Texas Independent Automobile Dealers Association executive director Jeff Martin joined senior editor Nick Zulovich for a conversation about how operators in the Lone Star State are faring during the coronavirus pandemic.
Martin also recapped how TIADA is making adjustments to modify its popular summertime conference to a digital format.
To listen to the episode, click on the link available below, or visit the Auto Remarketing Podcast page.
Download and subscribe to the Auto Remarketing Podcast on iTunes or on Google Play.
America’s Car-Mart is looking to show that COVID-19 won’t deter the chain of buy-here, pay-here dealerships. Coming off a new company record for annual revenue, Car-Mart opened another dealership on Monday after beginning the current fiscal year by relocating its corporate headquarters.
Now based in Rogers, Car-Mart currently operates 149 dealerships after opening the 38th location in its home state of Arkansas. The store in Cabot is to be managed by Dennis Johnson with the assistance of Chris Martin.
“A great deal of thought and foresight is placed on our decisions about where to grow. We select communities where we believe we can fill a void when it comes to what we offer at Car-Mart,” president and chief executive officer Jeff Williams said in a news release
“We’re different from traditional dealerships. In addition to providing quality, used vehicles we also provide financing and exceptional service after the sale,” Williams continued. :We are committed to providing peace of mind for our customers and we believe communities are better when we are there.”
Cabot is situated less than 30 miles northeast of Little Rock, the capital of Arkansas. This new dealership is located at 177 Arena Road.
“We’re excited about joining the Cabot community. It’s a growing area with a lot of potential,” Johnson said. “At Car-Mart, we offer a unique buying process for our customers where it’s not just a purchase, but an experience. We get to know our customers and work closely with them on flexible financing that meets their needs and budgets.”
Recent annual performance and pandemic-related financial actions
Car-Mart reported that revenue for its 2020 fiscal year came in at a new record of $196 million. The company said it retailed 52,914 vehicles during the fiscal year that ended April 30, representing a 5.3% lift year-over-year.
Chief financial officer Vickie Judy explained several movies Car-Mart made to “ensure financial flexibility during this unprecedented time.” In a news release, Judy noted that the company took a $30 million draw on its revolving credit facility and significantly reduced expenses during the last half of the fourth quarter, including part-time and hourly payroll as well as other non-associate related expenses.
As a result of these efforts, Judy said Car-Mart closed its fiscal year with a cash balance of $59.6 million and its debt, net of cash, to finance receivables stood at 25.1%, compared to 27.8% the end of the prior fiscal year.
“We have also taken advantage of deferring the employer share of Social Security payroll taxes as permitted under the CARES Act,” Judy said. “Although we reduced hours for certain associates, we are happy to say these measures have allowed us to maintain workforce engagement with no disruption to associate benefits.
Judy also mentioned Car-Mart increased its allowance for credit losses from 24.5% to 26.5% resulting in an $11.7 million pre-tax charge to the provision in the fourth quarter.
“For the safety of our customers and associates, we suspended certain collection activities, including personal visits and repossession efforts, for a period of time during the pandemic,” Judy said. “This resulted in a lower amount of net charge-offs as a percent of average finance receivables for the quarter.
“However, COVID-19 has impacted our customers and resulted in increased past-due amounts as a percentage of receivables, resulting in uncertainty of how customers pay and react in this new environment,” she continued. “We are very focused on working with our customers to keep them in their vehicle and on the road.”
Moves to keep retail activities in motion
To keep dealerships active, Williams also highlighted that Car-Mart launched curbside and home delivery as a result of the COVID-19 pandemic. He mentioned the company also increased its digital efforts, “which included expanding communications channels with our customers to ensure they know how much we care about them individually.”
Williams said, “In our nearly 40 years of business, we have weathered many storms, but through them all, we were steadfast in our focus on the customer experience, ‘Keeping our Customers on the Road and giving them Peace of Mind.’ Our commitment to our customers has never been stronger, and during these challenging times, we moved even closer to our customers and united together as a family. We are a small-town character lender and really stepped up and walked the walk by truly living out our company’s mission, vision, and values in our daily work.
“Our company has most certainly prioritized the safety and well-being of our associates and customers during the pandemic. We will continue to be diligent and aggressive in educating ourselves and our team members on ways to help prevent or reduce the risk of exposure to the virus,” Williams went on to say.
The Car-Mart leader also touched on the performance of the company’s staff and dealership personnel during the pandemic.
