F&I and Showroom June 2011

HEADLINETO BEPLACEDHERE

MAKING A

OUTLOOK

THE MOST FOR THE

Specialty Retailers Like EuroCar’s Tilo Steurer

Have Made eBay Motors a Key Part of Their

Business. Learn How the Online Marketplace Plans

to Use New Support Programs to Make Their Model Work for Dealers

of All Stripes.

The Disaster in Japan Halted Production, But the Rising Cost of Gas Is What Has

Industry Watchers Concerned

Tried-and-True Products That Make for Great Lease Add-Ons

JUNE 2011 $10.00

TRENDS: TOP 10 ACCESSORIES | MAD MARV: IT’S THE LITTLE THINGS | LEGAL: SOCIAL POLICYMAKING

A BOBIT PUBLICATION FI-MAGAZINE.COM

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2 F&I and Showroom June 2011

June 2011 Volume 14, Issue 6

Dealer Profi le

14 Making a BideBay Motors’ online marketplace is no longer exclusive to sellers of unique and one-of-a-kind vehicles, with more dealers using it to expand their market reach and increase sales.

Finance and Insurance

18 Make the Most From the LeasedTom Wilson of Riverside Auto Group, the magazine’s 2010 F&I Dealer of the Year, opens his playbook to reveal six tried-and-true products that make for great lease add-ons.

Market Analysis

20 Cloudy OutlookThe March 11 disaster in Japan is testing the industry once again, but no one is panicking. Gas prices could change that.

Compliance

26 A Dealer’s Guide to Connecting Technology and Compliance

Before you select your next compliance software tool, read this primer on connecting technology to your dealership’s compliance processes.

4 Letters

6 Editorial

8 Developments

34 Sales Driver

35 Mad Marv

36 Legal

40 Bottomliners

41 Ad Index

44 Industry Trends

Departments

Features

F&I and Showroom (ISSN 2154-1728) (USPS 018-706) (CDN IPM# 40013413) is published monthly, by Bobit Business Media, 3520 Challenger Street, Torrance, California 90503-1640. Periodicals Postage Paid at Torrance, California 90503-9998 and additional mailing offi ces. POSTMASTER: Send address changes to F&I and Showroom, P.O. Box 1068 Skokie, IL 60076-8068. Please allow six to eight weeks for address changes to take effect. Subscription Prices: United States $20 per year; Canada $35 per year; Foreign: $35 per year. Single copy price: $10; Fact Book: $30. Please allow six to eight weeks to receive your fi rst issue. Bobit Business Media reserves the right to refuse nonqualifi ed subscriptions. Please address editorial and advertising correspondence to the executive offi ces at 3520 Challenger Street, Torrance, California 90503-1640. The contents of this publication June not be reproduced either in whole or in part without the consent of Bobit Business Media. All statements made, although based on information believed to be reliable and accurate, cannot be guaranteed and no fault or liability can be accepted for error or omission.

14

18

20

26

Contents Endorsed as the offi cial publication

of the Association of Finance & Insurance Professionals

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It’s Time to RespondTO THE EDITOR: The industry needs

to issue an offi cial rebuttal to the

report you detailed in your May col-

umn (“Consumer Advocates Are At

It Again”). And we need to do this

in print, online and as prominently

as possible. That rebuttal also needs

to be sent to the organization that is-

sued this report, the so-called Center

for Responsible Lending, as well as

to those individuals who receive the

organization’s reports.

Let’s start with the Center’s second

conclusion, which states: “Dealers

tend to mark up interest rates more

for borrowers with weaker credit.”

It’s amazing to me how these analysts

can’t see the obvious. Of course rates

are marked up based on the strength

of credit. Loans for used vehicles and

smaller amounts are riskier because

the borrower isn’t as invested as

someone looking to borrow a larger

amount on a new car. What makes

these people “vulnerable targets” for

increased rates is their own credit and

payment histories. If you have poor

credit, you’re not going to get the

best rate. Please tell me you’re going

to offi cially refute these bozos.

Michael White

Luckily for all of us, brighter minds than mine, including our own legal columnists, Tom Hudson and Michael Benoit, were present at the round-table discussions the Federal Trade Commission hosted in Detroit in April. And from what I hear, it didn’t take long to refute the now-familiar anecdotes and baseless accusations trotted out by the consumer advo-cates in attendance. So, I think the industry has rebutted the study’s supposed fi ndings, and it did so in front of the people that really mat-ter: policymakers. — Gregory Arroyo

Mixed FeelingsTO MATT NOWICKI: The whole e-con-

tracting system (“Solving the eBusi-

ness Puzzle,” May 2011) sounds good

on paper (pardon the pun), but after

using it for six months, I have to say

that it’s a lot slower to implement

than just printing a form and having

it signed by the customer. Yes, deals

get funded quicker, but it takes a lot

longer to deliver the customer. And

when I have three customers waiting

outside of my door, I hate having to

e-contract.

Over the last two months, I started

using a new online menu that offers

e-contracting and e-rating capabili-

ties, and it’s slow. Loading and print-

ing the menu takes forever. I think

the concept of e-contracting is great,

but there really needs to be some up-

grades to speed things up.

Chris CiprianoF&I Manager

Hanover, Mass.

TO MATT NOWICKI: Your article pro-

vided a nice overview of the different

aspects of e-commerce as it relates to

aftermarket and fi nance. I am a huge

believer in the power of e-contracting

and e-rating, and agree that the per-

ception among dealers is that eBusi-

ness takes longer.

When I fi rst started e-contracting,

it was a pain. But after ironing out the

wrinkles, things are running smooth-

ly. Today, I e-rate almost all of my

service contracts and nearly 80 per-

cent of my contracts are e-contract-

ed. There are even times when the

customer’s fi nance contract is funded

before they leave my offi ce, which is

the biggest profi t incentive for those

who are still on the fence about this

way of doing business.

Best of all, through e-contracting,

you can keep your contracts in tran-

sit at less than fi ve days consistently,

which will make your controller your

new best friend. Even better, if you

have a new trainee, eBusiness will

ensure he or she doesn’t miss signa-

tures, pull the wrong contract or for-

get a surcharge. Yes, it takes a little

work at fi rst, but that shouldn’t hinder

my fellow fi nance professionals from

jumping on board.

Kelly WadlingerF&I Professional

Annville, Pa.

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]

Senior EditorJustina Ly

[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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L et me just say that I’m really

excited about the magazine’s

annual conference. Some of the

ideas we had to expand the confer-

ence are fi nally coming to fruition,

and I hope you and the rest of your

front-end staffers can be with us this

year. We’ll be at the Las Vegas Hil-

ton, with festivities set to kick off on

Monday, Sept. 26.

Let me start by saying, I hear you.

Good salespeople are hard to come by.

The good ones have been scooped up

by the competition, leaving you with

Gen Y and “Mr. Forgotten,” Gen X.

And they just don’t get it, right? Well,

I’m not going to bridge any genera-

tion gaps here, but I want to tell you

that this year’s conference is offering

something that just might help.

See, Cory Mosley, our Sales Driver

columnist, recently launched “Con-

trol Your Sales Destiny,” a new semi-

nar series he designed to deliver new-

school techniques to salespeople of all

ages. Well, Cory has added our annual

conference to his seminar tour route,

and he’ll be in Vegas for a special pre-

conference event on Sept. 26.

As you’ve probably read in his col-

umns, Cory preaches a new-school

philosophy to car sales. He’ll spend a

good portion of his seminar review-

ing his philosophy, and will touch

on the opportunities that exist in the

social media realm. However, what I

wanted to call your attention to is the

time management segment of Cory’s

seminar. So, if you want to give your

salespeople a good foundation for

success, Cory will lay out a daily rou-

tine your salespeople can follow.

I hope his event, which runs from 8

a.m. to 4 p.m., is enticing enough to get

some of your sales staffers out there. I

also think running your salespeople

through some of the F&I courses of-

fered at this year’s conference also

will serve to bridge the gap between

your store’s front-end departments.

But, like I said, Cory’s seminar is

only one of four events kicking off

on Monday. Greg Goebel, regarded

as one of the leading minds in spe-

cial fi nance, has agreed to move his

annual Special Finance Conference

from Dallas to run alongside the F&I

Conference. His event kicks off Mon-

day at 4:30 p.m. and runs through

Wednesday. And with 25 percent of

Americans claiming a credit score of

less than 600, Greg’s conference is a

must-attend event for your special fi -

nance or used-car manager.

This year we’ve also added a new

pre-conference event called Buy

Here, Pay Here for Franchised Deal-

ers. It also starts on Monday and is

being hosted by Rod Heasley and

Gary Perdue of Peritus Portfolio Ser-

vicess, a purchaser of auto loan paper.

Ken Shilson, founder and president

of the National Alliance of Buy Here,

Pay Here Dealers (NABD), is helping

to plan the event and will be there to

explain how BHPH can be used to

maximize your used-vehicle inven-

tory. If you’ve ever considered mak-

ing the leap into the BHPH business,

then you need to be at this event.

Also on Monday, David Robertson

and his Association of Finance and

Insurance Professionals will host a

certifi cation class. It runs from 10

a.m. to 4 p.m., and it’s the perfect op-

portunity to get your team certifi ed at

a special show rate.

Now, the F&I Conference and

Expo opens Tuesday morning after

a Monday night reception. Like last

year, the event will carry a training-

heavy theme with more than 17 edu-

cational sessions. Now, as I type this

sentence, members of our advisory

board are casting their fi nal votes on

the topics our agenda will fi eld this

year. And let me just say, I think our

board has hit the mark again.

One thing you can expect is an up-

date on the Dodd-Frank Wall Street

Reform and Consumer Protection

Act, which goes into effect on July 21.

There were a number of unknowns

that came with this new piece of leg-

islation and our legal experts will be

there to provide the dirty details.

The conference agenda also will

fi eld several topics outside of the F&I

realm, including digital marketing,

social media and sales. Now, this

brings me to my next point.

See, this year we’re marketing our

annual get-together under the Industry

Summit tagline. Like the magazine,

we’re looking to expand our confer-

ence into more of a front-end confer-

ence. Yes, we want to help you roll

more cars, but our main focus is on

helping you roll more profi table deals.

Lastly, stay tuned into www.fi -

magazine and www.industrysummit.

com for updates and announcements.

Also be sure to be on the lookout for

two new contests the magazine is

launching this year. One is our an-

nual F&I Dealer of the Year contest,

while the other is a new contest that

aims to fi nd the best F&I presentation

in the nation. Hey, at stake are cash

prizes and an all-expense paid trip to

the Industry Summit, so keep an eye

out for it.

