The gap between averages associated with new-vehicle installment contracts and used-vehicle deals continues to widen, while the total amount financed as well as stretching terms are on the rise, too.
The industry reached a point on Thursday where Experian Automotive announced that the difference between the average monthly payments for new and used vehicles reached its highest level on record.
According to the latest State of the Automotive Finance Market report, the average monthly payment for a new vehicle in the second quarter of 2015 was $483, while the used was $361 — widening the gap between the two to $122, the largest margin since Experian began publicly reporting the data in 2008.
Furthermore, analysts determined the difference between the total loan amounts for new and used vehicles also increased significantly. On average, consumers financed $28,524 for a new vehicle and $18,671 for used — a difference of $9,853.
“As the price of new vehicles continues to rise, and the gap between monthly payments for new and used vehicles widens, we see more and more consumers looking for ways to keep their vehicle payments affordable,” said Melinda Zabritski, Experian’s senior director of automotive finance.
“This could be especially true for consumers who have the financial ability to pursue a new vehicle but may have sticker shock at the rising prices and don’t want the accompanying high monthly payments,” continued Zabritski, who again will be one of the presenters during the SubPrime Forum at Used Car Week.
Findings from the report also showed that consumers are continuing to extend their loan terms as a way to keep payments down, especially for used vehicles.
Experian indicated the percentage of used vehicles financed for 73 to 84 months increased by 14.8 percent from Q2 2014 to reach 16.1 percent — the highest percentage on record.
Additionally, analysts noticed new vehicles financed for the same term length climbed 19.7 percent from the previous year to reach 28.8 percent.
Leasing continues its popularity
During the second quarter, Experian found that consumers continued to select leasing as a popular option, as 31.4 percent of all new vehicles financed were leases, up from 30.2 percent the prior year.
According to the analysis, leasing terms also increased, with leases extending past the average of 36 months into the 37- to 48-month range increasing by 18 percent.
Moreover, Experian the average lease payment dropped $13 a month, going from $407 in Q2 2014 to $394 in Q2 2015.
“The automotive finance market continues to progress in response to consumer demand,” said Zabritski, who will be part of the collection of industry experts at Used Car Week that runs from Nov. 16-20 at the Phoenician in Scottsdale, Ariz.
“The availability of different financing options allows consumers to stretch their dollar and more easily find a vehicle that meets their budgetary needs,” she continued. “Lenders and automotive dealers also can benefit greatly from these trends by gaining insight that will enable them to take advantage of similar market opportunities in the future.”
4 other trends
Experian highlighted four other findings from its latest report, including:
• Used-vehicle financing is at an all-time high of 55.5 percent, compared with 53.8 percent the prior year.
• The total percentage of new vehicles financed in Q2 reached a record high of 85.8 percent, compared with 85 percent a year earlier.
• The average credit score for a new vehicle loan dropped two points from last year to reach 709. The average credit score for a used loan increased one point to 645 over the same time period.
• During the second quarter, the average interest rate for a new vehicle loan was 4.8 percent, up from 4.6 percent in Q2 2014. The interest rate for used-vehicle loans was 9.1 percent, up from 8.8 percent over the same time period.
In a move that came together since the companies do not have “philosophical differences on how to treat the customer,” Enterprise Car Sales now has the equivalent of a captive to help deliver its off-rental vehicles to buyers through a new multi-year, private-label agreement with Chase.
Under the agreement announced on Tuesday, Chase Auto Finance will be the private-label auto finance provider at more than 130 U.S.-based Enterprise Car Sales locations. Marketed and serviced under the name Enterprise Auto Finance, executives highlighted the offering will provide customers a financing experience that complements Enterprise’s award-winning customer service.
Officials indicated Enterprise Auto Finance will roll out later this year.
“Chase is pleased to provide Enterprise with a consistent source of funding and servicing as it continues to expand its car sales business,” Chase Auto Finance chief executive officer Thasunda Duckett said. “This is a great opportunity to deliver a world-class customer experience under the Enterprise Auto Finance brand.”
