Financing

J.D. Byrider promotes pair to be franchise consultants

With more entrepreneurs and franchised dealerships taking an interest in J.D. Byrider’s business model, the buy-here, pay-here chain recently promoted two of its employees to be franchise consultants.

Ascending into this role are Lewis Scott and Tim Bullock. This move aims to help J.D. Byrider continue in its growth mode, which included the opening of 12 locations last year and the anticipation of a dozen more joining the network this year.

“These two hires allow us more contact, more touches, more impact with our franchisees,” J.D. Byrider vice president of franchise sales and finance Jack Humbert said in a message to BHPH Report.

“Both Lewis and Tim are able and excited to provide operational value out of the gate,” Humbert continued. “We are thrilled to bring their capability and energy to the franchise system.”

Bullock is no stranger to J.D. Byrider, having served with the company for 11 years in positions such as branch sales representative, finance manager, managing partner, regional credit analyst, credit manager and most recently as general manager of the Beechmont branch in Cincinnati.

“Tim is a highly motivated and ambitious business leader with a strong track record of delivering strong results within highly competitive markets,” Humbert said.

Scott isn’t unfamiliar with J.D. Byrider, either, boasting six years of experience with the company as consumer credit analyst, branch underwriter, branch team lead and currently as general manager of the Greenwood branch in Indiana. He also spent a total of 13 years in various industry positions with Chrysler Financial, Wells Fargo Financial and AccuQuote. 

Humbert also mentioned Scott is an ethics teacher certified by the state of Illinois as well as a certified American Sports Education program coach.

Latest winners in NIADA Membership Drive Challenge

Along with highlighting its latest Bronze-level National Corporate Partner, the National Independent Automobile Dealers Association described how Dennis Pope of People's Financial Corp. in Mableton, Ga., “carried the ball across the goal line” to claim the top prize in the second quarter of NIADA's Membership Drive Challenge.

Pope led the association's football-themed membership campaign, which ran from November to January, by sponsoring 82 new members.

Other prize winners include Jayne Harris and Jenny Myrick of the Carolinas IADA, who brought in 44 and 40 new memberships, respectively. Julie Colgate of Independent Dealers Advantage in Suwanee, Ga., contributed 39 new members as Ohio IADA executive director Wendy Rinehart added 34 members and Debbie Braswell of the Carolinas ushered in 25 members.

The association indicated the winners will select from a group of prizes that includes

—Complimentary full registration for the winner and a guest to the NIADA Convention and Expo, coming up June 13 to 16 at the Mirage in Las Vegas
—An Apple Watch
—A GoPro 4 camera
—Autographed sports memorabilia from a team of the winner's choice
—A free subscription to NIADA's online dealer compliance training

NIADA mentioned the football membership campaign — part of a year-long membership initiative that began with a baseball theme — accounted for 380 sponsored new memberships, bringing the total from the first two phases to 614 new members.

The football promotion was followed by a basketball campaign that wraps up on Thursday. The membership drive’s last lap — an auto racing-themed promotion — begins in April and runs through May 15.

“NIADA’s membership initiative has been a tremendous success so far, but it is far from over,” NIADA president Frank Fuzy said. “Once again, I urge every member, every auction and every vendor to get involved so we can finish strong.”

AutoRaptor now a NIADA National Corporate Partner

In other association news, AutoRaptor, a provider of Web-based customer relationship management, Internet lead management, sales and marketing applications for independent dealers, teamed with NIADA to become its latest Bronze-level National Corporate Partner.

“Our partnership with NIADA has been an exciting way to give even more independent dealers of all sizes access to the most intuitive CRM platform in the market,” AutoRaptor director of business development Isaiah Osofisan said.

“Keeping pace with the needs of independent dealers has been our primary focus, and we're excited to be able to reach NIADA member dealers who are invested in technology for the continued success of their dealerships,” Osofisan continued.

“Too often dealers are left with ineffective options for their business and AutoRaptor's philosophy of simplicity coupled with a suite of powerful features, provides dealerships with a dynamic tool to capitalize on every opportunity and see a direct increase in profits,” he went on to say.