Reinventing Our Conference

Letter from the Editor

The magazine’s annual conference is quickly taking shape. The editor provides a breakdown of some of the new features you’ll see in September. By Gregory Arroyo

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A fter completing its investiga-

tion of nearly 50 automobile

dealers, the Federal Trade

Commission found broad compliance

with the agency’s Rule Concerning

Preservation of Consumers’ Claims

and Defenses, more commonly known

as the “Holder in Due Course” rule.

The rule protects car buyers when

dealers sell buyers’ credit contracts

to other lenders. Under the rule, if

a dealer engages in fraud or makes

misrepresentations in selling a car

on credit, a consumer can raise the

dealer’s conduct as a defense to the

lender’s demand for payments.

The rule currently does not require

dealers to include the notice in credit

contracts when the amount fi nanced

exceeds $25,000. However, as a re-

sult of the Dodd-Frank Act of 2010,

which takes effect on July 21, 2011,

the rule will require the notice in

these contracts of up to $50,000.

Legislation aimed at amending a

California law that prohibited the

inclusion of deductible coverage

in the sale of GAP was signed

into law May 9 by Gov. Jerry

Brown, ending a four-month

effort led by several trade or-

ganizations and an F&I prod-

uct provider.

Dealers can now once again

include deductible coverage in the sale

of GAP. The law’s passage came 25

days after the California Department

of Insurance was to begin enforcing

a rule that required GAP providers

to remove deductible coverage from

their agreements and barred dealers

from including deductible coverage in

the sale of GAP if they had not ob-

tained an insurance agent’s license.

The fi xer legislation was spear-

headed by San Diego-based Owner-

GUARD Corp., which gained support

from the California New Car Dealers

Association, the Guaranteed

Asset Protection Alliance, The

American Financial Services

Association and the Consumer

Credit Industry Association.

Michelle Dicks, who serves

as general counsel for Owner-

GUARD, believes the campaign to

amend the rule also could benefi t

dealers in other states. “This is a valu-

able product to consumers and the

industry,” she said. “And if a similar

situation comes up in other states, the

industry now has some legislative his-

tory in California to work with.”

To read the online version of this

story, go to www.fi -magazine.com/fi x-gap.

NABD 2011 Draws Record AttendanceTHE NATIONAL ASSOCIATION OF

Buy Here, Pay Here Dealers drew a record crowd to its annual confer-ence in Las Vegas, setting the stage for an East Coast edition in Novem-ber, organizers said.

The association’s founder, Ken-neth Shilson, credited the atten-dance increase to the addition of a

two-day Dealer Academy, which began May 16. The inaugural event, which Shilson plans to expand next year to

include two educational tracks, helped expand the

larger event’s attendee base.“Overall attendance was up

more than 20 percent this year and included more than 1,800 total attendees,” Shilson said. “It was a great fi ve days.”

Marking its second year at the Venetian/Palazzo resort, NABD 2011 ran from May 18–20. The pro-gram featured more than 80 speak-ers, including F&I and Showroomcontributors Thomas B. Hudson and Melinda Zabritski of Hudson Cook LLP and Experian Automo-tive, respectively, as well as keynote speaker Greg Link of Franklin Covey and Manheim’s Tom Webb.

The agenda’s panel discussions and workshops covered standbys such as benchmarks, remarketing and payment assurance technology as well as social media and mobile technology. The exhibition space broke new ground as well.

“The exhibit hall included 120 sponsors and was the largest in the history of the [BHPH] industry,” Shilson said. “Attendees networked with other attendees, experts, spon-sors and recovery professionals who offered products and services which increase profi ts and cash fl ow.”

For more information on the East Coast event, scheduled for Nov. 6-8, 2011, in Atlanta, or to download presentations from NABD 2011, visit www.bhphinfo.com.

FTC Finds Dealers Compliant With Consumer Protection Rule

In April, Detroit’s Wayne State University played host as dealer and consumer advocates participated in a series of FTC-moderated panels.

Gov. Brown Signs Bill to Fix California GAP Problem

Developments


Brown

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The sudden closure in

March of Vacaville,

Calif.-based Signet

Financial Group left many

dealers responsible for ser-

vice-contract refund agree-

ments. Several companies,

however, have stepped up

to help.

So far, North American

Dealer Co-Op (NADC)

and National Automotive

Experts (NAE) have sepa-

rately offered to honor cur-

rent Signet contracts.

The Oregonian reported

in March that Greg Leh-

mann, Signet’s owner, sent

a letter to consumers in-

forming them that Signet

had worked out a solution

with the Colorado-based

North American and its

sister company, National

Administrative Dealer

Services, “that will al-

low dealers to continue to

write contracts without in-

terruption.”

Chad Greenlee, NADC

administrator, said the co-

op has offered its money-

back program for the last

17 years. “We’ve always

been friendly competitors,

and when Signet was go-

ing under, we were notifi ed

[on March 24] that they

were closing their doors,”

he said.

Dealers can honor cur-

rent Signet contracts

through North American,

which will provide cover-

age through its insurance

provider, Western Insur-

ance Company.

If dealers put

money into a

dealer reserve

account held

with Western,

the insurance

company will

then assume

liability for

the remainder

of those Signet contracts

but will not be offering re-

funds on currently expired

contracts. NADC’s policy

for Signet customers will

be provided through the

co-op and will allow deal-

ers to see the entire policy

before they sign up.

National Automotive

Experts also is accepting

Signet contracts through

its NUNL (“No Use, No

Lose”) service contract

refund program. The com-

pany says contracts must

be less than 24 months old

to qualify and that deal-

ers must remit the NUNL

paperwork as well as the

original Signet contract to

receive payment. In ad-

dition, NAE will charge

dealers a $25 surcharge for

contracts over six months

old and a $50 surcharge for

contracts that

are more than

12 months

old. The com-

pany says it

will mail cus-

tomers a new

contract with a

letter explain-

ing the circum-

stances.

“We aren’t relying on the

program to create income

for our NUNL program,

but to enhance the selling

of our service contracts and

other products,” said Kelly

Price, president of NAE.

Gary Fagg, who serves

as a consulting actuary at

Hurst, Texas-based Cred-

itRe, said refund products

are a good value in theory

but can be problematic

from an actuarial stand-

point. Costs can add up

if one considers that most

agreements promise to pay

the VSC-related losses for

consumers with claims

and refund the retail VSC

price to the consumer if he

or she didn’t fi le a VSC-re-

lated claim. “It takes every

‘gotcha’ you can dream up

to keep the loss costs in a

manageable range,” Fagg

said.

And that’s why compa-

nies like NAE don’t mind

being the cheapest. “Ser-

vice contract refund pro-

grams can be effective if

reserved correctly,” said

NAE’s Price. “As many

companies in the past have

been less expensive than

ours, we have held strong

to keeping the reserves at

levels that, in some cases,

were as much as the ‘cost’

of the other programs. We

know we aren’t the cheap-

est, but we intend to be

around for a long time.”

Greenlee added: “It’s

a program that’s been

around long enough that,

if it’s done properly, can

sell a lot more service

contracts and protect a lot

more customers.”

To read the online version

of this story, go to fi -magazine.com/signet-folds.

A lly Financial

claimed the title

of largest auto

fi nance company in the

United States in 2010,

according to Auto Fi-

nance News’ annual “Big

Wheels” ranking of car

lenders and lessors. Ally

Financial, the bank holding

company formerly known

as GMAC, amassed an

auto fi nance portfolio of

$74 billion last year, $10

billion more than Toyota

Financial Services, which

ranked second.

The Top 10 auto fi nance

companies in the U.S. in

2010 were:

Developments


NADC, NAE Step Up for Signet Dealers

Ally Financial America’s Largest Auto Finance Company, Report Finds

c

a

1

o

p

w

to

co

le

in

sta

1 Ally Financial

2 Toyota Financial Services

3 Chase Auto Finance

4 Ford Motor Credit Co.

5 Wells Fargo Dealer Services

6 Bank of America Dealer Financial Services

7 American Honda Finance Corp.

8 BMW Financial Services

9 Nissan Motor Acceptance Corp.

10 Santander Consumer USA


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

programs, has appointed Joel Appelbaum as chief underwriting and actuarial offi cer. He previously served as the North America chief risk offi cer for Zurich. Appelbaum also held positions with CNA Insurance and Argonaut Great Central Insurance Co.

Resource Automotive, a unit of The Warranty Group Inc., named Joe Amendola as senior vice president of

national sales. He is responsible for all sales and marketing activities within Resource’s U.S. retail automotive segment. Amendola joined Resource in 1994 as an F&I specialist.

First Extended Service Corp., a unit of The Warranty Group Inc., has named John Luckett as senior vice

president of sales and marketing. He will be responsible for all sales and marketing activities within First Extended’s U.S. agent distribution segment.

Safe-Guard Products International LLC has promoted Randy Barkowitz to CEO and David Duncan to president. Barkowitz served as Safe-Guard’s CFO for four years and was responsible for several strategic

initiatives. As senior vice president, Duncan has been responsible for account management, sales and business development with OEMs, F&I agents and national retailers.

JM Family Enterprises Inc. has promoted Carmen Johnson to executive vice presi-dent of JM Family, and Dan Chait to senior vice president of subsidiary World Omni Financial Corp. John-son joined JM Family

in 2007 as vice president of human resources. She will con-tinue to serve as the company’s principal legal advisor and oversee the human resources, learning and organizational development, benefi ts and healthcare services functions. Chait joined World Omni in 2002 as vice president of asset manage-ment. As senior vice president, Chait will have primary responsi-bilities for Southeast Toyota Finance portfolio management, dealer services, operations, sales and marketing.

Study Reveals Top 10 Reasons Shoppers Leave DealershipsA STUDY BY CAR-RESEARCH

XRM, a CRM solution pro-vider, revealed the Top 10 reasons prospective car buyers walk off the lot without buying. At the top of the list were sales and management staff issues, such as rude treatment of customers and lack of knowledge about products or fi nanc-ing. “Sales and man-agement staff issues” fi nished fi rst, followed by “Shopping,” “Price,” “Financial,” “Inventory,” “Style,” “Payments,” “Trade,” “Time,” and “Decision maker.”

GM Financial Posts $77 Million Net Income GENERAL MOTORS FINAN-

cial Co. reported net income of $77 million for the quarter that ended March 31, 2011, up from $63 million in the year-ago period. Loan originations ended the quarter at $1.1 billion, up from the $935 million recorded in the fourth quarter 2010 and up from the $624 million recorded in the year-ago period. Receivables totaled $8.7 billion on March 31, ac-cording to the company.