“Words can’t express how proud I am of our associates, and how our team continues to rise to the occasion in the face of maybe the greatest healthcare crisis and most certainly the largest financial disruption in the history of our country,” Williams said. “The fact that we deeply understand our company’s purpose is carrying us through this crisis and will set a firm foundation for us to continue our path of serving more customers with great vehicles and excellent customer service.
“Thank you to our Car-Mart associates for taking care of each other and our customers, and for improving the communities in which we do business,” he continued. “I am grateful for the hard work, dedication, and compassion of our associates. Their caring and compassion is making a real difference in the lives of so many good people facing increased financial and personal challenges in these trying times. I am in awe of the great people we have in this company and I am humbled to be part of the team.”
Details of new company headquarters and future investment
And at least part of that Car-Mart team will be completing its tasks in a new workplace.
Just before after Memorial Day, Car-Mart relocated its corporate office from Bentonville to a larger facility in Rogers to accommodate continued business growth. The new office is located at 1805 N. 2nd Street in the Benchmark Group Building.
“This move represents a significant milestone in the growth and evolution of our company,” Williams said. “We’re growing and we need a bigger space to accommodate our associates, and to foster a more productive work environment.
“For the first time in a long time, we will have all of our corporate associates in the same facility,” Williams continued. “This move will allow us to be more efficient and better serve our dealerships and our growing customer base. The new location features improved workspaces that will help to facilitate internal and external collaboration and communication. We’re excited to join the Benchmark Group in their beautiful building and to be a part of downtown Rogers.”
Judy pointed out how Car-Mart made this move without damaging its financial statement. She said the company finished 2020 fiscal year ended by adding $77.9 million in receivables, a repurchased $16.0 million of its common stock, and funded $5.5 million in net capital expenditures, a total of $99.4 million, with only a $4.8 million increase in debt net of cash.
“We will continue to remain focused on cash-on-cash returns and maintaining a strong balance sheet,” Judy added.
Furthermore, Williams mentioned some of the other investment paths Car-Mart might take.
“We will keep investing in our business, including recruiting, training, and retention of quality associates. We will be diligent in improving our operations, with significant emphasis on our vehicle inventory. And we will put a laser focus on delivering an exceptional customer experience. That is why we believe our company’s future is very bright,” Williams said.
“We expect disruptions in the consumer credit markets and in-vehicle supply channels to present positive opportunities for our business and we intend to be ready to leverage our position moving forward. As we have said, we believe that most of our dealerships can serve 1,000 or more customers over time and we have significant opportunities to gain market share from our existing locations,” he continued.
“In addition, new lot openings and strategic acquisitions are expected to be part of our plan as we move forward. The market we serve is large and our growth will be at a rate that aligns with our ability to serve our customers after the sale at the highest level of service,” he went on to say.
At least initially, federal government intervention to help individuals and business hit financially by the coronavirus pandemic have made a positive impact in terms of bankruptcy filings.
But experts suspect conditions will deteriorate in this part of the financial world as those assistance packages expire.
According to data provided by Epiq, the American Bankruptcy Institute (ABI) reported that the 39,969 total bankruptcy filings in May were down 42% from the 68,860 total filings in May of last year.
ABI also pointed out the total consumer filings decreased 43% in May, as the 37,391 filings fell from the 65,302 consumer filings registered last May.
Meanwhile, Epiq’s data also showed total commercial filings declined 28% in May, as the 2,578 filings were down from the 3,558 commercial filings completed in May of last year.
“Companies that tried to shore up their balance sheets at the beginning of the year represent the initial wave of chapter 11s due to the economic crisis brought about by the COVID-19 pandemic,” ABI executive director Amy Quackenboss said in a news release.
“The CARES Act and other swift government measures have been successful in keeping consumers afloat during the crisis,” Quackenboss continued. “As this relief runs its course, however, mounting financial challenges may result in more households and companies seeking the shelter of bankruptcy.”
Looking at a sequential comparison, ABI noted total bankruptcy filings in May constituted a 4% increase over the 38,444 total filings recorded in April. Total noncommercial filings for May also marked a 3 percent increase from the April noncommercial filing total of 36,151.
Officials said the average nationwide per capita bankruptcy filing rate in May came in at 1.98 (total filings per 1,000 per population), a decrease from the 2.09 filing rate during the first four months of the year.
Average total filings per day in May stood at 1,998, a 36% decrease from the 3,130 total daily filings in May of last year.
ABI shared that states with the highest per capita filing rates (total filings per 1,000 population) in May included:
1. Alabama (4.66)
2. Tennessee (4.05)
3. Delaware (3.90)
4. Mississippi (3.64)
5. Georgia (3.45)
ABI has partnered with Epiq, a leading provider of managed technology for the global legal profession, in order to provide the most current bankruptcy filing data for analysts, researchers and members of the news media.
