations of the

contract. That could mean the sales

price you think you can get will be

whittled away during the due dili-

gence process.

Here are three other items you

need to put together during the due

diligence or data acquisition period:

■ Fixed-asset schedules: Often-

times, these schedules have not

been worked. For example, if you

are closing in September, a fi xed-

asset schedule for August may lack

depreciation, additions and dele-

tions. Clean up all entries and get all

postings completed for the fi nancial

statement that will be used for the

closing entries.

■ Inventories: Add-backs are

simply one-time ex-

penses. You also need

to understand your tax ex-

posure, so get your accounting

fi rm involved with a fi nancial

review and audit. Your lawyer

also should be involved.

■ Special tools: Be sure to

get a copy of your special tools

list and provide it to the buyer.

Unfortunately, there are not

a lot of audited dealerships out

there, so it’s critical you make

sure your accounting fi rm has

not taken the fi nancial infor-

mation straight from the deal-

er without conducting its own

review. A buyer will often

come back and say the review docu-

ments are meaningless, which could

create an embarrassing situation.


Dealer Executive

PHOTO ©ISTOCKPHOTO.COM / FEVERPITCHED

FI0811buysell.indd 34FI0811buysell.indd 34 8/2/11 10:29:59 AM8/2/11 10:29:59 AM

s to AvoidBefore you think about selling or expanding your operation, check out this buy-sell primer for avoiding four possible landmines on the road to a sale. By Lon Leneve

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

Mistake No. 3: MispricingMispricing assets, the store and real

estate can stretch out the time it takes

to sell a dealership. It could also

mean lower-than-expected offers,

especially since the fi rst couple of

people that look at the store are usu-

ally the buyers.

It’s important to get your fi nancial

house in order before you go through

a buy-sell situation, because most

buyers are extremely thorough in

this market.

Mistake No. 4:Prepaid and Lifetime ProblemsPrepaid programs can be a major

landmine on the road to a deal, es-

pecially if they are not backed by an

insurance product.

One dealer I know gave away free

oil changes for life. He hoped that

the more customers used his service

department, the more money the

dealership would make. Instead, he

lost money every month. So, again,

understand the programs, quantify

them and put together everything that

supports those expenses. You must

understand what the actual costs are

— and try to limit them — before

asking a buyer to take them on.

Once you’ve got your team, your

fi nances and your programs in order,

the hard part should be over. You’ll

be better prepared to sell, and you

can take comfort in knowing you

have put your best foot forward with

any prospective buyer.

Lon Leneve is the president and CEO of Compli, a provider of compliance management software. He can be reached at [email protected].

All of the issues discussed in this article are addressed in the “How to Prepare for a Buy-Sell” Webinar. To watch for free, select “On Demand Webinars” under the “Events” tab at www.Compli.com.


FI0811buysell.indd 35FI0811buysell.indd 35 8/2/11 10:30:00 AM8/2/11 10:30:00 AM


http://www.Compli.com

FI0411uds.indd 1 3/23/11 4:27:37 PM

3


F&I’s resident sales expert delves into the two most important topics relevant to developing and retaining fresh talent. By Cory Mosley

It’s as if Marshall Goldsmith, famed

leadership development guru, read

my mind when he titled his best

seller, “What Got You Here Won’t

Get You There.” We agree that, to

excel in today’s constantly changing

marketplace, you’re going to need to

change things up. Strategies must be

reworked. The status quo must be

challenged.

Are you up to it? Do you have the

stomach to rethink the way it’s always

been done? The good news is, I’m

here to help. Picking up where we left

off last month, let’s look at two more

areas where the status quo needs to be

challenged to develop and retain fresh

talent.

Training and Development“Training” is a four-letter word to

some and misunderstood by many

more. To be effective, your training

providers must go beyond factory test

taking and shadowing a veteran sales-

person for a week. Recently, a dealer

remarked that she wanted to wait to

see how many of the seven salespeo-

ple she hired would survive the fi rst

two weeks before determining which

ones would be sent to training. Yeah,

pretty amazing, right?

People, there are plenty of sound,

fundamentals-based training pro-

grams on the market, many of which

will never see the inside of her deal-

ership and many others. Why? Forget

the multitude of nonsensical reasons.

The fact is that decision makers (and

not only dealers) just don’t believe in

third-party training programs and

don’t have the leadership skills to im-

plement or execute their own.

To paraphrase what famed manage-

ment expert Peter Drucker once said,

decisions are made solely by those

who are empowered to make them —

not by the smartest or most qualifi ed

person, just the person who can.

Another former client of mine was

having trouble fi nding a quality F&I

manager. He had gone through several

hires over a couple of months. He had

concerns about the “business prac-

tices” of the past F&I managers and

wanted someone to do it the way he

believed would best serve customers.

To help, I identifi ed one of their

salespeople with a fi nancial back-

ground, strong CSI and a good sales

track record. I also recommended an

F&I company who could train the

candidate I suggested. I felt this can-

didate’s experience doing it the deal-

ership’s way on the sales fl oor would

transition well into the F&I offi ce, and

the training would seal the deal.

It seemed like a no-brainer. Unfor-

tunately, management just couldn’t get

their arms around the idea and, to this

very day, F&I managers continue to

come and go.

