Our dealership has a very good repeat customer who has a car fetish. Every 4-6 months he gets tired of his current vehicle and wants a different one. Getting a new vehicle twice a year has been going on his whole life by looking at his credit report (29 auto loans – all classified individual loans).
I’ve seen him in fast vehicles such as a Ford Mustang Shelby, Pontiac GTO, Dodge Ram SS/T. Lately he took advantage of some Toyota specials on the Tundra and got a loaded extended cab 4X4. Due to its gas mileage, he traded that on an Infiniti G37 coupe.
Each time he finances the vehicle at the MAX advance for 72-84 months while rolling in a staggering amount of negative equity.
Usually, to get a deal done, the dealership has to take a mini-deal and ALL of my negotiation skills with the banks just to help this guy with his impulse purchases and roll a car – because of his negative equity.
Sometimes we couldn’t trade him out with $23,000 of negative. He would go home, think about his decision for a month or two, and come back with a few thousand down at always the right time of the month for us to give a car away.
The funny thing is that he understood the meaning of and always purchased GAP on each vehicle. He won’t be sorry if he ever has to use the benefits.
Obviously, with each new vehicle purchased from my dealership, I would have to cancel the GAP policy from the previous vehicle.
After doing some math, this customer is single-handedly responsible for about 15% of the total GAP cancellations processed in the 4.5 years I have been in F&I at my present dealership.
True Story (He just left the dealership).
Wednesday, September 24, 2008
Thursday, September 18, 2008
F&I Numbers
This is a column re-printed by permission from Motorcycle Product News. It is interesting to see the actual F&I numbers published. I wonder about the product sales process in the F&I department of a mortorcycle dealership verses automotive.
Life and Disability insurance probably sells well, though I could really see a strong presentation blowing the whole deal - just use the old "put your eye out close". Yes, a motorcycle scares me to death. Give me a big safe SUV!
By Steve Jones
Link to original article:
At GSA we track benchmarks through our involvement with dealer groups such as the Best Operators Club. Some of the members have kindly consented to let us share their numbers from our real-time, web-based data reporting system.
In this column we're going to review the July F&I numbers for one of our member dealers and the related TBOC averages. In 2007, this dealer sold 800 motorcycles, ATV and UTV units, plus 140 trailers and 39 boats. The dealership is located in a town of 22,000 on the outskirts of a city of 180,000 people.
In Chart 1 we see that they have only one F&I person. For July, they captured 90 percent of the financed deals. They had an approval rate of 52 percent. Tracking and following up on "approved but did not buy" deals is also very important. Did they buy elsewhere? Why? What could you have done to get these deals?
Chart 1
LINGO:
CY: current year
PVS: per vehicle sold
TBOC: average of the top five BOC members in this category
In Chart 2 you can see that their overall July finance penetration was just under 60 percent. This is short of the benchmark of 70 percent, but not bad. If you don't get the financing, it is very hard to maximize add-on sales of F&I and P&A products.
Last year at this time, this dealer was averaging just over $300 PVS in F&I GP. This year he has jumped to over $600 PVS! How did he accomplish this? According to the dealer, there were two main reasons: They hired a former auto F&I person who was tired of the long hours and pressure. The five-day week in this powersports dealership was just what he was looking for.(It should be noted that there are quite a few good people leaving the auto business — sales mangers and salespeople as well as F&I managers. This is a good time to take advantage of their current business situation.) They implemented a structured selling process with the correct turnover to the business (F&I) office. They also utilized a four-square worksheet process, and always asked for a down payment amount. This can often be converted to F&I products sales if customers are approved for little or no down payment.
Chart 2
Note: Our data reporting and analysis system is available for any dealership to use for a nominal fee. If you want more info on the Voyager IV data reporting system or BOC, please e-mail steve.jones@gartsutton.com or visit our website at www.gartsutton.com. In the trend analysis in Chart 3, you can clearly see what happened when they hired the right person for the F&I position and implemented the correct processes. In a very short time they were able to nearly double their F&I income.
"If you do not enforce the sales process, the four-square and the consistent turnover to F&I, it is very difficult to achieve big numbers in the business office," notes the dealer. Obviously, having a fully trained and experienced F&I person is also crucial to maximizing your F&I potential. In today's highly-competitive market, it is essential to have an effective F&I department to pick up the margins.