Ken Shilson of Subprime Analytics made his podcast debut to discuss one of his favorite industry endeavors — the annual buy-here, pay-here benchmarks that can give dealers of all sizes a barometer about a host of operational segments.
Shilson also delved into a series of recommendations aimed at helping BHPH dealerships navigate through the coronavirus pandemic.
To listen to this episode, click on the link available below, or visit the Auto Remarketing Podcast page.
Download and subscribe to the Auto Remarketing Podcast on iTunes or on Google Play.
CliftonLarsonAllen (CLA) understands operators’ accounting activities became much more complicated this year if they participated in the federal Paycheck Protection Program (PPP).
To provide crucial assistance, CLA recently announced new solutions to help borrowers tackle loan forgiveness.
PPP guidance is released frequently, and the related calculations are complex as a new law was signed by President Donald Trump just last week. CLA is offering forgiveness packages to guide borrowers and lenders through the process effectively and efficiently. The forgiveness packages involve innovative tools and virtual consultations with experienced professionals from across the nation to reduce the stress of the process.
“The forgiveness application and related support package is the most important step in the PPP process,” said Elly Barrineau, managing principal of CLA’s specialized advisory services practice.
“We’re here to help, whether it’s a short consultation with an experienced professional to get you started, or with full support throughout the process. Best of all, our virtual meetings mean you can work with us from the comfort of your home,” Barrineau added in a news release.
CLA emphasized that it has detailed knowledge of the entire program, from the PPP loan application and documentation to providing guidance borrowers need to navigate the benefits and understand the risk landscape.
The CLA forgiveness tool can guide borrowers through the detailed PPP loan forgiveness calculations and supporting documentation that goes with the forgiveness application. During online meetings, CLA professionals can help borrowers understand what portions are mandatory versus elective.
Some packages include access to CLA Intuition 2.0, a scenario-modeling tool that can allow users to plan ahead and respond effectively to changes during challenging times. In addition to bringing financial clarity, the interactive modeling dashboards show the financial impact of decisions under various scenarios.
“The real power comes in consulting with knowledgable professionals who have a dedicated focus on the PPP,” Barrineau said. “No tool alone can bring enough clarity around the PPP rules and process. The CLA team picks up where a tool leaves off.”
Experienced professionals can help borrowers plan an organized approach to completing Form 3508 and assembling the necessary supporting records. The CLA team can also help borrowers evaluate the most advantageous approach to counting FTEs between the standard and simplified methods.
CLA’s forgiveness packages were designed to match the support borrowers need with a level that brings the most value.
CLA offers financial tools to help lenders and borrowers navigate PPP loan forgiveness. CLA professionals also share updates and insight as part of their COVID-19 resource center and on their livestream series.
To learn more details, visit claconnect.com.
The National Independent Automobile Dealers Association is making a host of modifications for its 74th annual NIADA|NABD Convention and Expo because of the coronavirus pandemic.
First, NIADA said the event has been rescheduled for Sept. 21-24 at the Wynn Las Vegas, instead of its original dates this month at the MGM Grand.
In addition, NIADA indicated the 2020 convention will be combined with the NABD Buy Here-Pay Here Subprime Conference, providing the specialized training necessary to prosper in the complex buy-here, pay-here business.
Furthermore, the association is offering a path for dealers to attend the events virtually.
“The used-car industry’s premier event will offer everything you’ve come to expect — and everything you need to come back strong after a difficult stretch,” NIADA said.
“That includes the best and most comprehensive education available for independent dealers, an expo hall featuring vendors offering the latest products and services to help your dealership succeed, special events and networking opportunities and awards celebrating the best of our industry,” the association continued.
NIADA explained the all-new digital package provides a password-protected platform allowing dealers to view livestreams of the convention’s general sessions and many of the breakout sessions, as well as livestreams of the industry leadership awards and the National Quality Dealer award ceremony.
That virtual option also includes livestream footage from the expo hall during its regular hours and access to the expo exhibitors — including the ability to schedule virtual appointments during the convention.
“NIADA has heard the concerns of dealers across the nation and created the digital package to give dealers a chance to be part of the convention without having to get on a plane and take time away from their business,” the association said. “It allows them to get the convention’s educational benefits and meet with Expo exhibitors while they work on their dealership to increase sales and bring staff back on board.”