Look, I get it. You may have had a

bad experience, or the previous train-

ing program you paid for just didn’t

stick. Or, it could be that the last team

you spent money on to train left for the

competition. Whatever the case, there

is absolutely no reason for you to give

up on training your people.

Cleaning HouseMy personal philosophy and com-

mentary on the car business has been

shaped over the last seven years while

traveling to and working with a di-

verse group of dealerships across the

country — from those selling 1,000

units a month to those selling 50. And

throughout that time, one thing re-

mains constant: The smaller the deal-

ership, the smaller margin for error.

See, large stores sometimes make

decisions too quickly, while smaller

dealers tend to move too slow — es-

pecially when it comes to person-

nel decisions. Turnover is a problem

in our business, but, in my opinion,

we sometimes put too much stock in

loyalty.

To me, loyalty is a bonus earned

when someone excels at their job and

maximizes profi tability for their deal-

ership. The idea that someone needs

to be carried or paid for mediocre

performance in the name of loyalty is

crazy to me. You either expand or be-

come expendable; it’s that simple.

The reality is that tough choices

will need to be made in the coming

years. Everything will need to be

scrutinized, which means no topic

should be off limits. More opportuni-

ties will be availed to those who want

to be fi rst rather than those who wait

for someone else to try it fi rst.

You often hear that, in today’s mar-

ketplace, it’s more important to domi-

nate than compete. Do you agree? If

you answered “Yes,” I can say with

certainty that domination will never

be achieved if you color inside the

lines and wait for the other person to

show you theirs fi rst.

Cory Mosley is principal of Mosley Au-

tomotive Training, a company focused

on new-school techniques, products

and services. He also is the creator of

the “Control Your Sales Destiny” semi-

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

bobit.com.

It’s OK to ‘Think Different’

Sales Driver

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The magazine’s new columnist says the battle between ‘new school’ and ‘old school’ needs to stop. The reality, he says, is that both schools of thought are necessary in today’s retail environment. By Jim Ziegler

We’re living in a society

where social blackmail

and political correctness

trump common sense. Thoughts and

opinions are suppressed by the fear

of being labeled. The retail automo-

bile business is no exception, and

lines are being drawn in the battle for

sales department domination.

The “new-school” crowd, driven

by technology, considers themselves

superior to the point of arrogance,

while the “old-school” crowd —

driven by sales, persuasion, closing

and process — are close-minded to

the point of technophobia.

Name calling and labeling esca-

lates. Saying someone is “old school”

has become the new-age insult to

invalidate anyone who isn’t com-

pletely and blindly onboard. In fact,

I have seen experienced and highly

competent managers and dealers be

ridiculed and labeled because of this,

and it needs to stop.

The truth of the matter is the only

successful people in this new-millen-

nium car business are those with a

complete skill set in all areas of sales,

marketing and technology. Sales man-

agers and dealers who ignore technol-

ogy’s infl uence on our business are

like dinosaurs eating the last brown,

shriveled tree leaves before they’re

swallowed up by the tar pits.

On the other hand, a sales team

that relies entirely on Internet tech-

nology at the expense of process and

personality would send a dealership

spiraling into bankruptcy. That’s

because selling strictly by the num-

bers — without emotion, persuasion,

presentation and real-world sales and

social skills — doesn’t work.

Think about it. Why is social me-

dia so important to our business?

It creates a virtual personality that

helps humanize the dealership in the

eyes of consumers. And the message

that needs to be conveyed is: Know

me, like me, trust me and follow me.

And it needs to be in that order.

That’s why traditional sales de-

partments and the technology buffs

inside the dealership need to work

as a harmonized group, because that

can’t be accomplished if both aren’t

working together.

For those of you who believe the

“Road to the Sale” is an outdated

concept, let me just say that I strongly

disagree. If that means I’m old school,

so be it. Remember, I’m on the road

200 days a year speaking, consulting

and working in dealerships, so my

feeling on the matter has been shaped

by fi rsthand observation.

Hey, even in the most rigid one-

price, no-negotiation dealerships,

there’s still movement in the num-

bers. And the idea that average

people with well-defi ned processes

can achieve incredible results is still

as true today as it ever was. Again,

I base these statements on fi rst-

hand observation, not theory and

conjecture.

As for managers, the best ones are

those who take charge of the selling

effort and make themselves respon-

sible for the activities of the sales

force, real world and virtual. F&I

managers also play a critical role in

that effort. They are, in fact, sales

managers who specialize in fi nance,

not hermits who hide out in the back

offi ce until a deal appears.

One of the things I teach in my

sales management seminars is that

all departments must work together

in harmony under well-defi ned pro-

cesses, word-tracks and procedures.

The goal of this column will be to

expand on that philosophy, and I’ll

do that by sharing some of the best

practices employed by the most suc-

cessful dealerships in the nation.

Jim Ziegler is the president of Ziegler

SuperSystems Inc. E-mail him at jim.

[email protected].

Too Cool for ‘School’

On the Point

PHOTO BY JUSTINA LY

Social media is a good example of how technology is helping dealers

humanize their operations in the eyes of consumers.

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FI0711charter.indd 1 6/27/11 11:05:20 AM


Legal

Inquiring minds have been asking

whether customers can charge the

down payment for a new car to a

credit card. The answer to this ques-

tion — like so many others — is, “It

depends.”