With a focus on leading edge technology for customer data management and through its partnership with NIADA, AutoRaptor is offering special setup and integration pricing for its full suite of CRM capabilities, including

—Lead assignment and sales workflow
—Texting
—Push and pull integration with many dealer management systems
—Inventory and website integration
—Mobile apps
—Email marketing

“AutoRaptor is a leading independent auto dealer CRM provider, with easy-to-implement, cost-effective, high-impact solutions," NIADA senior vice president of member services Scott Lilja said.

“AutoRaptor has been a longtime supporter of our industry and NIADA and I am pleased to announce their endorsement as our newest National Corporate Partner,” Lilja added.

For more information, including special NIADA member pricing, visit autoraptor.com or call (888) 421-6533.

Tax refunds $1.3B behind last year’s pace

Cox Automotive chief economist Tom Webb playfully pointed out via social media how much tax refunds are down year-to-date, according to the latest update from the Internal Revenue Service.

The IRS indicated that the agency has processed 65,441,000 refunds through March 18. That figure is off by 1 percent compared to where the IRS stood a year ago.

Thus far, the IRS has distributed $189.896 billion in refund money, a figure 0.7 percent lower than at the same point last year.

In a tweet, Webb said, “Hoping my refund — still waiting — will make up that $1.3 billion gap.”

If Webb’s refund is in fact that much, the sum would be incredibly higher than the average the IRS reported. The agency’s data put the average amount received by taxpayers at $2,902.

Also of note, the average refund for taxpayers who have direct deposit was slightly higher, according to the IRS’ year-to-date information. That figure stood at $3,045 as the IRS reported that it has sent $175.850 billion back to taxpayers so far this year through this method.

Manheim dissects what $5,000 buys at auction nowadays

A segment of Manheim’s 2016 Used Car Market Report asked a question most buy-here, pay-here operators consider when they scour the lanes or online platforms to find inventory not only that will turn but will last for the duration of the installment contract.

To answer the question of what $5,000 will buy, Cox Automotive chief executive Tom Webb acknowledged in the report that rising wholesale prices often triggers headaches for BHPH dealers since they need to find vehicles their customers can afford, but can run the term of the note with minimal repairs.

To give a sense of just how much wholesale prices have gone up over time in the lower price tiers, Manheim looked at the average mileage on auction vehicles that sold between $4,000 and $6,000 during the past 16 years. Back in 2000, if operators spent an average of $5,000 for a vehicle at auction they acquired a vehicle with 84,541 miles.

“Average mileage slipped over the following three years as wholesale supplies grew and the overall pricing environment weakened,” Webb explained in the report.

But between 2003 and 2014, Webb pointed out that the average mileage for the typical $5,000 wholesale vehicle purchase rose every year, except for the recession of 2008 and 2009. A year ago, Webb mentioned BHPH dealers got a slight reprieve as the average mileage on a $5,000 auction purchase dipped but remained above 120,000 miles.

During a conversation with BHPH Report, Webb elaborated about the kinds of vehicles that fit that price parameter nowadays.

“It’s certainly a mixed bag,” Webb said. “Certainly a vehicle with six digits on the odometer is really not an issue in terms of running the terms of the note if you have some feeling about its condition level. Some makes and models have better reliability over time than others.

“The buy-here, pay-here dealers, as you know, are extremely knowledgeable of those units,” he added. “Typically they’ll have some makes and models which are on their black list which they will not buy at all for those reasons. But with any model, the condition can vary quite substantially depending on how it was used or abused.”

BHPH operators and other independent dealerships should benefit from the overall lift in wholesale volume, according to Manheim’s report.

As wholesale supplies grew a year ago, Webb explained independent dealers were better able to secure inventory that met the needs of their individual customer bases.

“As a result, unit sales grew considerably faster than in the prior two years, and at a pace that was higher than that of franchised dealers,” Webb wrote in the report. “Earlier in this cycle, many independents suffered as a result of a lower flow of wholesale units from franchised dealers, fewer desirable trade-ins, and reduced auction supplies.

“With all of those sources’ returning to normal volumes, independent dealers should have another good year in 2016, especially if all-important credit conditions remain favorable,” he went on to say.

7 key drivers for success during tax refund season

By the time this article is published, buy-here, pay-here dealers will be well into the 2016 tax refund season. The good news is that tax refund advances are back for the first time since 2012.  The bad news is that refunds are tracking behind schedule through February, but are starting to “trickle through” as we head into March.