A series of FAQs for both dealers and vendors as well as a path to register are available at niadaconvention.com.
Economic impacts related to the COVID-19 pandemic forced CarHop to diminish its dealership footprint.
The chain of buy-here, pay-here dealerships recently announced the closure of its two Pennsylvania locations in Carnegie and Pittsburgh. CarHop, which has offered special financing through its network of dealerships since 1996, pointed out its customers still can find service or support options through its website.
“Unfortunately, the effects of COVID-19 and the restrictions on sales have forced us to close operations after eight years in Pennsylvania,” CarHop director of marketing Eric Wanek said.
The company website indicated CarHop still has dealerships in 13 states, including:
California
Colorado
Idaho
Iowa
Kansas
Minnesota
Missouri
Nebraska
Oklahoma
South Dakota
Utah
Washington
Wisconsin
ComplyNet president and general counsel Adam Crowell recently debuted on the podcast to share how dealers are becoming more concerned about the health of their businesses than contracting the coronavirus.
Crowell, who oversees the compliance solutions and risk mitigation provider that developed a system with the National Independent Automobile Dealers Association, also discussed how insurance can play a role in helping operators navigate through the coronavirus pandemic.
To listen to this episode, click on the link available below, or visit the Auto Remarketing Podcast page.
Download and subscribe to the Auto Remarketing Podcast on iTunes or on Google Play.
States are slowly lifting stay-at-home restrictions, and independent dealerships are among the businesses now benefitting.
Employees are coming back to work and vehicles are beginning to roll over the curb more frequently as independent operators ramp up to get back to business, according to a new survey by the National Independent Automobile Dealers Association.
The NIADA COVID-19 Dealer Impact Survey of 846 independent operators conducted from May 9-14 — a follow-up to a survey orchestrated by NIADA a month earlier — found 63% of the dealerships that had furloughed or laid off employees a month earlier have started the process of bringing them back.
Overall, NIADA indicated 34% of the independent dealers said they are rehiring staff, 20% said they are not and 47% said the question was not applicable, meaning they had remained at a full-staffing level throughout the COVID-19 pandemic That was the same percentage as the previous survey.
According to the results released on Friday, 39% of operators who are rehiring said they had experienced no problems in doing so, but 31% acknowledged their employees were hesitant to come back because they were making more through the government’s enhanced unemployment benefits than they had made at their jobs, and 19% said fear of the coronavirus was an issue.
The survey also showed dealerships opening up again, with 44% doing business as usual (compared to 27% in April), 34% open by appointment only and 10% selling online only.
NIADA discovered just 11% of dealer survey participants remain closed temporarily — down from 27% — and 1% reported they have closed permanently.
“I am encouraged that the COVID-19 pandemic hasn’t put more dealers out of business permanently, as was originally feared,” NIADA chief executive officer Steve Jordan said in a news release. “Recovery and signs of life are showing, as 88% of dealers are open for business, with almost half open for ‘business as usual.’
“Unfortunately, open for business as usual doesn’t always mean sales have returned,” Jordan added.
Indeed, NIADA sales remain below pre-COVID levels for most dealers.
The survey showed 53% of the respondents said their sales were down 50% or more for the previous two weeks. Another 12% of dealers said their sales were back to normal levels, and 6% said sales were actually better than before the pandemic.
Rebuilding sales and customer traffic is by far the greatest challenge currently faced by independent dealers, cited by 38% of respondents in NIADA survey. The association noted that’s twice as many as the second choice, access to inventory at 19%, which was followed by funding and access to capital at 17%.
NIADA explained the funding issue has been lessened for some dealers by government relief programs such as loans from the Small Business Administration’s Paycheck Protection Program.
The association went on to mention the survey found 64% of dealers have received some sort of federal or state government funding. Of those who have not, 28% have applied and 4% have been approved. Another 8% said they were approved but told there was no money available.
To view the complete results of the NIADA COVID-19 Dealer Impact Survey, visit covid19.niada.com.
Kenny Atcheson is the founder and president of Dealer Profit Pros, which designs marketing and advertising programs for dealerships. Atcheson also is quite fond of baseball.
During this episode of the Auto Remarketing Podcast, Atcheson told senior editor Nick Zulovich about how dealerships should not stress over trying to “hit home runs” with their advertising campaigns during the coronavirus pandemic. Instead, Atcheson offered a variety of suggestions to keep stores of all sizes in the retail game.
To listen to this episode, click on the link available below, or visit the Auto Remarketing Podcast page.
Download and subscribe to the Auto Remarketing Podcast on iTunes or on Google Play.
