Of the more than 150 independent dealerships included in Equifax’s latest edition of the National Independent Automobile Dealers Association Business Confidence Survey, a total of 34 percent indicated an anticipation of adding personnel within the next year, even though the expectations for sales growth during the third quarter and beyond softened.

How independent and buy-here, pay-here dealerships might use additional human capital surprised John Giamalvo a bit when the vice president of dealer services at Equifax examined the survey data, which was released on Wednesday during the 2016 NIADA Convention and Expo in Las Vegas.

“What really struck me was the area on which they’re going to increase human resources assets really lacked in the area that they need the most — in the finance area,” Giamalvo told BHPH Report during a phone conversation. “That struck me because it’s completely contradictory to where the business has been going in that space where I would suggest that’s the area that needs to be bolstered the most.”

According to the survey polling dealers during the second quarter of this year, only 4 percent of participating operators who intend to increase their workforce plan to bolster the finance department. The majority (53 percent) expect to reinforce the sales team while another 39 percent plan to increase personnel in the service department.

BHPH Report asked Giamalvo to consider why independent dealers are not pushing more staff into the finance department.

“I think there’s a little bit of legacy here where I think the independent and buy-here, pay-here space looks at traditional finance outlets and having to staff up for those areas, they don’t really look there,” he said.

“When you consider the last 15 years or so, the used-car market has gone from maybe 10 percent or 15 percent using financing for the sale to now well over 50 percent,” Giamalvo continued. “When you consider that, there might be a little legacy there. Certainly you need to have a well-thought-out finance department in place when half of the cars you’re going to put over the curb require financing to do so.”

Beyond what Giamalvo mentioned, Equifax highlighted three other major findings from the latest survey, including:

• Outlook for retail sales growth for the third quarter (44 percent) was less optimistic when compared to the growth expectations for the second quarter (56 percent), while there was an increase in the number of respondents who thought sales would remain the same.

• 48 percent of respondents anticipate their customer traffic will remain consistent, and 51 percent believe overall economic conditions in the auto industry will stay the same.

• 95 percent of dealers plan to maintain or raise their investment in digital marketing, with 30 percent expecting to decrease their spending on traditional media.

“While there are some indicators that show slightly less growth, dealers still see the industry as stable and the fact that investment levels across different marketing channels has increased is a sign that shift to digital and its potential, is a reality,”  Giamalvo said.

While Equifax and NIADA have worked together on this survey for some time, it wasn’t until this week that the finding were distributed publicly. Giamalvo explained why independent and BHPH dealers should watch what these trends are doing.

“Independent and buy-here, pay-here dealers don’t have the benefits of the resources from the manufacturers and the benefits of the captive lenders, which tend to be massive and capable of moving the market,” he said. “The independent market and buy-here, pay-here dealers, they don’t have those resources and they don’t have those insights that can be provided by the manufacturers.

“The ability to move the needle that the manufacturers can provide with incentives and what the captives can do by buying deep,” he continued. “The captives buying deep is what’s eating into the buy-here, pay-here market quite a bit. They’re buying deep to move new cars.

“I think the independents and the buy-here, pay-here dealers responding to these surveys and understanding what you’re feeling in one state is aligned with what your brethren is feeling in other states as it relates to the issues these fellas are facing whether it’s financing or compliance, inventory issues, NIADA does a great job of crowd sourcing this information so they can focus in on the pain points and provide the thought leadership and disseminate it,” Giamalvo went on to say.

Equifax and NIADA conducted a presentation on Wednesday where experts from both organizations drilled deeper into the survey results. A video recording of the session can be found soon at www.niadatv.com.

“Partnering with Equifax on this quarterly business confidence survey has allowed us to gauge the pulse of the industry and the needs of our 15,000-plus dealer members,” NIADA senior vice president of dealer services Scott Lilja said about the survey, which can be viewed online here.