Will the 2016 tax refund season be a boom or a bust for your BHPH business?   Many BHPH dealers forecast for as much as 40 percent of their annual sales to be generated during the tax refund season. The most successful BHPH dealers plan ahead for this time of year in several facets of their business. 

Many will ramp up vehicle inventory levels in anticipation of increased sales numbers. Some will implement a tax refund program to process tax returns directly from their BHPH location. Others will change their advertising message to encourage customers to use their tax refund as a down payment on a newer vehicle. Still others will use a tax refund to help customer bring their delinquent loan payment to current status by applying a portion of the tax return to the delinquent account.

However, just adding a large numbers of new loans during the tax refund season does not translate to success in a BHPH operation. Collecting on those loans is where true success is measured, and that success may not be known for two or three years.

It’s the lure of a large down payment.

Most BHPH dealers will see a sharp increase in sales during the tax refund season. However, approving loans just to hit aggressive sales targets could actually backfire on a dealer in the BHPH business. Tax refund season means that customers will generally have larger down payments compared to other times of the year. 

A recent survey of BHPH dealers showed that a large percentage of dealers would let a large down payment influence their loan approval decision. Some dealers feel that a large down payment gives the customer “skin in the game”, and as a result the customer is less likely to default on their loan. Other dealers believe there is no direct correlation between the amount of down payment and the likelihood the customer will default on their loan.

These dealers believe that the down payment and the customer’s ability to pay should be evaluated separately.

With those factors in mind, here are the seven key drivers to success during the tax refund season. The most successful BHPH dealers will tell you that one of the keys to success during the tax refund season is to maintain discipline in the underwriting and verification guidelines that you have established. In addition, the following key drivers to success also apply:

1. Don’t take shorts cuts to approving a loan application because of a large down payment.

2. Don’t skip steps in the underwriting process such as pulling a credit report, getting a loan application with three years prior history on residence and employment, and getting a minimum of five references with verified phone numbers.

3. Don’t put the customer in too much payment.  A large down payment should be used to improve deal structure (lower the payment, shorten the term) but not to approve a loan.

4. Calculate a net pay to payment ratio before a loan decision is made to verify the customer can afford the payment. One of the most common mistakes BHPH dealers make is putting the customer in more payment that they can afford.

5. Don’t let installing a GPS or starter interrupt device influence your loan decision. A customer with a high net pay to payment ratio or poor job or residence stability will be a problem customer regardless of installing a GPS or SID device.

6. Insist on getting a co-buyer on the loan application with every opportunity.  The co-buyer provides an additional layer of security to protect the loan payment from going into default.

7. Don’t be too quick to pull the trigger on repossessions. Most BHPH customers will struggle with their loan payment at some point during the term of their loan.  They may need frequent payment arrangements to get their account back to current status. The most successful BHPH dealers will work with their customers, keeping them in the vehicle and making payments.  For these dealers, repossessing a vehicle is the last option.

The tax refund season can provide a big boost to a BHPH dealers annual business results.  However, big sales numbers during tax refund season can be deceiving.  The key to success in BHPH financing is not just putting loans on the books, it’s collecting out those loans!

Mark Dubois is president of Dealer Performance and Consulting. He has more than 30 years of experience in the automotive business ranging from sales, dealership management, recruiting and training, e-business, marketing and BHPH management. His website can be found at www.dealerperformanceandconsulting.com, and he can be reached at (941) 729-2357 or dealerperformancellc@gmail.com.

5 data-driven strategies to acquire more customers

With more tax refund money coming into potential buyers hands, DealerSocket unveiled a five-step customer acquisition plan for independent and buy-here, pay-here dealers on Tuesday.

Backed by the company’s most recent internal data and a survey of dealerships nationwide, DealerSocket highlighted the plan covers what executives called “low-hanging-fruit strategies” that dealers can implement right away to attract and convert more leads.

“It’s tempting for Independent dealers working in the trenches every day to get ‘tunnel vision’ about their marketing efforts. If the numbers aren’t where they need to be, the automatic response is to just try harder,” said Matt Redden, chief marketing and sales officer at DealerSocket.