Triad Founder Launches New Subprime UnitFOUR FORMER TRIAD

Financial executives have partnered with a Per-ella Weinberg Partners

affi liate to form CarFinance Capital LLC, a direct and indirect auto fi nance company catering to

the nonprime market. Based in Irvine, Calif.,

CarFinance Capital will launch on the West Coast and expand to Texas in June. Triad founder Jim Landy will serve as presi-dent and CEO, and former Triad executives Dennis Morris, Jeff Butcher and John O’Dowd, will be part of the executive team.

Chrome Provides VIN Data, Decoding Solutions to eBay MotorsCHROME SYSTEMS INC.

will provide VIN data and decoding solutions to eBay Motors. The solu-tions were designed to make listing vehicles and parts and accessories eas-ier for sellers. Chrome’s Automotive Description Service and Chrome IQ solutions will give eBay Motors the capability to enhance searches, provid-ing one-to-one vehicle matching for the most detailed brand, model, trim and equipment descriptions, according to the company.

Developments


Moves and Hires

ella Waf

CLic

thBase


Insurance

Risk Management

Products and services are underwritten and provided by member companies of Zurich in North America, including Universal Underwriters Insurance Company and Universal Underwriters Service Corporation. Certain coverages and products and services are not available in all states. *Results based on 2010 data. ©2011 Zurich American Insurance Company

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http://www.zurichna.com/dealer

Making aBidBidN

estled in a nondescript

business park in Costa

Mesa, Calif., is Euro-

Car, an independent

dealership that sells pre-

owned luxury and exotic vehicles.

EuroCar’s unassuming concrete-

and-glass building gives passers-by

no hint at the multimillion-dollar in-

ventory of Aston Martins, Bentleys,

Ferraris, Porsches and Rolls-Royces

parked inside the dealership’s ware-

house showroom.

“You’ll drive by us and you won’t

recognize what this is,” says Tilo

Steurer, EuroCar’s founder and own-

er. “It’s a huge warehouse. You can’t

see any cars outside.”

EuroCar’s modest exterior belies

its success. The independent dealer-

ship reached $76 million in sales vol-

ume last year. Eight-fi ve percent of

total sales are Internet based, and 60

percent of monthly sales come from

eBay leads. The dealership is recog-

nized by eBay Motors as a “top-rated

seller” and has earned a 100 percent

positive feedback rating from buyers.

The Upscale AuctioneerA native of Germany, Steurer started

EuroCar in 2006 after spending sev-

eral years in the vehicle service and

wholesale industries. He lists 75 to

80 vehicles on eBay Motors each

week on a 10-day auction cycle. His

store’s average monthly retail volume

is 65 to 70 vehicles, and eBay helps

Steurer reach customers all over the

world, including Australia, Canada,

China, Russia and Sweden.

“For us, [eBay Motors is] a great

lead generator and a great relation-

ship builder,” Steurer says. “It’s not

a blind sale. You get to know your

clients over the phone, via e-mail and

in person.”

Steurer says his dealership has been

successful because its inventory fi ts

the quintessential eBay Motors busi-

ness model. “eBay is more of a unique

market for unique items,” he says.

Since its launch in 1995, eBay has

become known as the marketplace

eBay Motors’ online marketplace is no longer exclusive to sellers of

unique and one-of-a-kind vehicles, with more dealers using it to

expand their market reach and increase sales. By Justina Ly


Dealer Profile

PHOTOS BY GREGORY ARROYO

FI0611profile.indd 14FI0611profile.indd 14 6/3/11 3:25:06 PM6/3/11 3:25:06 PM

THANK YOU

1,000,000 contracts sold. The best administration team, agents and dealers in the business. Find out how we do it at www.aulcorp.com or call 800.826.3207.

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“where practically anyone can buy

and sell practically anything,” as its

Website aptly describes. The eBay

Motors division has sold 4.3 million

vehicles since it received its own site

in 2000 and now receives more than

14 million unique visitors per month.

In the fi rst quarter of this year, 74

percent of vehicles sold on eBay Mo-

tors were sold across state borders.

Additionally, the site lists 30,000 fran-

chised and independent dealerships.

Clayton Stanfi eld, manager of

dealer training for eBay Motors, be-

lieves the e-commerce Website is a

viable marketplace for franchised

dealers because it can broaden their

reach, deliver stronger leads and gen-

erate incremental sales. “Franchised

dealers always believed they were at

a disadvantage. They always believed

that ‘indies’ could sell cars cheaper,”

he says. “We had to teach them that

they have a huge advantage because

they have certifi cations and warran-

ties. They have available fi nancing

which no one else can really do.”

Embracing an eBay BusinessBethany Johnson is the Internet man-

ager at RBM of Atlanta-North, a fran-

chised Mercedes-Benz dealership in

Alpharetta, Ga. Johnson uses eBay

Motors to sell her dealership’s pre-

owned inventory, including Mercedes-

Benz’s and other trade-in vehicles like

Hondas and Mazdas. “I’ll launch any-

where from 25 to 35 [listings] at any

given point. I do the seven-day auc-

tions because I fi nd that they’re the

best bang for the buck,” she says.

Johnson believes her dealership’s

embrace of selling vehicles through

eBay Motors is atypical of other high-

line dealerships. “They worry that

they won’t get high enough bids on

the vehicle or it’s not going to work

for them,” she says.

But RBM North is proof that eBay

works for luxury franchised dealer-

ships. Johnson estimates that nearly

50 percent of the dealership’s total

Internet sales, which account for 35

to 40 percent of the store’s total sales

volume, originate from eBay Motors.

Johnson and her team of two em-

ployees make contact with all of their

eBay Motors leads. They call cus-

tomers who bid for vehicles and of-

fer to answer any questions they may

have. She says making fi rst contact

lets customers know there is dealer-

ship support available to them. In

addition, Johnson’s store offers free

shipping on any vehicle sold as well

as airport valet service.

Johnson says she puts in extra effort

for eBay shoppers because they tend

to be solid leads. “They’re toward the

end of their buying cycle. They’ve

bid on that vehicle,” she says. “Now,

whether they’ve hit reserve [price] or

not, they are buyers and that’s what I

like about eBay customers.”

Stanfi eld says a proactive approach

like Johnson’s is key to any dealer’s

success. “EBay Motors is a market-

place. We bring the buyer and seller

together. The sellers who don’t do

as well are the ones who expect the

marketplace to also sell the car and

make gross,” he says. “You have to be

transparent and you have to reach out

to your customers.”

Different Markets, Different ResultsUnfortunately, even transparency

and communication do not guaran-

tee sales success for all franchised

dealerships. Chris Carlson, a sales

manager at Scott Robinson Honda in

Torrance, Calif., sold new and used

vehicles for about a year before clos-

ing his dealership’s eBay account in

April 2011.

“We took a crack at it and we sold

some cars off of it,” he says. “[We

sold] anything from cargo vans to

a fl atbed truck. We did sell some

new vehicles — Accords, Civics and

Elements.”

Carlson says the downside to sell-

ing popular makes and models on

eBay is the competition. He had to

outpace other sellers and manage bids

that were below MSRP. “You call and

try to work the lead, but there’s noth-

ing to work,” he says. “It was a steady,

consistent fl ow of ridiculous [leads].”

Despite the hurdles, Carlson says

the dealership managed to sell 18 cars

and made a profi t of $18,000. Still, he

decided to close the dealership’s ac-

count because of the expenses related

to running auctions, which included

paying an employee to manage them.

Fred Dixon, a used car and Inter-

net sales manager at Langdale Ford

in Valdosta, Ga., also had minor suc-

cess with eBay Motors. He used the

online marketplace for three months

last fall, listing 20 vehicles and sell-

ing two. “One of them was a Harley-

Davidson F-150 Super Crew,” says

Dixon. “It’s a specialty vehicle. When

we use [eBay Motors] again, it’ll be

for a specialty vehicle like that.”

Dixon says that preparing each list-

ing — uploading photos and writing

vehicle descriptions — was the most

time-consuming part. “For the re-

turn on effort, it just wasn’t worth it,

even though it’s not that expensive,”

Dixon says.

Stanfi eld says dealers can use eBay

Motors’ free suite of services to help

manage their listings and improve


Dealer Profile

EuroCar’s inventory of specialty vehicles fi ts the eBay Motors

business model perfectly, and owner Tilo Steurer now

lists 75 to 80 vehicles per week on a 10-day auction cycle.

Top 10 Selling Vehicles on eBay Motors OCTOBER 2010–MARCH 2011

1 Ford F-150/F-250/F-350 2 Ford Mustang 3 Chevrolet Corvette 4 Chevrolet Camaro 5 BMW 3-Series 6 Jeep Wrangler 7 Honda Civic 8 Ford E-Series Van 9 Cadillac Deville 10 DTS Honda Accord


EBAY MOTORS LAUNCHED ITS eDealer Training Program in 2009 to teach dealers tips, tricks and selling strategies. Since then, the program has trained 2,100 dealers. Forty-fi ve percent of these dealers had never used eBay before

attending the training program. The average dealer will have 20 listings running at one time. For more information about the free training program, visit www.ebaymotors.com/training.

online performance. These services

include listing software, photography,

vehicle description creation, custom-

er data collection, inventory manage-

ment and marketplace consultation.

“If you are a dealership that is small

and doesn’t have a listing tool, you

could use our tool to push your ve-

hicles to eBay,” he says. Dealers also

can choose from a host of third-party

service providers to create and man-

age vehicle listings.

Right Time for Used-Car BuyersThe experiences that Johnson, Carl-

son and Dixon have had with eBay

Motors illustrate a growing trend

among consumers who are purchas-

ing late-model vehicles from the on-

line marketplace. The site has always

attracted car collectors and enthusi-

asts, but now a more mature buying

market is using it to fi nd vehicles like

the Camry and Ford F-150, which

can be fi nanced, says Stanfi eld.

“Sixty-fi ve percent of the vehicles

that sell on eBay are between two and

seven years old,” he says. “Cars that

are seven to eight years old and 20

years old aren’t as big of a segment

on eBay, because those are the $5,000

to $7,000 cars. Those are more easily

sold locally.

“[Dealers] are the only people in

the world who can fi nance these ve-

hicles right now at a good rate, or at

least offer them a complimentary ve-

hicle,” Stanfi eld adds. “I think it’s a

fantastic time for franchised dealers

on eBay right now.”