Chase has more than $60 billion in auto loans and leases for nearly 3 million customers in the U.S. and has relationships with more than 70 percent of all U.S. auto dealerships. The private-label path to vehicle financing certainly isn’t unfamiliar to Chase as it already has relationships with Mazda, Subaru, and Jaguar-Land Rover. But this week’s announcement marks Chase’s first alignment with a single retailer that might turn as much metal as Enterprise, which began selling used vehicles in St. Louis in 1962.
Bruce Jackson, head of retail lending at Chase Auto Finance, told SubPrime Auto Finance News, “We are always in constant dialogue with our clients about how we can better serve their needs and Enterprise is no exception.
“Enterprise has such a focus on customer service, as do we, so there really were no hurdles,” Jackson noted about the journey to this agreement. “It would have been tough if we had philosophical differences on how to treat the customer, but we did not, and the alignment will work well.
“The customer will have a consistent experience from Enterprise Car Sales to Enterprise Auto Finance. We will operate as an indirect lender for this program, just like we do for the other OEM programs we have,” Jackson went on to say.
Mike Bystrom, vice president of Enterprise Car Sales, explained why this program with Chase will help the company maintain its low-pressure, vehicle-buying experience and allows the Enterprise sales team to focus on that customer experience.
“We are excited to join with Chase to offer a private-label financing option for our customers,” Bystrom said. “We’ve enjoyed a strong partnership with Chase for many years. Our companies share a deep commitment to exceeding customer expectations, giving back to our local communities, supporting military veterans and their families, and putting the customer first.
“Chase is a natural fit to provide financing to our customers through Enterprise Auto Finance,” he added.
For more information about Chase Auto Finance, visit www.chase.com/auto-loans or www.chasedealer.com. For more information about Enterprise Car Sales, visit www.enterprisecarsales.com.
GWC Warranty chief executive officer and president Rob Glander insisted the company’s bread-and-butter customers are dealer clients who are those small- to medium-sized independent dealerships that might not move as much metal as the big franchised stores but still want to be successful.
So the vehicle service contract provider has been on a quest this year in particular being that its GWC’s 20th anniversary to give these operators all the tools necessary to make presentations, enhance customer relations and leverage technology.
“Basically, we want to reinforce our brand messaging that GWC is the best in class used vehicle service contract provider, and we do it by trying to help dealers sell more cars,” Glander told SubPrime Auto Finance News during a phone conversation this summer. “We do it by giving them tools, better service, better products, better training and technology.
“This is a way of putting our money where our mouth is,” Glander continued. “We’re committed to giving them technology that’s going to make them more efficient regardless of how comfortable they are with it. It also helps them project a much more progressive image to their customers.
“New-car dealers sell an awful lot of used vehicles as well. We want our standalone independent dealers to be able to play with the same sort of confidence and professionalism that a new-car dealer has when they’re selling these vehicles. It levels the playing field,” Glander went on to say.
It’s not uncommon for salespeople at those franchised stores to be circling the showroom with an iPad in hand ready to help customers. This summer, GWC rolled out its own app for tablets so independents can do the same thing.
The company highlighted the GWC App features:
— Educational video library
— Interactive coverage selection tool
— Real-time, reactive virtual shopping cart
— Mobile rating engine with VIN scanner to create a fast, easy, user-guided experience for selling vehicle service contracts
“With any technology there are going to be early adopters who are all over things. We do encounter dealers that have tablets in their stores and they’re trying to make use of them,” Glander said. “But we do business with an awful lot of small and medium-sized dealerships across the U.S. They don’t get the training and resources from people coming into their dealerships all the time and offering the most up-to-date tools and technology.
"They’re oftentimes out there on islands by themselves. With the pace of change being what it is, these people have to figure out what they’re going to embrace and have to do it with cost in mind, too,” he added.
GWC rolled out the iPad app ahead of this year’s National Independent Automobile Dealers Association annual convention so company representative could be armed with the technology not only at the NIADA event but also when varios state associations have their gatherings, too.