There is no federal law I’m aware

of that prohibits the use of a credit

card for this purpose. Theoretically,

if a down payment is made on a credit

card and the customer also is signing

a retail installment sales contract, it

could give rise to an argument that

the Truth in Lending Act disclosures

on the RISC are incorrect. But I think

that’s a stretch.

State laws may have something to

say about the practice, so it wouldn’t

be a bad idea to check with your local

counsel to see if your state imposes

any restrictions or prohibitions.

I know from personal experience

that dealers are of two minds about

the practice. About 10 years ago, I

asked to put my own down payment

on a credit card — after negotiating

the price and the rate to rock bottom.

I don’t think they were happy about

it, but it was the only way the deal

was going to get done, so they were

willing to do it.

Normally, accepting a down

payment on a credit card is a bad

deal economically for the dealer.

They have to pay the usual bank fees

and interchange fees every time they

accept a card, and those fees can

severely eat into already razor-thin

margins. This is true even if you limit

the amount of a down payment that

can be charged.

There’s also the possibility that

the customer will dispute the charge,

especially if they are not happy with

the vehicle they purchased and if

you have not managed the customer

appropriately. That can mean months

of holdbacks by the card issuer.

Dealers also need to be concerned

about their obligations under their

agreements with their fi nance

sources. Virtually every dealer

agreement I’ve ever seen contains

a representation by the dealer

that no part of the down payment

was made with a loan or other credit

instrument. When the customer stops

paying on the RISC because he’s

drowning in credit card debt, your

fi nance source may be inclined to

suggest that you’re in material breach

of the dealer agreement.

Dealers also should check whether

their merchant agreements with the

card issuers permit the card to be

used for this purpose. There was a

time when you couldn’t make a debt

payment on a credit card. We all know

those days have passed, but it’s a good

idea to check out your obligations

under the merchant agreements.

At the end of the day, most dealers

are going to want to balance their

need to move the metal with the

economic costs of permitting credit

card down payments. A discussion

with your local counsel could

potentially put any legal concerns to

bed. Once you know you’re on solid

legal ground, look at what your

contractual limitations are. If you can

get over that hurdle, look at the

economic impact of a credit card

down payment on your bottom line.

I’m sure that will provide you with

the answer you’re looking for.

Michael Benoit is a partner in the

Washington, D.C., offi ce of Hudson

Cook LLP. He is a frequent speaker and

writer on a variety of consumer credit

topics. He can be reached at michael.

[email protected]. Nothing in

this article is legal advice

and should not be taken as

such. Please address all legal

questions to your counsel.

To Charge or Not to ChargeCan you charge a customer’s down payment to a credit card? The magazine’s legal wiz says the answer has more to do with economics than the law of the land. By Michael A. Benoit

PHOTO ©ISTOCKPHOTO.COM / KRYU

FI0811legal.indd 40FI0811legal.indd 40 8/2/11 10:33:44 AM8/2/11 10:33:44 AM


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FIC06-44summit_6pp.indd 1 8/2/11 11:11:52 AMFI0511cudl.indd 1 4/12/11 5:10:16 PM


Bottomliners

IZMOSTUDIO, THE VEHICLE PHOTO

division of izmocars, says it has developed a way to deliver color-correct, trim level-specifi c vehicle im-ages to any online platform. Car shop-pers can use the software to view an exact image of the vehicle they have confi gured on a third-party or dealer Website. The company

also unveiled a new solution de-signed to deliver high-resolution vehicle animations that work with

Apple’s iPhone or iPad, allowing mobile shoppers to utilize those devices’ 360-degree

“spin” views, touch-able “hot spots” and colorization features. For more information, visit www.izmostudio.com.

Izmocars Blazes New Online Trails

CNA Unveils New VSC ProgramCNA NATIONAL’S NEW “Z SERIES”

vehicle service contract program in-cludes fi rst-day rental car benefi ts, options for “sign and drive” road-side assistance, an expanded defi ni-tion of commercial-use coverage, and coverage for new and used vehicles with up to 150,000 miles on the odometer. The program also includes seal and gasket coverage, expanded coverage for certifi ed used vehicles and an extended powertrain warranty, according to the company. For more informa-tion, visit www.cnanational.com.

CAR-Research XRMUpdates Service Manager CRM ModuleCAR-RESEARCH XRM HAS RELEASED

an updated version of its Service Drive Control Manager. The new module is integrated with the com-pany’s CRM and provides a variety of features, including real-time tracking of repair orders, work-in-process reporting and various system alerts. Staffers also can easily access a customer’s complete service and purchase history. For more information, visit www.car-research.com.

Return of the Four-Square Worksheet EDMUNDS.COM’S SIMPLIFIED PRICING

is an online calculator that resem-bles the old four-square worksheet. The program uses a market fi nance rate to determine monthly payment, total interest and expected total price based on the new vehicle, trade-in and down payment. De-signed for consum-ers, the calculator also could serve as a tool and credibility builder for front-end staffers. Try it out at www.edmunds.com/calculators/simplifi ed-pricing.html.

Ford Launches Mobile Device Shopping ToolFORD MOTOR CO. AND FORDDIRECT,

a joint venture between Ford and its franchised dealers, have launched iPad- and smartphone- compatible apps of the Ford and Lincoln “Build & Price” online shop-ping tool. The app was designed to allow shoppers to virtually build a car, calculate a price estimate and locate a dealership. For more information, visit www.ford.com.