“Instincts and subjective observations are helpful, but dealers must also prioritize reliable, black-and-white data. It can reframe challenges and uncover solutions they may have never noticed otherwise,” Redden continued.

DealerSocket recommends implementing the following strategies for the quickest results in lead acquisition and conversion:

THE PROBLEM: Phone leads are underperforming.

With lower close rates, longer sales cycles and lower profit margins, phone-sourced leads provide tremendous opportunities of growth. Independent dealers take 37 percent longer to close phone leads whereas franchised dealers only take 18 percent longer. In addition, phone leads result in a mere 14 percent of independents’ sales. Perhaps most challenging of all, phone leads bring in about $307 less profit per sale than other lead sources. 

THE SOLUTION: Focus on phone training and call management efficiencies.

DealerSocket estimated independent dealers can make an average of 2.86 outbound calls to each phone prospect, while focusing more time on floor leads (4.13 calls) and Internet leads (3.82 calls). As a result, phone leads have only a 5 percent close rate. Implementing phone sales training and call management technology can help narrow the competitive gap with franchised dealers. 

THE PROBLEM: Traditional marketing no longer works.

Radio spots, TV ads, billboards and tent sales are mainstays of most dealerships’ marketing plans. But the ROI just isn’t there anymore. Conventional media now bring in an average total profit of $1,702 per vehicle, while digital marketing rakes in $2,514 per sale. In today’s increasingly digital world, dealers must relinquish preconceived ideas and embrace the media that work.

THE SOLUTION: Digital media results in more sales and costs less.

In many cases, DealerSocket said a lower price translates to lower performance. But executives insisted it’s just the opposite with digital marketing, which includes websites, social networks, email, smartphones, tablets and kiosks. According to DealerSocket data, it costs $150 of digital marketing to sell one car. Compare that to $1,581 of traditional media. If you stick with conventional methods, you’ll pay 10 times more than necessary.

THE PROBLEM: Third-party lead generation can be expensive.

Some dealers believe they must directly pay for more leads. They don’t think they can produce new prospects organically through resources already in place. While third-party lead generators can certainly work, the question boils down to cost effectiveness.

THE SOLUTION: Optimize your website for maximum visibility and efficiency.

DealerSocket determined about 35 percent of independent dealers’ leads arrive through their website, making it the No. 1 lead generator today. The company added it’s also one of the easiest to optimize for even more impressive results. Invest in organic search engine optimization and marketing so customers can find you. Also keep in mind that inventory pages are the most visited section of any dealer website. They should be well organized and fully searchable, while offering multiple calls to action so you can secure more leads.      

THE PROBLEM: Digital efforts do not account for user demographics.

Many businesses — dealers included — build websites for themselves rather than their end user. Do you know who is visiting your site, what they prefer in a user experience, and how your content displays on each person’s device?

THE SOLUTION: Pay special attention to mobile and tablet users.

Independent dealer websites can receive about half of their traffic from mobile devices and another 10 percent from tablet users. So DealerSocket suggested that dealers must prioritize responsive Web design that optimizes the user experience, regardless of how the user accesses the Internet.

Also, the company recommended that operators get to know their online shopper base, which typically consists of 65 percent males and 35 percent females. While age ranges are distributed fairly evenly, the majority of online shoppers are between the ages of 25 and 44.

THE PROBLEM: Many leads aren’t yet ready to buy.

Try as you might to bring in new customers, you may find that the majority of your leads are earlier in the purchase process – making it seem that even your strongest closing efforts fall on deaf ears.

THE SOLUTION: Leverage a data mining solution to boost trade-ins and intercept customers when they’re most likely to purchase.

DealerSocket acknowledged that data mining tools have long been a staple of the franchised dealer industry with about half of dealers using the technology. The results are clear cut — 75 percent of deals generated from a data mining solution result in a trade-in. On the contrary, DealerSocket noted only one out of every 10 independent dealers take advantage of data mining, and the small number of trade-ins follow suit (about 19 percent of deals).

The company explained today’s market includes affordable solutions geared specifically toward independents. By leveraging data mining to identify and target customers for vehicle buy-back programs, dealers can accomplish two desirable goals:

— Aid inventory acquisition efforts by purchasing quality vehicles from past customers.