June 2011 F&I and Showroom 17

eBay Motors Training for Dealers


http://www.ebaymotors.com/training

It’s that time again. Leases are

making their way back into the

fi nance mix, and F&I managers

are diving for cover. Fear not, in-

trepid fi nance professionals. Just

because it’s a lease doesn’t mean it’s

time to roll over and watch your per-

copy sink like the proverbial stone.

Here are a few pointers and prod-

ucts to help you avoid the lease blues.

There’s still profi t out there to be had;

you just have to change channels

and realize the motivation of your

customers. Once you dial in on their

needs and wants, the rest, as they say,

is history.

Get a Feel for the DealStart with a walk-around on the ve-

hicle your customer wants to trade

in. What condition is it in? How does

the paint look? Are there any dented

panels? Are there a lot of stains in-

side, windshield chips, etc.? If the

customer is a returning lessee, will

he or she get billed for excess wear

and tear?

A lessee wants the same conve-

niences and benefi ts that a buyer does.

Yes, the lessee is in a short-term con-

tract, but that doesn’t mean you can’t

make money on the deal. If your les-

see is in a short-term cycle and antici-

pates driving around 12,000 miles a

year, maybe offering the service con-

tract isn’t the way to go.

On the other side of the coin, if the

customer is driving for a term longer

than 36 months or anticipates higher

miles, then, by all means, offer the

end-to-end service contract protec-

tion. After all, paying to fi x a bank-

owned car is like knocking on your

neighbor’s door and offering to pay

for the repairs on his truck. It just

doesn’t make sense.

Offer Products That WorkSo what should you look for that

makes sense to the customer and

earns profi t for you? Two words: val-

ue and convenience. Here are some

product suggestions that add a lot of

both but won’t break the bank:

1Appearance Packages: Stories

about acid rain, environmental

fallout and harsh climate conditions

abound. Read any warranty

manual and look at all

the exclusions to the factory paint

warranty. At Riverside Auto Group,

we pair a Tefl on-based paint sealant

with a resin-based interior protectant

to keep the car looking good inside

and out. The customers love it. The

treatment makes cleaning a breeze

and virtually eliminates the chance

they’ll get dinged for excessive wear

at the end of the lease.

2Windshield Treatments: Space-

age technology has made its way

to auto retail. Companies such as

Crystal Fusion and Diamon-Fusion

have produced superior glass treat-

ments that are perfect for leased

vehicles. The chemical

bonding properties of


Finance and Insurance

Make the Most From tThe magazine’s 2010 F&I Dealer of the Year opens

its playbook to reveal six tried-and-true products

that make for great lease add-ons. By Tom Wilson

FI0611leasing.indd 18FI0611leasing.indd 18 6/2/11 3:59:18 PM6/2/11 3:59:18 PM

the treatments not only protect the

glass from chips and nicks, but also

provide superior water shedding and

enhanced visibility. After all, who

wants to see a bill for a new wind-

shield at lease turn-in?

3Road Hazard and Key Fob Pro-tection: AAA recently released

fi gures showing that tires are the

second largest expense on a car, right

after fuel. Add to that the fact that

many municipalities are on a tight

budget and have reduced the amount

of money they spend on road resur-

facing. That’s a recipe for some very

costly repairs.

Point out to your lessee that the

No. 1 exclusion on their tire warranty

is road hazard. Without a cost effec-

tive tire-and-wheel warranty stand-

ing guard over their wallet, the lessee

is looking at a huge bill if he or she

hits a pothole or debris, blows a tire

or bends a rim. Many policies also

offer an upgrade to cover lost keys

and fobs. Think those aren’t expen-

sive? Check with service to see what

a remote fob costs, especially for a

push-button ignition.

4GAP: Some leases, such as one

offered by Toyota Financial Ser-

vices, don’t include GAP in their con-

tracts. Make sure you point out to your

lease customers that a lease is not de-

signed to build equity. In the event of

a total loss, they could be exposed to

several thousands of dollars of risk.

The leasing company will cheerfully

accept the check from the insurance

company and stick their hand out

for the rest. With GAP, they’re safe.

Without GAP, they’re in trouble.

5Maintenance Plans: What a great

way to drive a vehicle! Keep the

gas tank full, and the rest of your

maintenance is covered. Lessees

looking for a convenient way to pre-

budget their auto expenses will enjoy

the features of a “gas-and-go” lease.

Some manufacturers already cover

maintenance for a specifi ed period,

but for those that don’t, the mainte-

nance plan is a great add-on. It puts

profi t in F&I and retains a customer

through service.

6Dent, Ding and Excess Wear:There are many vendors and

leasing companies that offer excess

wear-and-tear waivers or policies.

These are a great add-on, especially

for a car that will be driven in an ur-

ban setting. The lessee’s car will be

exposed to a variety of hazards in

various parking lots and city streets.

Even the neighborhood Little Leagu-

ers can infl ict some damage while

the car is sitting right at home in the

driveway. Excess wear policies go a

long way in easing the minds of the

lessees and removing the stress and

worry about getting a bill at the end

of their lease.

So, you have a variety of products

that lend themselves to creating a

great driving experience for your les-

sees and profi t for F&I. You’ll feel

better about writing a lease with these

products at your fi ngertips. Your cus-

tomers will love you for taking the

time to customize a worry-free lease

experience for them. And you can bet

they’ll be back again, looking for that

same experience on their next car.

Remember, when you’re looking

for profi t in your department, a little

plus a little plus a little equals a lot.

Customize your menu offerings by

using value-added products along

with some rate markup, where appli-

cable, and you’ll be smiling after

every lease and looking for more.

Tom Wilson is the F&I director for Riverside Auto Group in Escanaba, Mich., and the magazine’s 2010 F&I Dealer of the Year. Contact him at [email protected].


m the Leased

This sample menu has been customized to meet a customer’s F&I product needs. There are three F&I product packages: A La Carte, Standard, Preferred and Premium.

Thi l h b Riverside Auto Group presents this “Accept/Decline” form to each customer to confi rm the F&I products he or she has selected or declined to purchase.

This sample menu from Wilson’s Riverside Auto Group shows the base offerings for a new 2011 Toyota 4Runner in four packages: Economy, Standard, Preferred and Premium.

FI0611leasing.indd 19FI0611leasing.indd 19 6/2/11 3:59:22 PM6/2/11 3:59:22 PM


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

Cloudy Outlook

Randy Martin, an Internet

manager at Columbia,

S.C.’s Dick Dyer Toyota,

says that May started out

with a practically empty

incentive sheet. But by the middle

of the month, Toyota began offering

subvented rates and special leases on

several models. It’s not dealer cash

like he wanted, but it’s something.

“We were informed in April that

we’d see a lot less incentives and

inventory,” Martin says. “We were

told it would be that way for the next

three months.”

Martin’s initial concern was that a

cut in incentives might drive custom-

ers to other brands, which was an en-

couraging prospect for Bill Pearson’s

single-point Ford store in Peoria, Ill.

But it’s Pearson’s used-vehicle depart-

ment that has him excited. “National

statistics show that there are four

used customers to one new, so there’s

high demand for used vehicles,” he

says. “Some of that has to do with the

economy, some of it has to do with

fuel economy and some of it has to do

with what happened in Japan.”

Paul Taylor, the NADA’s chief

economist, says the industry was

facing a post-World War II situation

following the March 11 earthquake

and ensuing tsunami that struck Ja-

pan. The year was 1945, and vehicle

production facilities were either

wiped out or needed to be recon-

verted from wartime-goods makers

to car producers.

“That was the last time we faced a

situation where the supply side of the

market was restrictive,” Taylor says.

“Of course, the pressure was higher

then, because the capacity for vehicle

production in Europe and Japan had

largely been destroyed.”

Market watchers like Taylor see a

rough summer ahead. Come Septem-

ber, however, it’s anyone’s guess what

the market will look like for the rest

of the year and beyond.

A New Paradigm Analysts estimate that the disaster in

Japan will result in the loss of 300,000

to 400,000 new vehicles. But U.S.

dealers are now selling three used for

every new vehicle sold, according to

TrueCar.com, so most analysts believe

the used market will feel the pressure

the most.

“I think July and August is when

that pipeline is really going to dry

The industry is facing another possible crisis, but nobody seems to be in panic mode just yet. By Gregory Arroyo


Market Analysis

Tse

The situation was fl uid in the weeks following the March 11 disaster in Japan. Toyota initially said it would take until June before production levels returned to 70 percent capacity, but the news brightened in late May when

the company raised its projections to 90 percent in late May. Dealerships like Randy Martin’s Dick Dyer Toyota (inset) saw some of its best incentives

pulled for the month of May in reaction to Toyota’s initial production estimates. Two weeks later, however, incentives were back.

PHOTO COURTESY TOYOTA MOTOR CORP.

FI0611market.indd 20FI0611market.indd 20 6/3/11 2:47:45 PM6/3/11 2:47:45 PM

FI0411uds.indd 1 3/23/11 4:27:37 PMFI0611market.indd 21FI0611market.indd 21 6/3/11 2:47:53 PM6/3/11 2:47:53 PM

Are these your stats?

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up,” says Black Book Managing Edi-

tor Ricky Beggs. “The speculation

will be, ‘Do I go ahead and buy used

cars now, hold onto them for 30, 60,

90 days so when I don’t have new, I’ll

at least have used product to sell?’”

Complicating matters are gas pric-

es, which increased by 37 percent

from January to April. The concern

is that rising prices will cause dealers

to unload gas guzzlers in a panic like

they did in July 2008, when the U.S.

average price for regular gasoline hit

an all-time high of $4.11 per gallon

and wholesale prices on used trucks

and SUVs plummeted by about

$12,000 virtually overnight.

May data from AuctionNet, a

wholesale auction database, showed

that supplies of SUVs, large pickups

and intermediate compacts at auc-

tion were down 17, 40 and 26 per-

cent, respectively. Jonathan Banks,

who manages the NADA Used Car Guide’s data and editorial services,

says that’s an indication that dealers

aren’t dumping vehicles in a panic.

That could change if gas prices hit

$4.50 a gallon. Taylor, however, says

recent evidence shows that prices

could fall to $3.80 a gallon, which

would allow manufacturers to sell

their full range of vehicles, includ-

ing higher-valued vehicles like SUVs

and trucks.

Also encouraging is the credit

situation. As of March, average loan

amounts generated through auto fi -

nance companies were up 88 percent

over 2009, according to Equifax.