Product Feature

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FI0811bottom.indd 42FI0811bottom.indd 42 8/2/11 11:14:20 AM8/2/11 11:14:20 AM

http://www.cnanational.com

http://www.car-research.com

http://www.edmunds.com/calculators/

http://www.ford.com

http://www.izmostudio.com

September 26-28, 2011 Las Vegas Hilton www.IndustrySummit.com

Join Us in September for the First-Ever

Agenda, Keynotes, and Executive Leadership Program information inside!Produced by Bobit Business Media

FIC06-44.11

Business Sponsors

General Sponsors

Lead Sponsors

FIC06-44summit_6pp.indd 1 8/2/11 11:11:52 AMFI0811bottom.indd 43FI0811bottom.indd 43 8/2/11 11:14:22 AM8/2/11 11:14:22 AM

http://www.IndustrySummit.com

‘‘

‘‘

Monday, September 26, 2011 8:00AM – 4:00PMControl Your Sales Destiny

Celebrated trainer and F&I and Showroom columnist Cory Mosley is bringing his new seminar series to this year’s Industry Summit.

The daylong event will tackle a range of sales-related topics, from showroom, Internet and phone sales to social media and time management. Dealers will leave with a game plan for attacking many of the challenges facing dealerships in the digital age.Includes lunch. Additional charge of $299 for full-conference passholders.

10:00AM – 4:00PMAFIP Certifi cation Program

The AFIP Certifi cation Program is a college-level continuing education program for in-dealership F&I professionals as well as

lender and vendor support personnel. Attendees will get the regulatory and legal knowledge they need to excel and a strong foundation for industry-specifi c ethical practices. Basic and Senior certifi cation is available for franchised and independent dealers as well as motorcycle, RV and marine. Additional charge of $460 per level for full-conference passholders.

3:00PM – 3:30PM Networking Break Sponsored by

12:30PM – 4:30PMBuy Here, Pay Here for Franchised Dealers

Peritus Portfolio Services’ Rod Heasley and special guest Kenneth Shilson, founder of the NABD, tackle the subject of adding BHPH to a new-car dealership. Topics will include capitalization, inventory, deal structuring, collections and GPS and starter

interrupt devices, as well as advanced portfolio management strategies, including the sale of receivables. Additional charge of $49 for full-conference passholders.

Monday, September 26, 2011 5:00PM – 6:15PM No Shortcuts: Building a Sustainable Auto Franchise

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

in the new economy.

Tuesday, September 27, 20119:10AM – 10:10AM After the Storm: Rebuilding the Automotive Industry

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

and make the most of the recovery.

Tuesday, September 27, 20112:00PM – 3:00PM The Future of Dealer-Assisted Financing

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

report on the state of the industry.

Executive Leadership Program

Keynote Speakers

Register now at IndustrySummit.com or c

Without question, the most valuable event for F&I managers and directors, general managers — and some very smart dealer

principals I know — has become the F&I Conference in Las Vegas. The staff and sponsors have produced, without question,

the best single information venue in the industry. — George Angus, Team One Research and Training

Three of the most powerful conferences in automotive fi nance — the F&I Conference and Expo, Special Finance Conference and

Vehicle Service Contract Administrators Conference — will converge in September for the fi rst-ever Industry Summit!

Join hundreds of F&I professionals at this unparalleled once-a-year gathering and you’ll be armed for the year with information,

training, new contacts and a renewed energy for success!

September 26-28, 2011 Las Vegas Hilton

www.IndustrySummit.com

FIC06-44summit_6pp.indd 2-3 8/2/11 10:58:37 AMFI0811bottom.indd 44FI0811bottom.indd 44 8/2/11 11:14:23 AM8/2/11 11:14:23 AM


r call 800-576-8788 today! Turn the page for the full F&I Conference and Expo agenda!

Revolutionize and Enhance Your Experience With the Industry Summit Mobile App!✔ Create a personalized event schedule✔ Rate and comment on sessions✔ Find exhibitors and request meetings✔ Receive late-breaking information and alerts✔ Connect with colleagues using the Friends feature✔ Network via F&I and Showroom’s Facebook page✔ Works on all smartphones and traditional mobile devices — even in areas of low connectivity!

Sponsored by

Monday, September 264:30PM – 5:30PMThe State of Today’s Special Finance Industry, and the Numbers Behind ItSpeaker: Greg Goebel, Auto Dealer Monthly

6:15PM – 7:45PM Welcome Reception

Tuesday, September 278:00AM – 9:00AM Industry Summit Exhibit Hall OpenBreakfast served

9:00AM – 9:45AMWho’s Your Customer … Really? Does Your Inventory Match Your Customer Base? How to Find Out.Speaker: Greg Goebel, Auto Dealer Monthly

10:00AM – 10:45AMGM Financial Presentation

10:00AM – 11:15AMDealer Panel: Special Finance Marketing That Works! Moderator: Greg Goebel, Auto Dealer Monthly

11:30AM – 12:05PMChase Auto Finance Presentation

11:30AM – 12:15PMThe New Rules of Automotive MarketingSpeakers: Travis Miller and Jimmy Vee, Rich Dealers