Chart 3
Back to the F&I blog homepage:
Life and Disability insurance probably sells well, though I could really see a strong presentation blowing the whole deal - just use the old "put your eye out close". Yes, a motorcycle scares me to death. Give me a big safe SUV!
By Steve Jones
Link to original article:
At GSA we track benchmarks through our involvement with dealer groups such as the Best Operators Club. Some of the members have kindly consented to let us share their numbers from our real-time, web-based data reporting system.
In this column we're going to review the July F&I numbers for one of our member dealers and the related TBOC averages. In 2007, this dealer sold 800 motorcycles, ATV and UTV units, plus 140 trailers and 39 boats. The dealership is located in a town of 22,000 on the outskirts of a city of 180,000 people.
In Chart 1 we see that they have only one F&I person. For July, they captured 90 percent of the financed deals. They had an approval rate of 52 percent. Tracking and following up on "approved but did not buy" deals is also very important. Did they buy elsewhere? Why? What could you have done to get these deals?
Chart 1
LINGO:
CY: current year
PVS: per vehicle sold
TBOC: average of the top five BOC members in this category
In Chart 2 you can see that their overall July finance penetration was just under 60 percent. This is short of the benchmark of 70 percent, but not bad. If you don't get the financing, it is very hard to maximize add-on sales of F&I and P&A products.
Last year at this time, this dealer was averaging just over $300 PVS in F&I GP. This year he has jumped to over $600 PVS! How did he accomplish this? According to the dealer, there were two main reasons: They hired a former auto F&I person who was tired of the long hours and pressure. The five-day week in this powersports dealership was just what he was looking for.(It should be noted that there are quite a few good people leaving the auto business — sales mangers and salespeople as well as F&I managers. This is a good time to take advantage of their current business situation.) They implemented a structured selling process with the correct turnover to the business (F&I) office. They also utilized a four-square worksheet process, and always asked for a down payment amount. This can often be converted to F&I products sales if customers are approved for little or no down payment.
Chart 2
Note: Our data reporting and analysis system is available for any dealership to use for a nominal fee. If you want more info on the Voyager IV data reporting system or BOC, please e-mail steve.jones@gartsutton.com or visit our website at www.gartsutton.com. In the trend analysis in Chart 3, you can clearly see what happened when they hired the right person for the F&I position and implemented the correct processes. In a very short time they were able to nearly double their F&I income.
"If you do not enforce the sales process, the four-square and the consistent turnover to F&I, it is very difficult to achieve big numbers in the business office," notes the dealer. Obviously, having a fully trained and experienced F&I person is also crucial to maximizing your F&I potential. In today's highly-competitive market, it is essential to have an effective F&I department to pick up the margins.
Chart 3
Back to the F&I blog homepage:
Friday, September 12, 2008
Paystub
This definitely wins the grand prize for the best looking paystub I've seen:
You gotta wonder why some people have bad credit.
Back to blog homepage
You gotta wonder why some people have bad credit.
Back to blog homepage
Thursday, September 11, 2008
Capital One survey: Americans don't know loan rates
.
A majority (61 percent) of Americans who currently have auto loans do not know the interest rate they are paying on their loan, a new survey from Capital One Financial Corporation suggests. In a challenging economy, when saving money is particularly important, many consumers may be paying more than necessary and could benefit from a lower interest rate and a lower monthly loan payment by refinancing, the company notes.
Read the rest of the article here
Are you kidding me???
Where is Capital One getting the data for this survey?
I get beat up all the time over the interest rates. The majority of my customers want to know exactly what the rates are before any products are even mentioned.
Does this article suggest that if the customer falls into the sub-prime catagory, the F&I manager might not be practicing proper disclosure? By reading this article, it appears so 61% of the time - right?
Would Capital One be admitting that they are buying paper from automotive dealerships who are not properly disclosing what their customers are signing.
Having a 61% portfolio ratio of customers who have no idea what their interest rate is would scare me to death.
This creates visions of an F&I Manager putting one hand over the truith-in-lending disclosures while pointing toward the bottom of the r.i.s.c. leading the customer to just "sign right here".
Are we back to the "good 'ol days"?
Scary.
Back to blog homepage
A majority (61 percent) of Americans who currently have auto loans do not know the interest rate they are paying on their loan, a new survey from Capital One Financial Corporation suggests. In a challenging economy, when saving money is particularly important, many consumers may be paying more than necessary and could benefit from a lower interest rate and a lower monthly loan payment by refinancing, the company notes.