“What we’re seeing is a number of

loans across different segments in-

creasing,” notes Michael Koukou-

nas, a senior executive with Equifax.

“They’re not increasing to pre-reces-

sion levels, but they’re increasing in

general, and automotive is one of the

industries leading the way.”

Koukounas attributes the in-

crease to automakers being able to

get more for their products, a belief

supported by recent incentive data

from Edmunds.com. In April, av-

erage incentive spending per new

vehicle sold fell to its lowest point

since October 2005. The NADA’s

Banks attributes that to the industry’s

new reality.

“I call it a new paradigm, because

we had real strong diligence on the

new-car side in terms of production

and sales, which kind of lowered in-

centives and kept supply and demand

in check,” he says. “And everyone

was able to be profi table at these low-

er sales levels because we’re selling

more vehicles on a pull-type basis.”

But this new reality also has made

the market more sensitive to shocks to

the system, as was seen following the

Japan disaster. Wholesale prices for

intermediate compacts increased 10

percent in March and should have, at

most, remained fl at for April. Instead,

prices increased another 6 percent af-

ter Toyota and Honda announced that

dealer allocations would be at about

50 percent for May and June.

Dealers Better PreparedThe good news is that dealers are

getting more for their vehicles at re-

tail. Black Book’s Beggs says retail

prices for three-year-old used ve-

hicles in May were up 22 percent, or

about $3,700. Prices on entry-level

vehicles and compact SUVs were up

almost 29 and 7.5 percent, respective-

ly. “The consumer is saying, ‘I don’t

want to be tied up with a $25,000 to

$26,000 loan for fi ve or six years,

but I’ve got to have good transporta-

tion,’” he says. “So the thinking is,

‘I’ll tie up half of that much money

for half that period, and maybe I’ll

be able to get the car I want three

years from now.’”

Data from AutoTrader and J.D.

Power and Associates confi rms that

dealers are now able to pass on the


Market Analysis

“People thought I was crazy when I began lowering

prices on my used cars based on market demand, and that

resulted in a 300 percent increase in business.”

— Bill Pearson, Finish Line Ford

PHOTO COURTESY FINISH LINE FORD


higher prices they’re paying for vehi-

cles to consumers, but many believe

that’s because of tools like vAuto’s

inventory management software.

Pearson’s Finish Line Ford is a

vAuto user. He says the software has

kept all fi ve of his used-vehicle buy-

ers dialed in. “Most dealers don’t cal-

culate days supply, and that’s one of

the things vAuto does real well,” says

Pearson. “Right now, the software is

showing me that there’s only a 35-day

supply of SUVs. Now, I’m not look-

ing to pick up 20 or 30 of them, but if

I see a 30-day-supply vehicle and no

one else is bidding, well …”

Pearson is looking to move 3,000

used vehicles this year, which he’s

done in each of the last two years.

He’s even tinkering with the idea of

his Internet department adopting an

out-the-door pricing strategy, which

he knows doesn’t lend itself to F&I

production.

“If we’re really selling value, and

we have good F&I products that are

backed by good providers, then what

are we afraid of?” he asks. “Hey,

people thought I was crazy when I

began lowering prices on my used

cars based on market demand, and

that resulted in a 300 percent increase

in business.”

Worse Projected, Not ExpectedWhat’s encouraging to Taylor is that

brands poised to capture market share

are striking a chord with consumers,

but he says their ability to produce

cars consumers want while keeping

quality high will be tested over the

next four months.

“Supply is a constraint, but if the

ability to stock cars is low, it’s the im-

provement in the fl ow of new produc-

tion to the marketplace that’s encour-

aging,” says Taylor. “We have stock

models and fl oor models and this is

a tight stock, but a fl ow that was re-

trained is starting to pick up.”

News out of Japan also began to

improve at the end of May. Toyota of-

fi cials hope to reach 90 percent pro-

duction by the end of June, and Honda

announced it will be at 100 percent

by August. Meanwhile, Justin Leech,

a spokesperson for Toyota Financial

Services, says the company is using

its response to last year’s recalls as a

template for helping dealers through

the expected product shortages.

In April, the company rolled an of-

fer to extend leases for up to a year

in six-month increments. That will

give dealers the opportunity to keep

returning customers on the line until

the new car they want becomes avail-

able. The company also announced

that it would increase residual values

by two points on all 2011 model-year

Toyota and Lexus vehicles, an offer

that runs through August.

“What we’re going through now

is not unlike what we went through

during the recalls,” Leech says. “We

created a program specifi cally to help

our dealers manage through that pe-

riod and I think we were the fi rst cap-

tive to announce support programs

this time around. So we were pretty

quick to respond then and we were

pretty quick to respond now.”

Ford stopped making some vehi-

cles for one week after the crisis in

Japan. A resulting shortage in parts

was partially responsible, but Todd

Nissen, a Ford spokesperson, says

the company also was responding

to slowing demand for its F-Series

trucks. Ford also faced a potential

shortage of certain colors produced

in Japan, a problem that was quickly

rectifi ed when the OEM located re-

placement colors.

“There were several layers of sup-

ply chain that were affected by what

happened in ways I think people never

even imagined,” Nissen says. “It was

a bit of a learning experience, but, at

the same time, it was an opportunity

to put contingency plans into use.”

Although the picture was begin-

ning to clear up, the NADA’s Tay-

lor admits his vision of the future is

clouded. “We’re hopeful that manu-

facturers headquartered in Japan can

not only get back to near peak levels

of products, but can sustain those

levels through the end of the year,”

he says. “But we simply don’t know

what the outlook is from August

through the end of the year.”



FI0611friendly.indd 1 5/18/11 8:19:08 AM


Compliance

The Federal Trade Commission (FTC)’s Risk-

Based Pricing Rule is the latest example of

how compliance creates industries, as a slew

of solution providers lined up to help deal-

ers navigate the industry’s newest regulation.

The technology they developed will undoubtedly add ef-

fi ciency and accuracy to their dealer clients’ compliance

efforts, but it can’t be effective without the right processes

and procedures in place.

Before you begin your search for new software, let’s re-

view some areas of the sales and F&I processes where tech-

nology can support your dealership’s compliance efforts.

Sales: Discriminatory Lending and UDAP Claims

The Goal: Although dealers escaped litigation from the

class action discrimination lawsuit fi led against fi ve cap-

tive lenders early last decade, they need to be careful that

the processes they use to quote payment avoids any hint

of discriminatory practices. The suit, which ended in a

multimillion-dollar settlement, is still fresh in the minds

of plaintiffs’ attorneys and regulators, so expect the new

Consumer Financial Protection Bureau to continue to

monitor auto lending practices.

A Dealer’s Guide to Connecting

Technology and Compliance

Before you select your next compliance software tool, read this primer on connecting technology to your dealership’s compliance processes. By Joe Bartolone

The multimillion-dollar settlement against fi ve captive

lenders for discriminatory practices early last decade will

be fresh in regulators’ minds for years to come. Dealers who demonstrate a willingness and ability to play within the rules

will benefi t as auto lending continues its comeback.

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Second, dealers need to be cognizant of potential claims

of Unfair and Deceptive Acts and Practices and enact pro-

cedures that foster full disclosure. Remember, attorneys

are on watch for these types of issues because UDAP

awards typically provide for treble damages if the court

fi nds evidence of willful misconduct.

The Process: If your dealership runs credit before present-

ing the fi rst pencil, a good best practice for avoiding charges

of discrimination is to develop a rate matrix based on credit

scores. The matrix can be broken down in increments of 25

or 50 points. One method would be to take a captive fi nance

rate matrix and add two points to the tier-two buy rates. So,

in practice, every customer who has a 625 score should be

quoted a payment using the same fi rst pencil rate.

If your store doesn’t run credit before the fi rst pencil

quote, then establish a “store” rate that is used for all cus-

tomers. This rate could be based on an average rate of sold

deals over the last 90 days. The key here is consistency.

Full disclosure is critical to avoid UDAP claims when

the deal reaches the negotiation stage. That means giving

each customer all the necessary deal terms, including the

selling price, trade allowance, payoff, down payment, re-

bate, the amount fi nanced, payment, term and rate. Trans-

parency will not only help answer any future questions

about what the customer agreed to, it also will eliminate

the potential for payment packing or using hidden or unre-

alistic terms or rates to calculate payments.

Technology Breakdown: A computer desking system can

be your greatest weapon against discrimination or UDAP

claims. Look for a solution that integrates with your deal-

ership management system, as this will allow desk manag-

ers to quickly and accurately work a deal while computing

multiple combinations of fi nance and lease terms. Built-in

rate matrices are another nice feature, allowing managers

to compute fi rst-pencil payments based on credit scores.

When a solution is selected, be sure to lock down the de-

faults on the rate matrices, and to retain the fi rst-pencil

and fi nal agreed-to term worksheets.

Sales Finance: Bank Fraud

The Goal: Falsifying credit app information, stips, down

payments and collateral are potential areas of exposure for

dealers. However, your employees are not the only ones you

need to watch. There are customers who’ve been around

the block a few times and know how to work the system.

The Process: There are two key processes to consider:

First, have customers complete their own application.

When an application must be completed on the customer’s

behalf, have him or her sign the application and initial key

credit determinates, such as time at address and job. This

is not a legal requirement, but it will provide a nice defense

if the customer provides false information.

Dealers also must institute safeguards to ensure that hold

checks, deferred down payments and credit cards aren’t

accepted without the lender’s knowledge. Not only is this

found to be in violation of dealer-lender agreements, but

accepting these types of payments and disclosing them as

a cash down on the retail installment sales contract could

be a violation of the Truth in Lending Act’s Regulation Z.

Dealers also must take steps to ensure the value of the

collateral is properly stated. That’s why it’s a good practice

to create a book-out sheet for trades and purchased used

cars added to inventory. These sheets should be signed by

the manager who created and submitted them to the lender.

Additionally, all stipulations should be authenticated.

Benefi t letters from the Social Security Administration

can be authenticated by understanding the codes embed-

ded in the letter. Stips such as pay stubs, utility bills and

tax statements also should be scrutinized.

Technology Breakdown: A solution to electronically sub-

mit credit applications will defi nitely speed up the process,

but the real benefi t of these tools is they can print out the

data in a format that discloses the credit app, deal terms

and the collateral description. This can serve as an excep-

tional auditing tool to ensure the information provided and

submitted match up.

Compliance

Dealerships are vilifi ed by the courts when staff members are accused of fraud, but customers who know how to work the system also represent a potential area of exposure.