12:30PM – 2:00PM Industry Summit Exhibit Hall OpenLunch served

1:45PM – 2:30PMCapital One Auto Finance Presentation

1:45PM – 3:00PMSpecial Finance Legal and Compliance ReviewSpeaker: Thomas B. Hudson, Esq., Hudson and Cook

3:15PM – 4:30PMDealer Panel: It’s All About the People: Staffi ng, Hiring, Paying and Training Your Department Moderator: Greg Goebel, Auto Dealer Monthly

3:15PM – 4:00PMCredit Improvement Solutions to Increase Sales Today and TomorrowSpeaker: Jim Longacre, ReCreditpair

4:45PM – 5:30PMLooking For Finance Companies? Interactive Discussion on Which Finance Companies are Hot and Who’s Not in the SF World.Speaker: Greg Goebel, Auto Dealer Monthly

5:30PM – 7:30PMReception in the Industry Summit Exhibit Hall

Wednesday, September 288:00AM – 9:00AM Industry Summit Exhibit Hall OpenBreakfast served

8:45AM – 10:15AMDealer Panel: Talking Them In: Keys to Making a BDC Work Moderator: Greg Goebel, Auto Dealer Monthly

9:00AM – 9:45AMYour Dealership’s Solution for Being Compliant and Profi table at the Same TimeSpeaker: John Palmer, Promax Unlimited

10:30AM – 11:15AMUsing Technology to Help Source Inventory for Your Special Finance DepartmentSpeaker: Greg Goebel, Auto Dealer Monthly

11:30AM – 12:15PM10 Low-Cost, Very Successful and Proven Tools to Generate More Leads, Traffi c and SalesSpeaker: John Palmer, Promax Unlimited

12:30PM – 2:00PM Industry Summit Exhibit Hall OpenLunch served

2:00PM – 2:45PMMaximizing F&I Gross Profi t With Proper Deal StructureSpeaker: Greg Goebel, Auto Dealer Monthly

4:00PM – 5:30PM Reception in Industry Summit Exhibit Hall

Special Finance Conference Agenda

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

Wow!Special Finance Joins F&I Conference for the First Time!


Register now at IndustrySummit.com or c

F&I Conference aMonday, September 26, 20115:00PM – 6:15PM F&I Industry Awards andEvening Keynote Address:No Shortcuts: Building a Sustainable Auto FranchiseIn this presentation, Kevin Borgmann will share his perspective on the industry, analyze important future market and consumer trends that will shape the industry going forward and discuss the principles for building a sustainable franchise that will stand the test of time.Keynote Speaker: Kevin Borgmann, Capital One Auto Finance

6:15PM – 7:45PM Welcome ReceptionSponsored by

Tuesday, September 27, 2011 8:00AM – 9:00AM Industry Summit Exhibit Hall OpenBreakfast sponsored by

9:00AM – 9:10AM Welcome to Industry SummitPresenter: Gregory Arroyo, F&I and Showroom

9:10AM – 10:10AM Opening Keynote Address: After the Storm: Rebuilding the Automotive IndustryKeynote Speaker: John Gray, Experian AutomotiveSponsored by

10:15AM – 11:15AM Panel Session: The Idea Exchange: Trainers’ Best Practices for Sales and F&IJoin Kevin Jacobs and his panel of experts as they share their philosophies for success on the front end. Topics will include facilitating a sense of team spirit between sales and fi nance and how the new economy, Internet sales, Gen Y and the broadening role of general agents have changed their approach to this crucial facet of automotive retail. Moderator: Kevin Jacobs, Alaco EnterprisesPanelists: Bart Carpenter, GSFSGroup; Tony Dupaquier, American Financial & Automotive Services; Luis Garcia, Safe-Guard Products LLC; Heather Haynes, JM&A; Ronald J. Reahard, Reahard & Associates, Inc.

11:15AM – 11:30AM Networking Break Sponsored by

11:30AM – 12:30PM Workshop: 10 Habits of Highly Successful F&I ManagersAfter more than 15 years spent training many of the nation’s top-producing F&I managers and general agents, Gerry Gould is ready to deliver his compilation of the 10 practices that separate the best from the rest. From the basics of customer discourse to advanced techniques for selling products in the fi nance offi ce, the service drive and beyond, this workshop is a must-attend session for F&I managers who are driven to be the best in their fi eld.Presenter: Gerry Gould, United Development Systems

11:30AM – 12:30PMWorkshop: A Dealer’s Guide to Digital ComplianceThe Consumer Financial Protection Bureau assumed regulatory authority on July 21, with a slate of new regulations to follow. Dealers, F&I managers and general agents are invited to join attorney and compliance expert Jim Ganther to deconstruct the new rules and learn how technology providers are mobilizing to ensure that the processes followed in the fi nance offi ce continue to protect dealers and customers.Presenter: James Ganther, Mosaic Compliance Services

12:30PM – 2:00PM Industry Summit Exhibit Hall OpenLunch sponsored by

2:00PM – 2:50PM Afternoon Keynote Address: The Future of Dealer-Assisted FinancingUtah Dealer and NADA Chairman Stephen Wade was active in the recent struggle to restore and stabilize credit in the auto industry. Now he and NADA are working to ensure that regulators understand the value of dealer-assisted fi nancing. He will outline the association’s efforts and provide an up-to-date report on the state of the retail auto industry.Keynote Speaker: Stephen Wade, NADA