Read the rest of the article here
Are you kidding me???
Where is Capital One getting the data for this survey?
I get beat up all the time over the interest rates. The majority of my customers want to know exactly what the rates are before any products are even mentioned.
Does this article suggest that if the customer falls into the sub-prime catagory, the F&I manager might not be practicing proper disclosure? By reading this article, it appears so 61% of the time - right?
Would Capital One be admitting that they are buying paper from automotive dealerships who are not properly disclosing what their customers are signing.
Having a 61% portfolio ratio of customers who have no idea what their interest rate is would scare me to death.
This creates visions of an F&I Manager putting one hand over the truith-in-lending disclosures while pointing toward the bottom of the r.i.s.c. leading the customer to just "sign right here".
Are we back to the "good 'ol days"?
Scary.
Back to blog homepage
Thursday, August 21, 2008
No More Evil Car Dealerships
By: Robert Linkonis Sr.
Each time I read an article warning us about an evil car dealership taking advantage of some helpless customer, I find myself thinking about the other side of the story and ask: “what would your car buying experience be like if there were no more independent franchised new-car dealerships?’”
Sorry to interrupt the cheering, but think about this for a moment: If there were no independent dealerships competing with each other in our free-enterprise economic system, the consumer purchasing their new vehicle would be required to pay the full window sticker price from a manufacturer-owned “outlet store”. Do you think the price would be lower?
One might protest: “Of course it would be lower. We would be cutting out the middleman. Without an evil car dealership sucking up all the profits, the manufacturer could pass that savings on to us the consumers.”
Really? The only true way to cut out the middleman by this theory is to commute to the assembly plant in Detroit or whichever state (or country) the model you wish to purchase is built. Once your vehicle is tested and ready for delivery (which might be days or weeks after you were told it would be ready). You would pay with cash and drive your new vehicle home to do your own DMV work - before the temporary transport license plates expire of course.
Do you have a vehicle you need to trade? Well the factory has no interest in helping you with that one. They are in the business of assembling and selling NEW vehicles. What are they going to do with your old worn-out piece? Do you still owe money on it? Uh-oh. If the “outlet” has no interest in taking your old vehicle on trade, why should they care about helping you with potential negative equity? Nope, with the trade-in, you’re on your own. Good luck trying to sell it. It’s not that hard (really it’s not).
It is assumed that you have better things to do than changing your vehicles oil or doing other regular maintenance and would prefer to have it done for you. Until a convenient network of (probably independent) service centers was established, you would have to take it back to the assembly plant where you bought it.
You might think that to be ridiculous, “there are service stations everywhere” you respond. Yes, but do you really think the guy at the Exxon station is completely knowledgeable about how to fix the technology and many complicated electronics in today’s brand-new vehicles?
Technicians at dealerships now are pressed enough to stay on top of service bulletins for just one brand much less every one out there. Do you want your car “practiced on” by a jack of all trades?
The furious public would demand that the manufacturer set up sales and service centers close to where they live and work to make buying and servicing their vehicles more convenient. Should these outlets operate as non-profit entities or at a loss just to give you a convenient place to purchase and service your new vehicle?
I think not. The factory would expect these outlets to be profitable, as would the owners of any retail outlet. Instead of an independent franchise, the “middle man” would then become a manufacturer-owned outlet store. Operations of these sales and service centers would then be conducted in one of two ways:
1) Similar to the independent franchised dealer with the freedom to adjust retail prices of sales and service to compete in the marketplace. Pay plans for all staff would be based on net-profit. This competitive environment allows informed consumers to get better service and a much better deal.
2) Or it could be like Ford's failed experiment in trying to operate factory-owned dealerships 10 yrs ago. In keeping sale prices identical at each one of their outlets, it was assumed that more profit would be made through price-fixing.
There were numerous reasons why Ford's experiment failed. Mainly it was because there were other choices out there. Ford found out that there are many dynamics, in addition to the huge overhead involved in operating a dealership. Ford also recognized that the outlets had to be profitable (sounds like any car dealership doesn't it?).
We need to support the local dealers and ethical f&i managers that want to do business the right way. They are the vast majority. Let them make a profit. The alternative is manufacturer-controlled outlets where you are guaranteed the privilege to PAY HIGHER PRICES when buying and servicing your vehicle.