“We’ve been tablet users for a long time. We’re big Apple people in here,” Glander said. “We said there’s got to be a way to get this technology out there for our dealers. We knew Apple will sell 250 million iPads so you know they’re out there. So how do you play in there? How do you get this in front of dealers in a way that makes it useful for them?”
After brainstorming for several months, GWC generated its app concept and hired a service provider to build the tool with the final step in the process taking about six weeks.
Those four primary app features are coupled with capabilities such as the customers being able to see exactly what level of VSC would do to their monthly payment as well as an eContracting portal so the whole delievery can be completed in a paperless process.
“It makes it very user friendly. It helps the dealer be more efficient and progressive regardless of their comfort level with the technology,” Glander said.
New Benefits for Elite and WealthBuilder Dealers
Along with this summer’s app rollout, GWC Warranty also introduced two new value-added benefits exclusively for its Elite and WealthBuilder Dealers — GWC Virtual Training and Covideo.
GWC’s new Virtual Training platform is an interactive online video training tool that is designed to offer helpful content for every employee in a dealership. Available content topics include:
—Compliance
—F&I processes
—Sales strategies
—GWC product information and more.
Ideal for new employee ramp-up and legacy employee refresher courses, the company also highlighted GWC Virtual Training also boasts testing and reporting functions to maximize retention and track progress. This value-added tool is being offered free of charge to both Elite and WealthBuilder dealers.
Covideo is a customized, branded video email marketing service proven to increase internet response rates by 77 percent, showroom shows by 27 percent, customer satisfaction by 10 percent and sales by 7 percent. Glander pointed out that Covideo is easy to use on any computer or mobile device and is useful for lead follow up, vehicle walk-arounds, thank you videos for buyers and more.
GWC is sharing the cost of Covideo with Elite and WealthBuilder dealers to offer the service at a discounted rate – a price exclusive only to GWC Elite and WealthBuilder dealers.
“At GWC, we help dealers sell more cars by providing products, service, technology and training to help build upon their success,” Glander said.
“In Virtual Training, we are providing a training platform that levels the playing field for many independent dealers competing with larger stores,” he continued. “With Covideo, we are offering a high-tech tool aimed at helping dealers project a more modern, progressive image to current and potential customers.”
To sign up for either of these benefits, Glander explained that GWC Elite and WealthBuilder dealers simply need to contact their GWC dealer consultant.
Online Dealer Portal Celebrates First Anniversary
While the company as a whole turns 20, GWC Warranty also had another milestone this summer as it hit the one-year anniversary of its online Dealer Portal
In one year, the GWC Warranty Dealer Portal received more than 45,000 vehicle service contract submissions, evolving from an online tool for dealers to rate and submit contracts electronically to a comprehensive Web-based platform used by more than 4,000 dealerships nationwide.
With 220,000 logins in the first year alone, Glander noted that dealers have found value in the Dealer Portal’s numerous tools and resources by implementing its flexible functionality into their business’ everyday processes.
With a new release of the Dealer Portal, its list of features now includes:
—Prioritized, rapid-response online claims adjudication for Elite and WealthBuilder Dealers
—Free access to GWC’s Virtual Training Platform: an interactive, user-friendly training resource available exclusively to Elite and WealthBuilder Dealers
—An educational video library with streaming, on-demand content designed to aid in selling a VSC
—Real-time, fully historical “contracts and applications” reporting complete with claims summaries for every contract ever submitted
—A virtual content hub where dealers can download electronic product brochures, detailed component coverage information, cost of repairs statistics and more
—Instant access to frequently used forms and documents, such as a digital sales waiver and user guides for various sales like the GWC Dealer App for iPads
—A comprehensive, up-to-the-minute snapshot of past contracts and rating sessions
—The lead-generating LogoBuilder application that quickly and seamlessly brands dealership inventory with extended protection to help build confidence earlier in the sales process
Finance companies wondering about which competitors are booking the deals they believe they should be originating now can tap an enhanced solution to find answers.
Through a partnership with Black Book, Equifax on Wednesday introduced new features to its Lost Sales Analysis tool for guiding finance companies’ business decisions based on analysis of their lost opportunities.