2:55PM – 4:05PMPanel Session: Executive PanelThe automotive fi nance industry is at a crossroads. Join F&I and Showroom’s Gregory Arroyo as he leads a no-holds-barred debate on the state of the industry. Topics to be covered include a loosening credit market, changing

car-buying habits and the trend toward direct-to-consumer product sales. Don’t miss this informative session featuring some of the industry’s top minds.Moderator: Gregory Arroyo, F&I and ShowroomPanelists: Stephen Amos, GSFSGroup; Jim Atkinson, AUL Administrators; Bob Corbin, IAS; Dave Duncan, Safe-Guard Products LLC; Kelly Price, National Automotive Experts; Charlie Robinson, The Warranty Group

3:05PM – 4:05PMWorkshop: Out With the Old: New-School Sales Training IdeasF&I and Showroom’s sales columnist is a tireless advocate of “new-school” training methods designed to meet the needs of today’s dealers and car buyers. Forward-thinking F&I professionals will leave this session armed with new strategies for profi table Internet sales as well as effective new word-tracks and a deep appreciation for the psychology of auto fi nance.Presenter: Cory L. Mosley, Mosley Training, LLC

3:05PM – 4:05PMWorkshop: Extraordinary F&I: Leaving Average BehindThe Law of Entropy tells us that any system will inevitably break down over time. This principle is hard at work in the fi nance offi ce, where F&I professionals’ energy levels and logical reasoning are worn away by the daily grind. Leading trainer Rick McCormick will share his secrets to personal motivation as well as practical steps to keep your energy levels high and your skills in check on every deal.Presenter: Rick McCormick, Automotive Financial Services

4:05PM – 4:30PM Networking Break Sponsored by

4:30PM – 5:30PMWorkshop: Best Practices for F&I Managers and General AgentsProductive F&I managers rarely do their work in a vacuum. Consistent performance in the fi nance offi ce requires strong partnerships with management, sales and service departments, fi nance sources and general agents. George Angus will lay out a plan for devising mutually benefi cial pay plans and a network of support to drive profi ts.Presenter: George Angus, Team One Research and Training


www.IndustrySummit.com



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

information!

4:30PM – 5:30PMPanel Session: Captive Lenders RoundtableThe F&I Conference remains among the leading forums at which top lending executives meet to engage the dealers they serve. Join Marguerite Watanabe and her panel of auto fi nance heavyweights as they share their take on 2011 and look forward to the year ahead. Moderator: Marguerite Watanabe, Connections Insights

4:30PM – 5:30PMPanel Session: Mobilizing the Dealer ExperienceThe iPhone and other smartphone devices have revolutionized how marketers connect with consumers. Now, the insurance arms of several captives and aftermarket product providers are eyeing the iPad and the dormant tablet category it awoke to revolutionize the dealership experience. But does the mobile movement represent a lasting change, or just hype? Join Gregory Arroyo and his panel as they convene to fi nd the answer. Moderator: Gregory Arroyo, F&I and Showroom

5:30PM – 7:30PMReception in Industry Summit Exhibit HallSponsored by

Wednesday, September 28, 20118:00AM – 9:00AM Industry Summit Exhibit Hall OpenBreakfast sponsored by

9:00AM – 10:10AM Panel Session: F&I Managers RoundtableJoin F&I and Showroom’s own “Mad” Marv Eleazer as he convenes an all-star roster of some of the nation’s most successful F&I managers. They’ll be there to trade strategies for hanging paper, driving profi ts and maintaining high CSI scores in the new economy. Dealers, lending executives and general agents are invited to attend what promises to be one of the conference’s most popular and hard-hitting sessions.Moderator: Marv Eleazer, Langdale FordPanelists: Angelia Butts, Jenkins & Wynne; Chris Cochran, Haddad Motor Group; Joe Papa, Brown’s Ford of Johnstown; Kelly Wadlinger, Faulkner Nissan Inc.; Tom Wilson, McDonald Auto Group

10:15AM – 11:15AM Workshop: Creating Interest When the Customer Says ‘No’Objection handling is an indispensable skill for F&I managers, but how many “No” answers is too many? Veteran trainer Ron Reahard will share his strategy for pitching products and responding properly to questions, objections and rejections without frustrating customers.Presenter: Ronald J. Reahard, Reahard & Associates Inc.

10:15AM – 11:15AMWorkshop: How Did We Do? Update on the Dodd-Frank ActAs F&I and Showroom’s legal columnist and a leading dealer advocate, Michael Benoit has tracked the Dodd-Frank Act — and the resulting formation of the Consumer Financial Protection Bureau — since its inception. Dealers, F&I managers and general agents are invited to join Benoit for a concise but comprehensive review of the legislation and its near- and long-term effects on automotive retail and fi nance.Presenter: Michael A. Benoit, Hudson Cook LLP

11:15AM – 11:30AM Networking Break Sponsored by

11:30AM – 12:30PMWorkshop: Game Changers: 3 Can’t-Miss ClosesAmong leading trainer Luis Garcia’s keys to F&I success is ending every product presentation with an effective “close.” Dealers and agents will learn the secret to creating lifelong customers by securing their investment with the right fi nancing and products ranging from service contracts to key replacement.Presenter: Luis Garcia, Safe-Guard Products LLC

11:30AM – 12:30PMWorkshop: Marketing in the Digital AgeThe “gold rush” might be over, but online vehicle listing sites remain a key sales tool for most dealers. Leading trainer and industry forecaster Jim Ziegler will lay out a plan for where, when and how to take your inventory online — and determine whether the time and money you invest is paying off.Presenter: Jim Ziegler, Ziegler SuperSystems Inc.