— Increase sales as customers replace their old vehicle with a new one.

For more data-driven recommendations, operators can download DealerSocket’s free Independent Dealership Action Report here.

IRS says return system back up & running

The latest update from the Internal Revenue Service should calm concerns from buy-here, pay-here dealers looking for potential buyers to have income tax refund monies available for possible down payments or for current customers to get their contract out of the delinquency bin.

The IRS said late on Thursday that it resumed processing individual and business tax returns following a system problem.

The IRS emphasized that taxpayers do not need to take any additional steps or action due to the outage, including people who filed just before or during the outage. Throughout this period, officials indicated taxpayers were able to continue to send their tax returns to their e-file provider. These companies have already started sending these tax returns into the IRS.

The agency indicated it is continuing to examine the underlying cause of this week’s outage as well as monitoring any follow-up issues.  Officials emphasized that it's important to note that at this time this situation appears to be a hardware failure.

“IRS teams worked throughout the night and around the clock on this system outage,” IRS commissioner John Koskinen said. “Our processing systems are back in business.

“Taxpayers should see little, if any, impact on their tax returns or refunds,” Koskinen continued. “We apologize for the inconvenience this caused, and we appreciate the support and patience from taxpayers as well as our partners in the tax community and state revenue departments.”

The agency added that it anticipates that nine out of 10 taxpayers will receive their refunds within 21 days after being accepted by the IRS.

5 improvements to NIADA member services website

The National Independent Automobile Dealers Association made a major enhancement to the NIADA member services Web-based promotional platform.

According to what NIADA officials indicated on Thursday, the enhancement not only can make it easier for the association's 15,000-plus members to access benefit programs, but also is designed to add extensive new offerings.

The association explained the portal, developed in conjunction with BenefitHub, significantly expands the number of member benefit offerings, enhances navigation and ease of use, and makes it much easier to sign up for member benefit programs.

The new member services gateway offers:

— Expanded consumer-oriented member benefit offerings for personal use, including travel, electronics, dining, health/beauty, tickets, sports/outdoors, apparel and more

— Enhanced transparency of NIADA’s many member benefit programs

—  Improved user navigation

— A consolidated Member Services hub to eliminate user confusion while enhancing ease of use, understanding of special offers and the signup process

— Enriched capability for member benefit partners to develop new, innovative and compelling NIADA member benefit offerings

“Our valued member dealers will find this new member benefit program portal to be extremely user-friendly, making it easy to navigate and take advantage of the hundreds of exciting, leading-edge member benefit programs that allow them to save hundreds of dollars on both business and personal services and products,” NIADA senior vice president of member services Scott Lilja said.

“This innovative enhancement and resources allocation by NIADA clearly highlights our long-term commitment to ensuring members receive a robust return on their membership investment,” Lilja continued about the site that’s available at niada.benefithub.com.

This enhancement announcement comes on the heels of NIADA acquiring the assets Leedom & Associates.

J.D. Byrider honors 17 operators during annual awards program

J.D. Byrider recognized a total of 17 dealerships from 12 states as winners of the buy-here, pay-here store chain’s annual awards during its November convention in Orlando, Fla.

The company highlighted that its Franchise of the Year winners were chosen in three categories — Single (one location), Mid (two to three locations) and Multiple (more than three locations). The winners included:

• Single: Mike Marsh for his location in Traverse City, Mich.

• Mid: Mike Burgstone and team for their locations in Joliet, Glendale Heights, and East Dundee, Illinois. This is their second-consecutive Franchise of the Year award.

• Multiple: Russ Larson and team for his eight locations in Huntsville, Ala., Burlington, Cedar Rapids, Davenport and Des Moines, Iowa, Columbia and Springfield, Mo., and Omaha, Neb. This is their 10th-consecutive Franchise of the Year award.