Good Stuff.
AFI
To measure a "well-run" automotive F&I Department, visit: http://www.AutoFinanceInsider.blogspot.com
By: Robert Linkonis Sr.
Each time I read an article warning us about an evil car dealership taking advantage of some helpless customer, I find myself thinking about the other side of the story and ask: “what would your car buying experience be like if there were no more independent franchised new-car dealerships?’”
Sorry to interrupt the cheering, but think about this for a moment: If there were no independent dealerships competing with each other in our free-enterprise economic system, the consumer purchasing their new vehicle would be required to pay the full window sticker price from a manufacturer-owned “outlet store”. Do you think the price would be lower?
One might protest: “Of course it would be lower. We would be cutting out the middleman. Without an evil car dealership sucking up all the profits, the manufacturer could pass that savings on to us the consumers.”
Really? The only true way to cut out the middleman by this theory is to commute to the assembly plant in Detroit or whichever state (or country) the model you wish to purchase is built. Once your vehicle is tested and ready for delivery (which might be days or weeks after you were told it would be ready). You would pay with cash and drive your new vehicle home to do your own DMV work - before the temporary transport license plates expire of course.
Do you have a vehicle you need to trade? Well the factory has no interest in helping you with that one. They are in the business of assembling and selling NEW vehicles. What are they going to do with your old worn-out piece? Do you still owe money on it? Uh-oh. If the “outlet” has no interest in taking your old vehicle on trade, why should they care about helping you with potential negative equity? Nope, with the trade-in, you’re on your own. Good luck trying to sell it. It’s not that hard (really it’s not).
It is assumed that you have better things to do than changing your vehicles oil or doing other regular maintenance and would prefer to have it done for you. Until a convenient network of (probably independent) service centers was established, you would have to take it back to the assembly plant where you bought it.
You might think that to be ridiculous, “there are service stations everywhere” you respond. Yes, but do you really think the guy at the Exxon station is completely knowledgeable about how to fix the technology and many complicated electronics in today’s brand-new vehicles?
Technicians at dealerships now are pressed enough to stay on top of service bulletins for just one brand much less every one out there. Do you want your car “practiced on” by a jack of all trades?
The furious public would demand that the manufacturer set up sales and service centers close to where they live and work to make buying and servicing their vehicles more convenient. Should these outlets operate as non-profit entities or at a loss just to give you a convenient place to purchase and service your new vehicle?
I think not. The factory would expect these outlets to be profitable, as would the owners of any retail outlet. Instead of an independent franchise, the “middle man” would then become a manufacturer-owned outlet store. Operations of these sales and service centers would then be conducted in one of two ways:
1) Similar to the independent franchised dealer with the freedom to adjust retail prices of sales and service to compete in the marketplace. Pay plans for all staff would be based on net-profit. This competitive environment allows informed consumers to get better service and a much better deal.
2) Or it could be like Ford's failed experiment in trying to operate factory-owned dealerships 10 yrs ago. In keeping sale prices identical at each one of their outlets, it was assumed that more profit would be made through price-fixing.
There were numerous reasons why Ford's experiment failed. Mainly it was because there were other choices out there. Ford found out that there are many dynamics, in addition to the huge overhead involved in operating a dealership. Ford also recognized that the outlets had to be profitable (sounds like any car dealership doesn't it?).
We need to support the local dealers and ethical f&i managers that want to do business the right way. They are the vast majority. Let them make a profit. The alternative is manufacturer-controlled outlets where you are guaranteed the privilege to PAY HIGHER PRICES when buying and servicing your vehicle.
Good Stuff.
AFI
To measure a "well-run" automotive F&I Department, visit: http://www.AutoFinanceInsider.blogspot.com
Thursday, August 7, 2008
Paying the Phone Bill
I am VERY bored today. Maybe I'll draw up a bank contract with numbers looking like this check and send it in to funding...
Ah, too much work.
Ah, too much work.
More Redneck Pics
August started out strong and just fizzled yesterday. I still don't feel momentum. Oh well. Let's enjoy some more redneck pics.
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Redneck Stonehenge
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Redneck Mansion
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Redneck Limo
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Redneck Car Lot
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Check out more redneck pics HERE
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Redneck Stonehenge
.
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Redneck Mansion
.
.
Redneck Limo
.
.
Redneck Car Lot
.
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Check out more redneck pics HERE
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