Dealer Principal Shares His Store’s Subprime Success Story
SUPERIOR, Wis. — With the right people, processes and lenders in place, Pat Ringold, dealer principal at Benna Superior Ford, said he believes any store can achieve success in the subprime marketplace.
In fact, to support this view he cited results at his own store. Ringold said his dealership went from no subprime sales about 18 months ago to now completing an average of 40 subprime transactions a month.
"Why do dealerships start subprime and drop subprime? I don't think they invest in the people and they don't look at it as a separate department. I think that's the biggest mistake that they make," Ringold explained to SubPrime Auto Finance News.
"It's a totally separate department. It needs to be run as a separate department. It needs to have employees. It needs to have management. It needs to be monitored," he continued.
"Until a dealer is willing to take that jump, that leap of faith, they're just going to have a department that really just kind of goes along," Ringold added.
Ringold went on to explain how his subprime department operates. He modeled it the same way he instituted similar departments as an executive with the Hecker Automotive Group, which is based in Minneapolis.
One of the primary keys to achieving success, he pointed out, is maintaining a positive relationship with subprime lenders.
"You've got to keep the portfolio real clean," Ringold highlighted. "You have to be right above board. You've got show them what you've got and be honest. If you do, they'll be with you for life."
Some of the lenders Ringold said Benna Superior Ford uses today include AmeriCredit, Wells Fargo Auto Finance, CitiFinancial and Capital One.
"The lenders will look up Benna Superior Ford and see how the portfolio is performing. Then, they'll see this is a good person to give a loan to," Ringold explained.
Before customers ever have their names placed before a lending institution, Ringold said his special finance manager, Rob Hobbs, or one of his staff members, sits down and speaks with a customer for at least an hour – maybe more.
Ringold said this interview process is critical to gaining all the necessary background information from the customer in order to make a sale possible.
"We don't treat the subprime customer any differently than we treat a prime customer," Ringold said. "That's the biggest mistake people make. For whatever reason some dealers feel that this person — just because they had a few bumps in the road — can be treated less professionally. We're not that way here.
"The customer knows better than anybody what they can afford and what they can't afford," he continued. "They know better than anybody how much money they can put down, how much money they've got sitting around.
"Then we'll say we have three or four vehicles that fit the parameters of what you're looking for, not just what the bank's telling you that you can afford," Ringold explained.
When the dealership and the customer finally come to an agreement over the vehicle and the loan is approved, Ringold said the next important step is to keep that vehicle in good, working shape.
"If it doesn't have a factory warranty, we put a six-month, 6,000-mile warranty on it," Ringold pointed out.
"We do this knowing full well that when a person purchases this vehicle, drives it off the lot and has a problem and the car doesn't run, they're not working. And if they're not working, this deal is working backwards real fast," he continued.
Ringold admitted not every single subprime transaction works out exactly like both the dealership and customer want. However, he encourages ambitious goals for his sales department.
More specifically, he's looking for growth of about 20 to 30 percent during the next 12 months.
"Yes, we do have some losses, but we don't have an exorbitant amount of repos with any of these lending institutions. That's what gets dealers really in trouble," Ringold noted.
"It's very satisfying not only to our customers but all of our service folks who get to know the people. They're just people. They're just people who want a car. They have a family. They want a home and want to pay their bills. They're no different than any of the rest of us. They should be treated that way, but they're not always," he explained.
Customers in his area have clearly responded to Benn Superior Ford's strategy. Ringold said his repeat business is stronger now than it was when he became part of the dealership in 2001.
"You get a very strong allegiance from the customer," Ringold pointed out.
"The customer will come back and will do all the service work with you. The way the domestics have been kind of punched in the nose the last few years, I think it's really an area that it's nice for the customer to come in and appreciate the dealership, talk about it and tell their friends about," he added.
Ringold said the majority of people suffer some financial bumps in the road at one point or another. So the key, according to him, is simply showing the customer the respect they deserve.
"I don't think there's anybody on our show floor who hasn't been in their shoes at least once," Ringold said.
In order to keep his store's subprime sales growing, Ringold said Hobbs plans to continue to work with subprime customers exclusively at Benna Superior Ford.
"It's all Sales 101," Hobbs explained. "You treat everyone the same. You treat them professionally. You treat them with respect because all of them can buy, it's just a matter of how they can buy."