First launched in April of last year, Equifax explained the Lost Sales Analysis tool uses auto loan application data, DMV title and vehicle registrations (which are provided by IHS Automotive, driven by Polk), and credit attributes to evaluate the deals finance companies lost to competitors and how those lost opportunities are performing.
The resulting information includes:
— The financing source that booked the application
— Deal metrics such as customers' annual percentage rate, amount financed, type of loan, term and more
— Performance metrics
— Payment history as reported by the booking finance company
— Vehicle description.
Equipped with these insights, Equifax highlighted finance companies have been able to evaluate lost sales applications and determine how their credit offers compared to the competition. As a result, Equifax noted many finance companies have been able to enhance their underwriting practice within 30 days of losing the sale.
Lost Sales Analysis from Equifax now incorporates vehicle values, which aid auto financers when calculating loan-to-value ratios to better match loan terms to the depreciated value of the collateral.
In addition, the new version of Lost Sales Analysis can provide finance companies with greater flexibility to synthesize the specific attributes they are most interested in. Finance companies can submit up to 50 custom fields for analysis, and they can receive the information tailored to their specific business needs.
“Using a lender's own, unique loan application data, Lost Sales Analysis helps them understand the big picture of how they compare in the market," said Lou Loquasto, auto finance leader at Equifax who will be one of the industry experts on hand during the SubPrime Forum at Used Car Week.
“In the past 12 months, 30 of the top automotive finance lenders have incorporated the findings into their sales and lending practices to make their offers more accurate,” Loquasto continued.
“Additionally, with the enhancements we've made to the product, auto lenders will capture a stronger understanding of their vulnerabilities, so they can clearly define their buy box, help improve relationships with dealers in their network, and simultaneously maximize their immediate and long-term profitability,” Loquasto went on to say.
Black Book vice president of lender solutions Barrett Teague, another expert on tap to be a part of Used Car Week at the Phoenician in Scottsdale, Ariz., on Nov. 16-20, shared what the firm is bringing to the table to enhance Equifax’s tool.
“In today’s highly competitive market, auto lenders are increasingly relying on data, analytics and business intelligence to drive smarter, more profitable decisions for their portfolios,” Teague said. “The integration of Black Book data strengthens the auto lender's ability to analyze deals more closely to minimize missed opportunities.”
Additionally, existing Equifax consumer insight products, such as Equifax Risk Score and Bankruptcy Navigator Index 4.0, are now integrated into Lost Sales Analysis to better evaluate auto loan applicants' credit worthiness.
For more information about Lost Sales Analysis for auto finance companies, visit www.equifax.com/business/lost-sales-analysis.
Analysis compiled by Edmunds.com of used-vehicle financing activity during the second quarter at franchised dealerships turned up more evidence of the fuel igniting record-setting growth.
According to the site’s latest Used Vehicle Market Report, the average amount financed moved 3 percent higher year-over-year to $20,732.
“Loan terms are growing to offset higher prices but for the first time since pre-recession we are seeing average APRs creep higher,” Edmunds.com said about the average APR, which came in at 7.7 percent.
“While nearly 60 percent of used buyers financing their vehicle obtained an APR of 5 percent of lower, many buyers have APRs in excess of 10 percent,” the site continued in its reported, which also mentioned the average used-vehicle retail prices hit a record high in Q2.
Edmunds also pointed out that the average term for a used-vehicle installment contract originated at the franchised store during the second quarter climbed to 66.2 months, extending an upward march that began in 2009.
Beyond the rising retail prices, Edmunds.com director of industry analysis Jessica Caldwell told SubPrime Auto Finance News during a phone conversation on Friday that another elements is pushing the APR average higher.
“My feeling is some of the folks in the subprime market are driving up the averages,” Caldwell said. “It is a law of averages because the majority are paying a lower interest rate. But for every person who is getting a 2 percent APR, there is someone paying 25 percent. It definitely affects the averages.”
All of that used-vehicle activity at franchised dealerships — subprime or not — helped to push the industry to a new record in Q2.