J.D. Byrider also distributed 17 President’s Awards, which are given to individual locations based on store earnings, portfolio quality and customer service ratings. This year’s President’s Award winners are located in:

Alabama

— Tuscaloosa (2700 Skyland Blvd. E) – Steve and Jeanne Locklear, owners

Arkansas

— Sherwood (6055 Landers Rd.) – Mark Bedgood, Bill Evans, Matt Enderlin, Jeffrey Boone and Fred Nichols, owners

Illinois

— Joliet (2323 W. Jefferson St.) – Mike Burgstone, owner

Indiana

— Bloomington (2425 W. 3rd St.) – Terry Gerhart, Mike Bolin, Ben Becht, owners

Iowa

— Burlington (125 S. Roosevelt Road) – Russ Larson, Doug Stewart, Jeff Lee, Daryl Nelson and Gerod Meier, owners

— Davenport (925 W. Kimberly Road) – Sheila Schaub, Jeff Nickerson and Tedd Pless, owners

— Des Moines (2426 SE 14th St.) – Russ Larson, Jeff Lee, Doug Stewart, Daryl Nelson and Paul Newman, owners

Kentucky

— Owensboro (250 E 18th St.) – Jeff Anderson, owner

Massachusetts

— Dorchester (710 Morrissey Blvd.) – Trevor Wiggins, Jack Correia, Kelly Wiggins, owner

Michigan

— Traverse City (3536 North U.S. 31 South) – Mike Marsh, owner

Ohio

— Euclid (20941 Euclid Ave.) – Dennis Ange, owner

— Akron (777 Canton Road) – Chris McPhie, owner

— Mansfield (1810 W. 4th St.) – Chris McPhie, owner

— Wooster (4536 Cleveland Road) – Chris McPhie, owner

South Carolina

— Columbia (3815 W. Beltline Blvd.) – J.T. and Jonathan Gandolfo, owners

Virginia

— Roanoke (3141 Peters Creek Road) – Gary Duncan, owner

Wisconsin

— Appleton (2301 W. College Ave.) – Russ Darrow, Jr., owner

“We are extremely proud of each of this year’s winners,” said Tom Welter, vice president of franchising for J.D. Byrider. “They have risen to the top of our dealer community with their quality service to customers.

“These awards are a great reminder of the strength within our franchise system and our drive for improvement year after year,” Welter went on to say.

4 questions about potential Tax Refund Advance impact

Just before Thanksgiving, Tax Max highlighted a development that could positively impact buy-here, pay-here operators. After four years on the shelf, the banking industry has revived the Tax Refund Advance for 2016.

To help BHPH dealers take advantage of this opportunity, Chip Wiley — who is the corporate trainer and marketing specialist for Tax Refund Services and Tax Max — answered four questions he has received most about how the Tax Refund Advance is designed to function.

Where can customers get these refund advances? 

Dealerships need to contact their tax refund season company partner to verify if they are a participant in this program. Not all tax preparers will be participating as not all tax refund associated banks are expected to offer the Tax Refund Advance product.  Ask around, contact your state association, or contact national associations like NIADA or NABD for recommendations.

How can I benefit from this?

The obvious answer will be from the early influx of tax refund dollars into the market.  In the past two years, tax refunds started paying out between Jan. 29 and through Feb. 5.  Tax Refund Advances are expected to begin in the Jan. 15 through Jan. 22 timeframe.  Dealers “in the know” will have the advantage with the timing of their marketing.

People want their refund money yesterday, so the allure of a 24-hour check is a major draw. Dealerships that work directly with a tax refund partner stand to profit the most. These companies thrive on the success of the sale of the vehicle and increased down payments, thus creating an essential partner in this critical time of year. Being able to offer your customers the ability to get their hands on early tax season money is key. 

How much will this cost the customer?  How much will this cost the dealership?

Ask your tax refund partner company for more details.  Some Tax Refund Advance products come at no additional cost to the customer, no additional cost to the dealership, and with no credit checks.

Can I expect increased traffic from this?

That is up to you, your sales staff, your marketing, your online presence, and your vigilance to capture the tax refund customer.

If you are content with the business you attracted last year, then no, you should not expect and increase. In fact, your business should drop again this year. The significant beneficiaries will be the business owners who go after the customers and bring them in the door. This can be used as an opportunity for sales, repairs, collections, special payments, irregular payments or back-end product upgrades.

Remember, $750 is a lot of money, but customers will spend it faster than it arrived. Be proactive with the intent on seizing opportunities such as this one while your competitors sit on the sidelines. Many will not know this money is coming. It is your chance to steal market share.

X