12:30PM – 2:00PM Industry Summit Exhibit Hall OpenLunch sponsored by

2:00PM – 3:00PM Workshop: Lights, Camera, Action! Training With Video TechnologyMatt Nowicki wants dealers to invest in a single, inexpensive piece of technology that can serve as a training, compliance and employee-retention tool: a video camera. Learn how recording transactions in the fi nance offi ce can protect dealers from frivolous lawsuits and reward F&I managers who have worked hard to master the art of selling.Presenter: Matt Nowicki, IAS

2:00PM – 3:00PMWorkshop: Profi ts and Pitfalls: Joining the Social Media RevolutionIt’s not too late to establish a social media presence for your store, and this two-part workshop was designed to help F&I, sales and Internet managers get up to speed. In Part One, attendees will learn how to establish and maintain accounts on Facebook, Twitter and more, as well as dealer review sites. Part Two will focus on avoiding the legal traps inherent to viral marketing.Co-Presenters: David Johnson, Next Generation Dealer Services and Brian Casey, Locke Lord Bissell & Liddell LLP

3:05PM – 4:00PMWorkshop: Fixing the Desk at Your DealershipIn today’s market, there is simply no excuse for a disconnect between promises made to customers in the showroom and the reality they’ll face in the F&I offi ce. Veteran trainer John Vecchioni closes out the F&I Conference schedule with an unfl inching look at an issue that continues to divide dealerships. Attendees from both sides are invited to join the discussion, but be forewarned: There’s plenty of blame to go around.Presenter: John Vecchioni, United Car Care

4:00PM – 5:30PM Reception in Industry Summit Exhibit Hall Sponsored by

e and Expo Agenda


Event Highlights

FIC06-44.11

Registration and Hotel InformationPass Type

Early Bird(on or before

Aug. 26)

Regular Rate (after Aug. 26

and onsite)

Full-Conference Pass (Dealer/Agent)Includes access to all F&I Conference,

Special Finance Conference and VSCAC educational sessions,

exhibit hall, meals and receptions

$695 $795

Industry Pass (Manufacturer/Supplier) Includes access to all F&I Conference,

Special Finance Conference and VSCAC educational sessions,

exhibit hall, meals and receptions

$745 $845

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

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

Welcome to the Las Vegas Hilton!3000 Paradise Road, Las Vegas, NV 89109Call 800-732-7117 by Sept. 2 to register at the special conference rate of $125/night!

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

F&I Dealer of the Year Awards!Sponsored by The most prestigious F&I accolade in the industry will be awarded when the program opens. Make sure you are present to witness your colleague receive this honor!

F&Idol Video Contest Awards Sponsored by Don’t miss the presentation of our contestants’ objection-handling training videos, judged by a panel of experts, and the announcement of the winners!

Welcome Reception Sponsored by Welcome to Las Vegas! Monday evening is your fi rst chance to catch up with friends you haven’t seen since last year!

Tuesday Reception Sponsored by Kick the night off right and join us for cocktails and hors d’oeuvres — and the chance to mingle with the F&I Dealer of the Year and F&Idol winners!

Lobby Lounge Sponsored by You can meet with friends or colleagues, sit down with your laptop or just take a moment to relax at CNA National’s Lobby Lounge. Open during show hours.

Internet Café Sponsored by You can catch up on work, check e-mail or print your boarding pass at Safe-Guard’s Internet Café. Open during show hours.

Martini LoungeSponsored by There’s no better place to enjoy a martini than Las Vegas. Let EFG provide you with a classic cocktail at their famous Martini Lounge!

Closing ReceptionSponsored by EAC provides you with an opportunity to fi nish up business at this reception. Tie up loose ends before you head out on the town or back home!


www.IndustrySummit.com800-576-8788

Register by Aug. 26 to Save $100 on Your Full-Conference Pass!Produced by Bobit Business Media

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FIC06-44summit_6pp.indd 6 8/2/11 10:57:57 AM

© 2011 Innovative Aftermarket Systems L.P. All Rights Reserved.

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FI0811bottom.indd 49FI0811bottom.indd 49 8/2/11 11:14:30 AM8/2/11 11:14:30 AM


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Company Phone Web PageAllstate Dealer Services 904-992-6185 [email protected] 2-3

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

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

CARLAW Auto Dealer Suite 877-464-8326 counselorlibrary.com 50

Charter Warranty 877-404-6823 saveadeal.com 41

Chem Etch Manufacturing Inc. 877-564-2565 chemetchmfg.com 50

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

Continental Warranty Inc. 215-512-5596 continentalwarrantyltd.com 51

CUDL 877-744-2835, ext. 2334 CUDL.com 42

Dealerlink 800-890-8850 DealerLink.us 32

DealerTrack 888-288-2635 dealertrack.com/compliance 15

Friendly Finance Corp. 800-872-2877 friendlyfi nancecorp.com 31

GSFS Group 713-580-3023 [email protected] 33

Industry Summit 800-576-8788 industrysummit.com 43-48

Innovative Aftermarket Systems (IAS) 800-346-6469, ext. 8989 smartdealerproducts.com 5, 49