According to the New York Federal Reserve’s Consumer Credit Panel, a nationally representative sample drawn from anonymized Equifax credit data, auto loan originations reached a 10-year high in the second quarter at $119 billion, supporting a $38 billion increase in the aggregate auto loan balance.
That balance is now above $1 trillion, which Equifax deputy chief economist Dennis Carlson discussed with SubPrime Auto Finance News in more detail.
More discussion about how the subprime slice of the auto finance market is behaving is on tap for the SubPrime Forum, which is a part of Used Car Week. Analysts and experts from the leading data and compliance providers are set to be a part of the event, which runs from Nov. 16-20 at the Phoenician in Scottsdale, Ariz.
For more details, go to www.usedcarweek.biz.
Officials from eLEND Solutions recently unveiled an upgrade to the company’s CreditPlus solution that’s being dubbed, “Get Prequalified in Seconds.”
The technology provider explained that this enhancement to CreditPlus can give dealers an online instant prequalification lending solution to elevate the online automotive retail financing process from basic prescreening to full prequalification.
Officials insisted the new CreditPlus features can bring a “revolutionary” instant prequalification program to retail automotive for the first time through Credit Bureau Connection, the exclusive credit reseller for eLEND Solutions.
Until now, eLEND Solutions emphasized dealers only had access to prescreening products, which offered limited credit information and were initiated without consumer consent or hard inquiry credit report products that impact consumers’ credit scores and have the burden and costs of additional compliance requirements.
CreditPlus’ “Get Prequalified in Seconds” can deliver a full credit report and exact real-time credit score, and, importantly, is consumer-initiated so it can greatly reduce compliance costs by eliminating the requirement for a firm offer of credit and the risk-based pricing notice.
Now dealerships can prequalify consumers with a soft pull credit report in real time, instantly delivering a variety of finance options, driving up qualified leads and enabling them to match consumers with the right lending options early in the buying process.
“There is a huge difference between prequalification and prescreening or traditional hard inquiry credit reports. We are thrilled to offer CreditPlus users this game changing prequalification product and to have worked with our credit reseller partner Credit Bureau Connection to insure we have delivered a secure and 100 percent compliant process to our dealers,” eLEND Solutions chief executive officer Pete MacInnis said.
“The addition of prequalification to our suite of products enhances our mission of creating a connected car buying experience that seamlessly transitions online car shoppers to in-store buyers,” MacInnis added.
CreditPlus instantly can prequalify customers based on dealer-defined credit criteria, giving buyers direct, upfront access to dealership financing sources and real near-final terms from multiple finance companies, all of which are controlled by the dealer.
With CreditPlus, dealers are able to match a buyer with the right vehicle and the right financing program before the customer has even started the test drive. This process can facilitate a more equal exchange of information between consumer and dealer and the structuring of a more profitable deal.
“With the addition of PreQual to CreditPlus, eLEND Solutions is enabling the auto dealer to take a huge step forward in providing instant, real-time automotive financing options,” Credit Bureau Connection CEO Mike Green said.
F&I Express recently added PayLink Payment Plans to its online network of aftermarket F&I product providers.
Officials explained that F&I Express has aggregated aftermarket insurance provider product information online to make the automotive retail F&I process more efficient for dealers and their customers.
PayLink Payment Plans, a vehicle service contract payment processing provider, can create payment plan solutions that are tailored to dealerships’ unique business requirements.
“PayLink Payment Plans is a recognized leader in VSC financing and payment processing,” F&I Express president and chief executive officer Brian Reed said.
“Inclusion of PayLink Payment Plans to the F&I Express network will now allow its many dealers a responsive payment financing and the best-in-class solution for vehicle service contract providers,” Reed continued. “This is another important step forward in our efforts to help the auto industry bring more F&I processes online.”
Joining the F&I Express network is an effort to help PayLink reach current and potential automotive retail clients more quickly and effectively.
“With F&I Express as the digital connection for all aftermarket F&I needs, we are excited to integrate within their platform,” said Rebecca Howard, CEO of PayLink Payment Plans. “We are committed to applying our extensive industry expertise and technology resources to dealers and look forward to integration with F&I Express.”