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Automated inventory systems also provide protection

against powerbooking, a practice where the seller arti-

fi cially infl ates a vehicle’s value by listing a higher trim

level or nonexistent options. The right system will time-

stamp any modifi cations made to each vehicle’s record

and record the name of the person who made the change.

Rebates/Dealer Incentives: Eligibility Checks

The Goal: Most new-car sales are tied to some form of

factory rebate and/or dealer incentive, so it’s crit-

ical that you take measures to ensure that

your dealership, the customer and the

vehicle are eligible for the incentive

claim submitted to the factory.

The Process: Ensuring that no

mistakes are made requires a

joint effort between sales, F&I

and the administrative offi ce.

First, sales should print a copy

of the inquiry to the incentive

program, confi rming the amount

of the rebate, promotional rate or

dealer incentive available.

Sales should then be required to col-

lect any of the required documentation for

consumer-specifi c programs. The fi nance offi ce should

then ensure that the incentive is properly applied to the

deal and that the customer properly executes documenta-

tion confi rming the amount of the rebate and assignment

to the dealer.

Following the delivery, all rebate documentation

should be collected and attached to an acknowledgement

form indicating that all three departments agree that the

rebate is valid. Also, be sure to fi le the paperwork in the

deal jacket.

As for dealer incentives, remember that they are ve-

hicle-specifi c and may have a volume bonus attached.

Eligibility is usually tied directly to the vehicle’s deliv-

ery date and the incentive payable is generated when

the dealer writes up a retail delivery report. That’s why

it’s critical that your dealership’s RDR reconciliation

process ensures that vehicles reported monthly to the

factory match the sold vehicles detailed in the DMS and

then eventually match the credits applied by the factory.

Remember, charge-backs resulting from factory audits

can be the most expensive penalty a dealer will face.

Technology Breakdown: Gaining knowledge of the fac-

tory applications and working with your DMS providers

can provide you with exception reporting tools to manage

this important component of your operation.

IRS and FinCen Reporting: Form 8300

The Goal: Reporting to the Internal Revenue Service

and the Financial Crime Enforcement Network (FinCen)

transactions for which more than $10,000 is received

from a single buyer can’t be overlooked. Those who inten-

tionally disregard the rule’s requirements could be fi ned

$25,000, or the amount of cash they received but failed to

report, whichever is greater. The required reporting docu-

ment is called the Form 8300. Check out the IRS Publi-

cation 1544 for more instructions on complying

with this rule.

The Process: Your cash receipting

system should provide a detailed

description of the form of cash ten-

dered, as disclosing that money

received was cash, check or credit

card does not provide enough de-

tail to support a good Form 8300

process. That’s why each cashier

should be provided with a set of

standard abbreviations to properly

identify the form of cash received —

was it currency or a personal check,

cashier’s check, money order, bank draft,

credit card or something else?

Technology Breakdown: Most DMS offerings include

an automated cash receipts application, which generally

provide for multiple classifi cations of the type of money

received. This will assist the accounting offi ce in making

sure the Form 8300 is fi led within 15 days after receiving

a payment, as mandated by this requirement.

Compliance

Automated inventory systems

also provide protection against powerbooking,

a practice where the seller artifi cially infl ates a vehicle’s value ... The right system will timestamp any modifi cations made to each vehicle’s record

and record the name of the person who made

the change.

the

the

.

v-

n

hy

on

the

and

ory.

dits

fac-

ders

nage

The IRS requires the completion of Form 8300 for any transaction in which more than $10,000 is received from a single buyer. Dealers who fail to comply can be fi ned upwards of $25,000 per violation.



FI0311recycle.indd 1 2/17/11 4:57:46 PM

Identity Check: Red Flags Rule

The Goal: The enforcement moratorium the FTC placed

on the Red Flags Rule was fi nally lifted as of Dec. 31,

2010. That means dealers must have a written “Identity

Theft Prevention Program” in place to identity, prevent

and mitigate ID theft. Currently, the law sets $3,500 as

the maximum civil penalty per violation, but that doesn’t

include civil liability.

The Process: This rule requires dealers to designate a

compliance offi cer and perform a risk assessment to iden-

tify the threats of identity theft relevant to their operation.

Dealers must also develop written policies and procedures

for detecting, preventing and mitigating identity theft, and

employees must be trained to follow them. Audits on the

effectiveness of the dealership’s program must be per-

formed periodically, and an annual report detailing the

success and shortcomings of the program — as well as

any required improvements — must be submitted to the

dealership’s board of directors or senior management.

Technology Breakdown: Many companies offering con-

solidated credit reports, F&I menus and specialty ID theft

services have incorporated automated “Red Flag” tools.

These solutions use a variety of indicators to suggest the

likelihood of identity theft. Some tools display pass or fail

indicators, while others will use proceed-with-sale or a

do-not-proceed indicators. Other solutions use a numerical

value (e.g., buyer index score, customer identity score).

It’s important to remember that these indicators are gen-

erated as a result of searches conducted by data aggrega-

tors that track fraud-related activities from other industries

and other public records. In other words, these solutions

may miss discrepancies in the customer’s credit report.

They also can’t measure Red Flag behavioral patterns de-

tected during the sales process.

Out-of-wallet questions are another great weapon

against ID thieves. These questions are typically based on

information available in public records. They’re a good

way to catch customers who may be posing as someone

else. You probably can think of a few such questions your-

self, but most solution providers can electronically gener-

ate a set for you.

Joe Bartolone is an associate with gvo3 & Associates, a nationally recognized sales and F&I compliance consulting fi rm. He can be reached at [email protected].

Compliance

Identity theft remains a key concern for government agencies and consumer privacy advocates, and should be for dealers as well. With the moratorium on Red Flags enforcement lifted as of Dec. 31, 2010, there is no excuse left for not implementing a written policy for protecting your customers against identity thieves.

Ida gaafotFaiipyi

32 F&I and Showroom June 2011 PHOTO ©ISTOCKPHOTO.COM / DAVE WHITNEY



AF0

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AT BOBIT BUSINESS MEDIA, WE’RE KEEPING THINGS

You can feel confi dent that within our magazines, websites and trade shows, Bobit Business Media is doing our share to maintain a “green” working environment.

As individuals and as a company, we are dedicated to maintaining green initiatives and strive to be good

citizens of this planet. Finding new and innovative ways to reduce our carbon footprint is always a priority for Bobit Business Media.

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Can’t fi nd good salespeople? Gen Y have you perplexed? The magazine’s sales columnist offers a few thoughts. Will you be willing to listen? By Cory Mosley

By the title of this column, you

might assume that my message

this month is directed at sales

professionals, but it isn’t. What I want

to do is drive home that message to

those of you in decisionmaking roles,

those of you in control of the infor-

mation that fl ows to the employees on

the frontlines of your stores.

Steve Jobs, Apple’s iconic founder,

has an interesting quote that I often

repeat when working with dealership

decisionmakers. He said: “You can-

not mandate productivity; you can

only create a conducive environment

where people can excel.” Unfortu-

nately, this often is not the case.

It seems like many dealers spend

a ton of time on the “what” and not

nearly enough time on the “how.”

These individuals use every meet-

ing to hammer home the message

that the dealership needs to sell

more cars, conduct more customer

follow-ups, and mine the customer

database. Typically, the meetings

end with them shouting, “Everyone

needs more appointments for Satur-

day.” Unfortunately, that’s not going

to get it done.

I speak to sales professionals daily.

Some are past clients while others

are longtime friends from my days

on the sales fl oor. All of them seem

to be telling the same old stories. So,

I’d like to announce a new rule for

you decisionmakers out there: If you

don’t train, then you can’t complain

about how slow business is, how you

can’t fi nd and keep good salespeople,

how everybody seems to be giving

cars away, and how frustrated you

are about management refusing to

use the new system correctly.

Training isn’t just about drills or

word-tracks; it’s about process, pro-

cedure, creating a great culture, im-

proving teamwork and leading the

way. If your store isn’t producing at

its potential, ask yourself: What new

skills have you, as a decisionmaker,

given to your team to help them be

more successful?

I’m not talking about daily train-

ing sessions that recycle techniques

from 30 years ago, nor am I talking

about buying some new technology

product or service to improve busi-

ness. I want you to encourage you to

be progressive and understand the

human factor. Let me explain:

■ Expand or Become Expend-able: It is my opinion that tough de-

cisions will need to be made in the

coming years, as the competition and

fl ow of information increases and

the attack on gross profi t continues.

I mean, how can we possibly do the

same things today that we did 30

years ago?

Not long ago, I was told by a dealer

that I was the fi rst person in 11 years

to conduct training at his dealership.

Amazing, right? I mean, think about

this: How much of that information

you’ve learned about today’s cus-

tomer or that new software solution

actually trickles down to the sales

team? An even better question is:

How hard do you push to inject new

ideas into the mix or encourage your

people to take a fresh look at the way

your store conducts business?

■ Say Hello to Gen Y: My guess

is most of the people making up your

sales team are in the dark about those

customers who were born between

1981 and 1994. It’s unfortunate if

that’s the case, because that market is

75 million customers strong. This is

a generation that is four times more

likely to respond to text messages

than voicemails, and currently ac-

counts for 25 percent of all car buy-

ers. Most experts believe that per-

centage will increase to 40 percent in

the next 10 years.

Now, those stats only skim the sur-

face as to what motivates this gener-

ation. One thing you can be certain

about is word-tracks such as, “What

would it take to earn your business?”

and “If I could, would you?” aren’t

going to work on this generation.

It’s time to move forward, folks.

It’s no longer about whether your

team is good or bad; it’s about how

we can get better. See, as the chal-

lenges become more sophisticated,

so do the strategies needed to ensure

continued success. The good news

is, most problems can be attributed

to a defi ciency of knowledge, which

can be corrected fairly quickly. And

with the right long-term plan of ac-

tion, it can be cured forever.

As a decisionmaker in a dealer-

ship, you control what information

gets disseminated to the sales pros

on the frontlines. So, I would ask

that you make an effort to seek out

a fresh perspective and treat your

mind like an umbrella, which, as you

know, works best when it’s open.

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.

No Training, No Complaining

Sales Driver

FI0611salesdriver.indd 34FI0611salesdriver.indd 34 6/2/11 4:09:50 PM6/2/11 4:09:50 PM

Way back in 1954, Kitty

Kallen recorded a popular

song titled, “Little Things

Mean A Lot.” It was a lovely tune

from a lady to her beau about how

important the little things are in a re-

lationship. Well, the lesson this song

teaches can be applied in the F&I of-

fi ce, because it’s the little things that

can really make a difference.

