Working Smarter in Today's Market
Some people may feel that the special finance market is dead. Even a friendly competitor, a magazine that has long supported the SF segment, shocked me by disappearing as a stand-alone publication and indicated in a letter to its readers that it would return once “people begin buying, and lenders lend.”
Quite frankly, that one stunned me. Certainly, the market is more difficult than a couple of years ago, but the thought that the SF market has died and gone away is just flat wrong. As I said about 12 months ago, finance companies have rethought the way they are advancing money on subprime deals, which ultimately results in a SF climate that feels more like 1995 than 2009. However, money is still available, finance companies are still making loans and certainly SF departments that are in the game are still selling cars.
Has the market claimed some dealers, departments and finance companies? Certainly, it has, but that happened in the mid- to late-90s as well. Maybe it didn’t happen to the same magnitude from the dealer ranks, but if you looked at the number of finance companies that failed or were forced to merge during that time frame, it was likely more than today.
Certainly when a company like AmeriCredit is forced to shave its originations by nearly $8 billion in the period of about 12 months, that alone has a massive impact on the market. That equates to about 500,000 loans a year, or nearly 42,000 per month. But all of that business doesn’t disappear, and indeed, most of my clients and dealer friends are working smarter and have managed to retain their entire market share—with some even posting impressive gains.
Working smarter is the key. There’s new technology available to help you find the best inventory that matches the finance companies’ programs you work with, structure deals in order to maximize profits, optimize the number of leads you are able to generate, and ensure the leads you are buying are the best quality and are worked in an systematic process to guarantee maximum results.
Working smarter is also realizing that those dealers who focus on only one type of customerhave been hit the hardest in the past year. Some dealers who focused solely on SF suddenly lost the majority of their subprime finance sources and were left in the lurch. Others who focused solely on the sale of new or used vehicles to prime credit customers have found it very difficult to work with the tsunami of new subprime buyers and tighter prime guidelines and advances. The results of both of those situations have been devastating. Now more than ever, especially in the all-important used car business, it is crucial to be able to sell and finance every opportunity. It takes working smarter to do just that.
To that end, we’ll still be here, and we will also be in Dallas, Texas, August 9th through the 11th for the 2009 Special Finance Convention. Over the last two years, nearly 400 of the best SF dealers and managers, along with the finance companies and vendors that move the market, have convened with the best SF trainers in the country to share techniques and methods to allow them to continue to reap the benefits of the subprime market.
I am proud to say of those dealers who attended in 2008 (and continue to report their SF results to me), nearly all have retained their SF market and valuable gross profits. Often, the needed ideas or information come from sharing ideas with other SF dealers or managers who have experienced the same obstacles.
Working smarter is also why we are going back to the Fairmont Hotel in Dallas. I have had dealers or managers ask, “Why not Las Vegas?” My answer is simple. We have such a jam-packed agenda and every item on it is important. Additionally, many of the major finance companies servicing the SF market are based in or have large regional offices in the Dallas-Ft. Worth area. It is verybeneficial for dealers and managers to be able to interact with these companies. Come to Dallas to work hard and learn, so you can make the money to go play where you want (i.e., Las Vegas).
There are some really exciting things happening in the subprime market, and I have been fortunate to be privy to some of these developments while they have been in the planning stages. I have talked to dealers involved in beta tests, and the results have been very positive. I am sure you will see these programs roll out in the coming months and they will certainly be covered in Dallas. Additionally, with dealers increasingly considering dealer-owned finance and lease companies, we will add a track to our convention that will feature subprime leasing and what it takes to be successful.
Mark August 9th – 11th on your calendar now, and plan to be in Dallas, Texas. Whether you are trying to maintain your edge, regain that lost touch, or approach the subprime market for the very first time, there will be a mountain of information for you.
In the meantime, attack the market with a positive can-do attitude. You may be surprised at the results! Of course, feel free to drop me an e-mail with any questions I might be able to help you with.
Until next issue,
Great selling!
Vol. 3, Issue 3