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

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

Protective 800-794-5491 protectiveassetprotection.com 7

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

Resource Automotive 312-560-9182 thewarrantygroup.com/automotive 26-27

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

TD Auto Finance 800-200-1513 tdafdealer.com 13

United Car Care 800-571-6412 unitedcarcare.com 29, 50

United Development Systems Inc. (UDS) 800-282-1154 UDSDealerServices.com 37

Universal Warranty Corp. 248-263-4498 universalwarranty.com 23

Warrantech 800-723-1154 warrantech.com/auto 25

Wise F&I 800-849-1080 WiseFandI.com 35

Ziegler SuperSystems Inc. 800-726-0510 ZieglerSuperSystems.com 39

Ad Index

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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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L ast month, the magazine’s F&I

Forum lit up after a certain,

high-profi le fi nance execu-

tive — I don’t think I need to name

names here — told a competing pub-

lication that dealerships would get

more deals approved if they focused

on loan-to-value (LTV) limits rather

than trying to load a deal with back-

end products.

I get his message, but I feel com-

pelled to at least make a case as to why

F&I products are important to both

dealers and car buyers. See, I believe

in the products I sell. I wouldn’t carry

them if I didn’t. I buy them on every

vehicle I purchase, including service

contracts and, yes, credit insurance.

And that goes for Mrs. Marv as well.

For you newbies unfamiliar with

the fi ner points of F&I jargon, “Line

5” refers to the total amount the

lender will advance, including taxes,

document fees, title charges and all

back-end products. The term irritates

F&I managers because a Line 5 call

usually means the lender is excluding

or limiting your back-end products.

Now, to be fair, a Line 5 call is usu-

ally the result of the front-end hitting

the lender’s LTV limits.

However, I want to make it clear to

lenders that products like service con-

tracts, GAP and credit insurance are

where we earn most of our income.

Finance sources who understand that

are an F&I manager’s best friend.

They value their relationships and

will do all they can to make room for

these products in the approval. At the

very least, they’ll make an exception

when the deal comes in for funding.

For those that don’t, I get it. If the

loan goes bad, you’re on the hook.

And the more products included in

the loan, the more you stand to lose.

I also realize that computer scoring

models are playing a part in this as

well. They were designed to help

lenders make better decisions, but I

think there are far too many lenders

that rely on those models.

You lender reps reading this col-

umn may scoff at that, but just keep in

mind that the dealer is your customer,

not the car buyer. Yes, the buyer will

eventually become your customer,

but that relationship and your indirect

lending arm wouldn’t exist without

dealers. And what matters to the deal-

er is the opportunity to earn a profi t

from aftermarket product sales.

And let’s be clear: The products of-

fered in the F&I offi ce are aimed at

protecting the customer’s investment.

You also have to remember that we

are, as F&I managers, legally respon-

sible for offering all customers every

product for which they qualify. De-

nying customers the opportunity to

protect their investment because my

products might put the loan at risk is,

in my opinion, simply unethical.

And if your argument is that $40

a month for a service contract in-

creases the monthly payment and

the likelihood of default, then maybe

the deal is too risky in the fi rst place.

And what happens if our customer

suffers a mechanical breakdown and

you’ve denied him or her the ability

to fi nance that coverage? Doesn’t that

also increase the chances of the cus-

tomer missing a payment or two?

I just highly doubt that loans

perform better without back-end

product, but I do agree that we F&I

managers need to be conscious of

back-end percentages. I mean, try-

ing to stuff a $3,000 VSC down a

lender’s throat on a $5,000 vehicle

is about as incredulous as a lender

giving a Line 5 call on an 800 FICO

consumer who is looking to fi nance

at 90 percent LTV.

Strong-arming a lender isn’t the

way to go, either. We F&I managers

need to pick our battles when asking

for back-end exceptions, and we must

approach the customer with good

reasons for buying the products.

Lenders are notorious for guard-

ing their purses, so give them a good

reason to fund the deal by showing

courtesy and respect. We’ll talk a

little bit more about this next month,

but I wanted to leave you with some

words of advice I picked up from my

esteemed colleague, George Angus:

“Stop whining, get proactive in solv-

ing the problem by soliciting the help

of your GM or dealer and seek out

more lenders.”

What Angus is suggesting is that

you track the impact (i.e., lost F&I

income) of every Line 5 call you get.

I’m sure your boss will be more than

happy to go to bat for you the next time

the lender rep comes in for a visit.

Marv Eleazer is the fi nance manager at Langdale Ford in Valdosta, Ga. E-mail him at [email protected]

Don’t miss your chance to see “Mad” Marv in person as he leads a panel of top F&I professionals at the Industry Summit in September! Visit www.IndustrySummit.com for details.

Call On ‘Line 5’

Mad Marv

After hearing what one fi nance executive said about fi nancing back-end products, the magazine’s front-line columnist decides to delve into the root of the dreaded ‘Line 5’ call. By Marv Eleazer

FI0811madmarv.indd 52FI0811madmarv.indd 52 8/2/11 10:54:02 AM8/2/11 10:54:02 AM


http://www.Industry

Solved.

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

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f&i and showroom august 2011

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