Take an F&I colleague of mine

who consistently runs north of

$1,100. He had just suffered through

a rough month in which his produc-

tion was basically cut in half. While

backtracking to fi gure out what went

wrong, he discovered that his down-

fall wasn’t the result of any major

blunders on his part. No, what got

him were the little things.

How many times have you made

a presentation, discovered another

party was going to be involved in the

decision, then learned they were un-

available? Why is the customer even

in your offi ce, right? How could the

sales department be so blind?

The Bible’s King Solomon once

wrote, “There is no new thing under

the sun.” Wise words, right? But how

do they apply to us in the automotive

retail industry?

For starters, have you ever noticed

that, no matter how many conferenc-

es, workshops and seminars you’ve

attended, the message never changes?

Yes, the delivery may vary, but not

the message. That’s because there are

certain steps in the fi nance process

that must be followed to deliver the

unit profi tably and within the bounds

of federal and state regulations. So,

why should you ever attend another

training session, right?

The answer is simple: There are

times in every F&I manager’s career

when we need to hear the message

again. We’re creatures of habit, right?

Think about it: How is it that bad

habits are just as easy to pick up as

good ones?

In this business, the ability to rec-

ognize a bad habit and make a change

often separates the successful from

the not-so successful. But, as we all

know, recognizing when change

is needed is easier said than done.

That’s because we all have a tendency

to stray a little here and a little there

from what works, which is usually

how bad habits begin to surface. And

before you know it, you’re in a slump.

The best way to keep those bad

habits at bay is to be active. It’s easy

to surf the Web and make personal

calls when things are slow, but it’s

better to use that time to sharpen

your skills. You may even want to see

if there are any deals you can rehash

with your sales manager. Maybe it’s

time to visit the service drive to offer

a pep talk about referring vehicle ser-

vice contract (VSC) prospects. You

may even want to dust off that cash

menu and do a little fi ne tuning.

See, the biggest problem with not

keeping yourself sharp is you tend to

make mistakes when business picks

up and you get swamped. Little mis-

takes, such as forgetting a signature,

can be costly. You lose credibility

with the customer when you have to

reel them back in. Even worse, they

may get second thoughts about that

service contract they opted for.

Here are some suggestions to help

keep you sharp during downtime:

■ Get out of your offi ce and inves-

tigate what’s going on around you.

■ Offer to sit in on deals at the desk

and take turnovers.

■ Forecast your goals.

■ Constantly check what you ex-

pect of yourself.

■ Become an ally, rather than an

adversary, to the sales department.

■ Study and become familiar with

your local market dynamics.

■ Sign up with new lenders that

can compete with the local credit

unions and banks.

■ Make sure your service writers

are referring VSC prospects and that

you’re spiffi ng them for doing so.

■ Develop a menu option for VSC

offerings that work well with cash

customers.

■ Get involved with online forums

where like-minded F&I staffers swap

sales ideas.

■ Keep your offi ce organized.

■ Always be mentally prepared to

deal with the next customer.

■ Learn how to leave your personal

issues at home.

I know what you’re thinking:

There’s nothing new here. Well, that’s

the point. You have heard it all before,

but maybe it’s time you pick up these

simple habits again. I can almost

guarantee you’ll see amazing results.

Listen, there is only one person

you can truly affect, and that’s you.

The little things can have a huge im-

pact on your daily success, so make

sure you’re paying attention to those

small details. The big problems will

take of themselves.

Marv Eleazer is the fi nance manager at

Langdale Ford in Valdosta, Ga. E-mail

him at [email protected].

Catching the Little Big Things

Mad Marv


The magazine’s from-the-trenches columnist provides advice on how to keep the little things from snowballing out of control. By Marv Eleazer

FI0611madmarv.indd 35FI0611madmarv.indd 35 6/2/11 4:10:11 PM6/2/11 4:10:11 PM


FIC05-61summit_3pp.indd 1 6/3/11 5:50:25 PM


Legal

L ast month, my colleague,

Thomas Hudson, provided his

take on the fi rst in a series of

roundtable discussions hosted by the

Federal Trade Commission (FTC).

This month I’d like to offer my take

on what happened inside the Wayne

State University Law School in De-

troit. I felt it was a worthwhile ex-

ercise, but there was an interesting

theme that emerged that day.

To get everyone caught up, the

FTC is on a mission to learn all it

can about the auto sales and fi nance

business so it can appropriately ex-

ercise its newly minted authority —

courtesy of the Dodd-Frank Wall

Street and Consumer Protection Act

of 2010 — to regulate dealers.

The discussions were spirited and

the industry responded well to most

of the allegations of abuse levied by

consumer advocates. Most of the

transgressions they pointed to are al-

ready prohibited by state and federal

laws. As Tom wrote last month, “If

you eliminated the discussion about

things everyone agreed were illegal,

the entire program would have taken

about 15 minutes.”

The point the industry tried to

make was that enforcement of ex-

isting law, rather than the creation

of more regulations, will do more

to help stop alleged abuses. Neither

the dealer community nor fi nance

sources have any incentive to prop up

or protect the abusers, and I suspect

both communities would support the

enforcement of the myriad laws al-

ready available to stop them.

But while industry reps were fo-

cused primarily on market forces

and using economics as a means of

incentivizing behavior, consumer

advocates seemed bent on utilizing

social policymaking to do the think-

ing for consumers. Unfortunately,

these are two very different philo-

sophical approaches that cannot be

easily reconciled.

The government engages in social

policymaking all the time. For ex-

ample, the Equal Credit Opportunity

Act makes it illegal to discriminate

against a protected class in a credit

transaction. But that doesn’t mean

you can’t charge members of a pro-

tected class more for credit if there

is a legitimate business reason to do

so. You just can’t base a decision on

class status.

Remember, every American is part

of at least two protected classes: race

and gender. So, while it would be il-

legal for me to create underwriting

standards that treated men more ad-

versely than women, it would not be

illegal for me to charge a man with

a 550 FICO score more for credit

than a woman with a 750 score. And

while it would be illegal to have

one price for men with a 550 score

and a better price for similarly situ-

ated women, it is not illegal per se to

charge credit-challenged consumers

more for credit. Last I checked, hav-

ing a poor credit score did not make

one part of a protected class.

My view is that people will pay

for credit exactly what it is worth to

them, just like we do with plane tick-

ets. I recently fl ew from Washington,

D.C., to Texas. The best fare I could

get, given my time constraints, was

$1,600. Now, the woman sitting next

to me paid a little more than $200

for her ticket. She made a determina-

tion that the ticket was worth $200

to her; I made a determination that

the ticket was worth eight times that

to me. Did the airline make a lot

more money off of my ticket? You

bet. Do I feel discriminated against?

Not one iota.

See, no one held a gun to my head

and said I had to buy that ticket. Yes,

I would have liked to pay less, but

that doesn’t mean I want my govern-

ment fi xing the price of plane tickets

and dictating to airline shareholders

how much the value of their shares

are permitted to grow. That’s a reci-

pe for economic ruin.

The same goes for credit. At the

end of the day, no one pays more for

credit than it is worth to them, and

the market determines what that cost

is. If asked, I expect most consumers

would agree they have a responsibil-

ity to understand the legal obliga-

tions they submit themselves to. I

also think that consumers are per-

fectly capable of learning, given the

proper tools. So, if we want to tinker

with social engineering, how about

we consider incentivizing consumer

education and personal responsibil-

ity? I think that is far better for soci-

ety in the long term than deputizing

our government to protect us from

ourselves.

Michael Benoit is a partner in the Wash-

ington, 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.benoit@

bobit.com. Nothing in this article is le-

gal advice and should not be taken as

such. Please address all legal questions

to your counsel.

Social Policymaking Is Not the SolutionCan the FTC balance what consumer advocates want and what industry reps say is needed? The magazine’s legal wiz says that time will tell. By Michael A. Benoit

FI0611legal.indd 36FI0611legal.indd 36 6/3/11 5:55:11 PM6/3/11 5:55:11 PM

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

Register Today and Reserve Your Spot!

Join Us September 26-28, 2011! Register now at IndustrySummit.com

or call 800-576-8788

Turn the page to learn more about this year’s show!

FIC05-61summit_3pp.indd 1 6/3/11 5:50:25 PMFI0611legal.indd 37FI0611legal.indd 37 6/3/11 5:55:13 PM6/3/11 5:55:13 PM

http://www.IndustrySummit.com

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

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

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

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

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

10:00AM – 4:00PM

AFIP Certifi cation Program This program was designed to provide the regulatory and legal knowledge F&I

professionals need to excel and a strong foundation for industry-specifi c ethical practices. Additional charge applies

12:30PM – 4:30PM

Buy Here, Pay Here for Franchised Dealers

Peritus Portfolio Services’ Rod Heasley will tackle the processes, pitfalls and profi t potential

of adding a BHPH operation to a new-car dealership in this comprehensive, two-part course. Additional charge applies

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

Opening Keynote: 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, 20112:05PM – 3:00PM

Keynote Address: 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 LeadershipProgram Day

Keynote Speakers

FIC

04

-08.

11

Register now at IndustrySummit.com o

FIC05-61summit_3pp.indd 2-3 6/3/11 5:51:10 PMFI0611legal.indd 38FI0611legal.indd 38 6/3/11 5:55:13 PM6/3/11 5:55:13 PM

http://www.IndustrySummit.com

Kicking off on Monday, September 26

at 4:30pm, the 2011 Special Finance Conference, brought to you by Special Finance Insider, offers a separate agenda focused on

providing an unrivaled subprime auto fi nance education. From basic operations to advanced

deal structuring, benchmarking and more, Greg Goebel — along with experts from top

fi nance companies and suppliers — will outline a plan to leverage changes occurring in the subprime market! Visit www.IndustrySummit.com today to register or for more information, including the agenda, list of speakers and more!

Now entering its eighth year, the F&I Conference and Expo is the must-attend

event for dealers, sales and fi nance managers, trainers, agents and

fi nance executives. Targeted training sessions will cover all aspects of auto retail and fi nance, including management, lender relations, deal structuring, marketing, Internet and social media strategies, lead generation and much more! This

year’s event starts with a keynote address on Monday, September 26 at 5:10pm, followed by an evening reception and two full days of workshops, panel discussions, and a full exhibit hall — plus plenty of opportunities for networking!

F&I Conference and Expo

Special Finance Conference

Register by August 26 to take advantage of our early-bird discount!