Special finance software solution provider ProMax Unlimited reviewed dealership data from July and compiled the top 20 highest grossing vehicles in three different subprime credit tiers.
The three lists should be especially helpful for dealerships and finance companies that originate deliveries associated with models from Chevrolet, Hyundai, Ford and Dodge
In a blog post, ProMax Unlimited noted that vehicles are ranked in order of total units sold, not total gross:
Credit Tier 575-619
1. 2013 Hyundai Elantra: $2,646.98
2. 2013 Chevrolet Cruze: $3,600.26
3. 2013 Kia Soul: $3,218.34
4. 2013 Chevrolet Malibu: $2,981.18
5. 2013 Ford Fusion: $2,920.35
6. 2013 Chrysler 200: $2,524.60
7. 2013 Dodge Avenger: $2,250.00
8. 2013 Dodge Grand Caravan: $2,886.46
9. 2013 Hyundai Sonata: $2,946.06
10. 2014 Chevrolet Cruze: $3,852.71
11. 2011 Chevrolet Malibu: $2,788.54
12. 2013 Kia Optima: $2,784.82
13. 2012 Ford Fusion: $2,135.75
14. 2013 Ford Focus: $4,494.38
15. 2012 Chevrolet Cruze: $3,627.27
16. 2012 Toyota Camry: $3,001.35
17. 2013 Chevrolet Sonic: 2,759.05
18. 2012 Chevrolet Malibu: $3,102.32
19. 2012 Ford Focus: $2,266.01
20. 2013 Chevrolet Impala (Fleet): $2,230.22
Credit Tier 520-574
1. 2013 Ford Fusion: $3,137.13
2. 2013 Dodge Avenger: $1,727.26
3. 2013 Hyundai Elantra: $2,982.77
4. 2012 Ford Focus: $1,739.23
5. 2013 Chevrolet Cruze: $2,267.88
6. 2013 Chevrolet Impala (Fleet): $2,195.01
7. 2013 Hyundai Sonata: $2,206.30
8. 2012 Ford Fusion: $3,013.60
9. 2013 Kia Soul: $2,956.19
10. 2012 Nissan Altima: $2,778.23
11. 2014 Chrysler 200: $2,623.67
12. 2012 Chevrolet Cruze: $2,203.18
13. 2013 Chrysler 200: $1,829.98
14. 2014 Nissan Altima: $2,923.39
15. 2013 Dodge Grand Caravan: $2,250.34
16. 2014 Ford Fusion: $1,861.77
17. 2014 Chevrolet Cruze: $1,653.25
18. 2012 Chevrolet Malibu: $2,483.58
19. 2013 Chevrolet Malibu: $1,718.37
20. 2013 Ford Escape 4WD: $3,463.21
Credit Tier 460-519
1. 2013 Dodge Avenger: $2,766.95
2. 2013 Hyundai Elantra: $1,902.93
3. 2013 Chevrolet Malibu: $745.25
4. 2011 Ford Fusion: $1,357.39
5. 2013 Nissan Altima: $2,544.57
6. 2013 Chrysler 200: $2,208.38
7. 2014 Chevrolet Cruze: $3,519.93
8. 2012 Ford Fusion: $2,231.35
9. 2012 Chevrolet Malibu: $3,351.51
10. 2012 Nissan Altima: $3,582.73
11. 2014 Nissan Altima: $2,601.81
12. 2014 Chrysler 200: $1,934.95
13. 2013 Chevrolet Impala (Fleet): $1,456.55
14. 2013 Kia Optima: $2,612.91
15. 2013 Chevrolet Cruze: $2,473.77
16. 2013 Dodge Dart: $2,716.96
17. 2013 Ford Fusion: $2,652.25
18. 2014 Toyota Corolla: $2,404.98
19. 2013 Ford Focus: $2,715.42
20. 2013 Kia Soul: $2,104.89
NextGear Capital announced a series of strategic moves this week to enhance its resources for dealers, including plans to add up to 200 new jobs by 2018.
The company also intends to make substantial investments exceeding $50.88 million to lease and renovate its corporate offices in Carmel, Ind., to support its growing customer service and technology divisions.
Additionally, NextGear Capital plans to upgrade its technology infrastructure and software to better serve its more than 20,000 customers.
“NextGear Capital’s success can be attributed to our talented workforce, both here and across the country, who work diligently every day to ensure our customers' needs are met and embody the work ethic and family values that Indiana is known for,” NextGear Capital president Brian Geitner said.
This week’s announcement marks the company’s second expansion in recent years. In 2013, Gov. Mike Pence joined NextGear Capital to announce the company’s headquarters expansion in Carmel, creating up to 169 new Hoosier jobs. The company has since exceeded those plans, now employing more than 430 Indiana-based associates.
NextGear Capital is currently hiring customer service and technology associates. Interested applicants may apply at http://jobs.manheim.com/careers/nextgear-capital-jobs.
“Indiana stands out as a regional leader for job growth, and companies like NextGear Capital repeatedly choose Indiana as a home for their expansions because of our pro-growth policies and low-regulation business environment,” Pence said.
“One of our greatest strengths is in our workforce, and after meeting with the hardworking Hoosiers who make NextGear Capital’s success possible back in March of 2013, I’m excited to announce this additional expansion here in the Hoosier State.”
The Indiana Economic Development Corp. offered NextGear Capital Inc. up to $1.6 million in conditional tax credits and up to $85,000 in training grants based on the company’s job creation plans. These incentives are performance-based, meaning until Hoosiers are hired, the company is not eligible to claim incentives.
The city of Carmel also supports the project.
“We were thrilled last year when NextGear Capital moved into its new corporate headquarters in Carmel, which we took as a reflection of the strong high-tech business community we enjoy,” Carmel mayor Jim Brainard said.
“NextGear Capital has been one of Indiana's true technology success stories and today’s news of another expansion in its workforce is great news for Carmel and all of central Indiana,” Brainard went on to say.
Vanguard Dealer Services — an agent and administrator of F&I products and services to franchised dealers nationwide — formed a partnership this week with Southfield Capital, a lower middle market private equity firm.
Officials indicated Vanguard's senior management, including chief executive officer Jim Polley along with Ed Reitz and Mike Seergy, will continue in their current operating roles and will maintain a shareholding in the company.
Additional terms of the transaction were not disclosed.
“The Vanguard team is very excited to announce our partnership with Southfield Capital,” Polley said. “We have ambitious plans to grow Vanguard into the nation's preeminent provider of F&I products and services through a combination of acquisitions and the introduction of new products and services.
“We needed a partner that has experience executing roll-up strategies and the operational expertise to ensure that we scale the business appropriately as we grow,” he continued. “Southfield’s excellent track record with companies similar to Vanguard gave us confidence that they are the right partner for us. We are excited to implement our growth plans and develop a truly great company.”
Headquartered in Fairfield, N.J., Vanguard offers a full suite of proprietary and third party vehicle service contracts and ancillary products such as tire protection, key replacement, dent repair and pre-paid maintenance. The company also offers F&I consulting and reinsurance services focused on enhancing dealership profitability.
At the core of Vanguard’s value proposition is its ability to increase dealer profitability and customer retention. The company achieves this performance by leveraging its broad product offering and establishing best practice systems and processes, including F&I training, automotive management training, compensation plan development, dealer owned reinsurance, dealer incentive management, sales strategy and proficiency analysis, compliance review and F&I specialists staffing.
“We are thrilled to announce our investment in Vanguard and look forward to our partnership with the Vanguard team,” Southfield partner Andy Cook said.
“Jim Polley and his management team have developed a fantastic business which is now positioned for accelerated growth,” Cook continued. “Vanguard is a mission critical vendor to automotive dealers that increasingly rely on Vanguard’s products and services to drive profitability. Vanguard represents a compelling platform investment in a large and highly fragmented market.”
East West Bank provided the senior debt financing, and Fidus Investment Corp. provided the subordinated debt financing. Finn Dixon & Herling provided legal counsel to Southfield Capital. Woodbridge International acted as financial advisor to Vanguard and its shareholders.