Meet the F&I Conference Advisory Board!This team of experts put their heads together to build an agenda designed to help

front-end staff maximize profi ts in every aspect of their dealership operations!

Advisory Board ChairGregory ArroyoF&I and Showroom

George AngusTeam One Research and Training

Bob CorbinInnovative Aftermarket Systems (IAS)

Patrick DeMarcoRistken Software Services

David DuncanSafe-Guard Products International

Marv Eleazer Langdale Ford and F&I and Showroom

Jim Maxim Jr. MaximTrakTechnologies

Cory MosleyMosley Training LLC

Kelly PriceNational Automotive Experts (NAE)

Ronald J. ReahardReahard & Associates Inc.

Steve VeldkampGreat Lakes Companies

Tom WilsonRiverside Auto Group/Northern Motor Co.

Ricky WolfeInterstate National

m or call 800-576-8788 today!

FIC05-61summit_3pp.indd 2-3 6/3/11 5:51:10 PMFI0611legal.indd 39FI0611legal.indd 39 6/3/11 5:55:15 PM6/3/11 5:55:15 PM

http://www.IndustrySummit

FI0511cudl.indd 1 4/12/11 5:10:16 PM


Bottomliners

BMW GROUP FINANCIAL

Services now offers special-ized content on the Face-book fan pages of BMW Financial Services and MINI Financial Services. The BMW USA Facebook page, www.face-book.com/BMWUSA, has a dedi-cated BMW Financial Services tab, which directs consumers to infor-mation on fi nancing and products.

The MINI Financial Services Facebook page, www.face-book.com/MINIUSA, offers the “World of MINI” tab, which directs visitors to the MINI “Protection” viral

video, the MINI Financial Services Mobile Website, and the “Liquid Assets” game, which can be downloaded directly through a link to the iTunes App Store.

BMW Captive Offers New Facebook Content

IAS and DataDot Partner to Provide Anti-Theft SystemF&I AFTERMARKET PROGRAMS

provider IAS has added DataDot Dealer Services’ “microdot” system to its anti-theft product portfolio. Each microdot is the size of a grain of sand and is laser etched with a unique microscopic identifi cation code registered to a secure data-base and a network of insurance companies and law enforcement agencies, according to the com-pany. For more information, visit www.datadotdna.com.

Finance Express to Release iPhone, Android AppsFINANCE EXPRESS, A PROVIDER OF

Web-based fi nancial services for independent dealerships, has introduced iPhone and Android mobile applications. The apps were designed to allow dealers to scan VINs, evaluate vehicles, review ve-hicle history reports, create auction run lists and add vehicles to their in-ventory, according to the company. For more information, visit www.fi nanceexpress.com/mobile.asp.

ACC to Aid Dealers in Filing Oil Spill Prevention PlanAUTOMOTIVE COMPLIANCE

Consultants is working to assist dealers in certifying their EPA-man-dated Spill, Prevention, Control, and Countermeasure (SPCC) plans before the new regulation takes effect in November. Dealerships located near navigable waters or adjoining shorelines with indi-vidual, aggregate aboveground oil storage capacity greater than 1,320 gallons or buried storage capacity greater than 42,000 gallons are affected by the rule. For more information, visit www.compliantnow.com.

Polk Launches Loyalty Analytics ToolPOLK HAS LAUNCHED THE WEB-BASED

Loyalty Analytics Tool, which provides information on U.S. light-vehicle transactions in the last decade. The solution offers data on vehicle characteristics, including manufacturer, make, model and segment information; demographic information, such as age, gender, income or ethnicity; and standard geography, including national, state, designated market area and ZIP code. For more information, visit www.polk.com.

Product Feature

FI0611bottom.indd 40FI0611bottom.indd 40 6/2/11 4:14:39 PM6/2/11 4:14:39 PM

http://www.datadotdna.com

http://www.fi

http://www.fi

http://www.compliantnow.com

http://www.polk.com

http://www.face-book.com/BMWUSA



http://www.face-book.com/MINIUSA




we are.

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

Company Phone Web Page

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

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

AUL Corp. 800-826-3207 aulcorp.com 15

CARLAW Auto Dealer Suite 877-464-8326 counselorlibrary.com 41

Chem Etch Manufacturing Inc. 877-564-2565 chemetchmfg.com 42

CNA National 800-345-0191, ext. 720 cnanational.com C2-1

Continental Warranty Inc. 215-512-5596 continentalwarrantyltd.com 42

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

DealerLink 800-890-8850 dealerlink.us 17

Friendly Finance Corp. 800-872-2877 friendlyfi nancecorp.com 27

Industry Summit 800-576-8788 industrysummit.com 37-39

Innovative Aftermarket Systems (IAS) 800-346-6469, ext. 8989 smartdealerproducts.com 3, 43

JM&A Group 800-553-7146 jmagroup.com 42

NAC (National Auto Care Corp.) 800-548-1875 nacsolution.com 7

National Automotive Experts 800-810-8859 nationalautomotiveexperts.com 9

Old Republic Insured Automotive Services Inc. 800-331-3780, ext. 7386 orias.com 29

Protective 800-794-5491 protectiveassetprotection.com 11

Reahard & Associates Inc. 866-REAHARD go-reahard.com 5

Resource Automotive 800-527-3448 resourceautomotive.com 22-23

United Car Care 800-571-6412 unitedcarcare.com 25, 42

United Development Systems Inc. (UDS) 800-282-1154 udsealerservices.com 21

Warrantech 800-833-8801 wtcookie.com C3

Wise F&I 800-849-1080 wisefandi.com 29

Zurich 877-368-7513 zurichna.com/fi s 13

Ad Index

FI0611index.indd 41FI0611index.indd 41 6/3/11 3:51:26 PM6/3/11 3:51:26 PM


Products


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

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FI0611warrantech.indd 1 5/18/11 8:56:37 AM


A new report shows that consumers are favoring stylish accessories over utilitarian add-ons, with upgraded exteriors, upholstery and electronics leading the way.

W ith the economy on the

rebound, the accessories

market seems to be fol-

lowing suit with steady progress in

the fi rst quarter of this year. A new

trend report reveals that many of

the top-selling items boast a wallet-

friendly price point, indicating that

car shoppers are ready to buy acces-

sories if the price is right.

San Francisco’s AddOnAuto

(AOA), an accessories sales solution

offered by izmocars, surveyed 140

dealerships across the United States

to compare accessory sales in the fi rst

quarter of this year. The survey found

that factory exterior, upholstery and

electronics led all categories in vol-

ume, revenue and profi t.

With accessory sales at dealer-

ships reaching $9.6 million for the

fi rst quarter of this year, AOA says

auto dealers have already sold half

their total accessory sales for 2010

($20 million). Average gross profi t

and net profi t margins on accessory

sales have remained fairly consistent

with last year, rising from 45 to 46.4

percent and from 28 to 32 percent,

respectively.

The top-ranked add-ons in the

parts category by sales volume were

splash guards, cargo trays and remote

starts, all of which feature relatively

low price points. Consumers also

tend to gravitate heavily to electronic

add-ons, helping the category to se-

cure the No. 1 spot in overall dealer

profi ts for the fi rst quarter.

Remote starts led all electronics

by volume, revenue and profi t, and

proved to be increasingly popular at

dealerships in regions with colder cli-

mates. Security systems also placed

high on the electronics list, landing in

the No. 2 spot for profi t. The category

also captured notable rankings under

volume and revenue. Keyless entry

was another top seller in electronics

by volume.

The report also showed that climate

greatly infl uences which products sell

best in certain locations. Considering

that remote starts topped electronics

sales, it’s no surprise that electronics

were the volume leaders in the colder

Mid-Atlantic and Midwest regions.

In the South, window tint led the

pack but didn’t land in the top fi ve for

any of the other areas. Factory exteri-

or and body side moldings were con-

sistently popular sellers across every

region surveyed.

As for the most accessory-friendly

brands, the study found that Toyota

and Honda lead all OEMs in revenue

and profi t per sale. Fellow import

brands Acura, Lexus and Scion

rounded out the top fi ve, removing

Ford from its 2010 rank as one of the

best-dressed makes. Surprisingly,

trucks were not among the fi ve most

accessorized models, which could be

attributed to inconsistent gas prices

around the country.

Style Trumps Utility in Accessory Sales

Industry Trends

Top 10 Accessories Categories, Q1 2011

RANK BY VOLUME BY REVENUE BY PROFIT

1 Factory exterior Upholstery Electronics

2 Window tint Wheels Step bars

3 Floor mats Step bars Upholstery

4 Factory interior Electronics Wheels

5 Roof racks / cargo carriers Body side moldings

6 Dealer packages Factory exterior

7 Body side moldings Navigation Paint protection

8 Electronics Video Dealer packages

9 Step bars Paint protection Video

10 Spoilers Window tint Navigation

Top 10 Electronics, Q1 2011

RANK BY VOLUME BY REVENUE BY PROFIT

1 Remote start Upholstery Electronics

2 Back-up sensor Bluetooth Security system

3 Audiovox remote start Security system Bluetooth

4 Security system Back-up sensor Wheels

5 Keyless entry Back-up camera

6 Keyless entry Factory exterior

7Remote start

and alarm system

Parking assist sensors

Paint protection

8 Remote start with light

Vehicle intrusion program Viper 5101

9 Universal back-up camera Fog lights Video

10Pursuit keyless entry remote

start

Audiovox remote start

Rearview mirror with

camera

FI0611trends.indd 44FI0611trends.indd 44 6/2/11 4:28:14 PM6/2/11 4:28:14 PM

When cookie cutter coverage just won’t do.Vehicle service contract coverage on the customer’s terms.

CustomEdge

Let Warrantech work for you. Warrantech

An AmTrust Financial Company

For all your VSC needs, choose Warrantech.CustomEdge: Consumers choose their own coverage terms.

Extended powertrain coverage.

Extended non-powertrain coverage.

Comprehensive pre-owned vehicle coverage.

A dealership training and income development program.

A comprehensive VSC for used vehicles with month-to-month payment terms.

Coverage for repair labor costs offered through the Service Department.

Provides a method for developing a personal asset for retirement and estate planning.

FI0611warrantech.indd 1 5/18/11 8:56:37 AMFI0611trends.indd 993FI0611trends.indd 993 6/2/11 4:28:15 PM6/2/11 4:28:15 PM

FI0611cover.indd 994FI0611cover.indd 994 6/3/11 4:05:34 PM6/3/11 4:05:34 PM

F&I and Showroom June 2011

Documents

Transcript of F&I and Showroom June 2011