Tag Archive | "F&I"

JM&A May Buy F&I Companies to Grow in West

Financial services giant JM&A Group, a powerhouse in the Southeast, is aiming to grow in the rest of the United States. The main target for expansion is the West, and JM&A executives say they will consider purchasing smaller providers to pick up share in the finance and insurance market, reported Automotive News. But executives also have expanded the sales team and increased marketing and incentive budgets to help pitch JM&A’s services to large dealership groups west of the Mississippi.

That market is largely untapped by JM&A, a unit of JM Family Enterprises, the Deerfield Beach, Fla., company founded by Jim Moran. The F&I unit got its start 32 years ago acting as a captive finance company for Toyota dealerships in Florida, Georgia, Alabama and the Carolinas that were serviced by JM’s Southeast Toyota, exclusive distributor of Toyota and Lexus vehicles in that corner of the country.

“We have a 30 percent market share in the Southeast, and there is no reason we couldn’t achieve the same market share over time across the country,” said Colin Brown, CEO of JM Family Enterprises. “There is a lot of growth out there” even if industry volumes don’t come back, he said.

That share — or penetration rate — means JM&A sells at least one product on three of every 10 new and used vehicles sold in the Southeast. On the East Coast, penetration is 8 percent. It’s 6.6 percent in the West and even lower in major Western states such as California and Nevada.

“As we get beyond where we started, the opportunity tends to really stick out,” said Forrest Heathcott, president of JM&A. “Those are some pretty key markets where there’s a lot of population.”

In the next five years, JM&A intends to boost penetration in the West to 10 percent, Heathcott said. He said it could take 15 years to match the 30 percent share of the Southeast.

“These are big decisions for dealers to make, and they don’t come quickly,” Heathcott said.

To accelerate the expansion, JM&A has “budgeted for some very thoughtful, formidable acquisitions,” Heathcott said. He wouldn’t share numbers but said JM&A already is in discussions with independent agencies and smaller insurance companies.

Heathcott said JM&A increased its marketing and incentive budgets about 25 percent each this year. Incentives typically include dealer rewards or trips.

Growth by acquisition would be a first for JM&A, Heathcott said. The acquisition target area includes California, Washington, Oregon, Arizona, Texas, Oklahoma and Colorado.

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Consumer Advocacy Product Introduced to Dealer Market at NIADA

LAS VEGAS – Repair Assurance, a new F&I product introduced at the NIADA convention, is a vehicle service agreement that offers different consumer benefits and fresh opportunities for dealers. Consumers receive representation when dealing with auto repair facilities and warranty companies.

Consumers who purchase plans of coverage, ranging from one to five years, have a dedicated Repair Assurance repair adviser that will fully negotiate with a repair facility or warranty company all aspects of any repair or maintenance service.

The Repair Assurance adviser ensures that the correct repair is being done at the correct price and at the correct time. This service is unlimited and consumers can contact their adviser as many times as they wish to ask questions or get advice on any auto repair or maintenance issues.

Repair facilities can also call Repair Assurance directly before beginning a repair to work with a customer’s adviser directly. The adviser steps in to negotiate the entire repair on the customer’s behalf.

In addition to the advocacy service, Repair Assurance offers a complete spectrum of ancillary service agreement benefits such as towing, fuel and fluid delivery, lost key & lockout, flat tire and extrication services. Additional discounts are provided on rental vehicles.

Repair Assurance was conceived and developed by Tom Cullen and his partner Tony Fiorillo of Vision Marketing Group, based in West St. Paul, Minn. Cullen said the idea for this product came to him after witnessing the downsizing of a highly respected service contract administrator in Omaha, Neb.

“I thought it was a waste of talent to let all those experienced claims people go,” Cullen said. “Then it occurred to me that if they could adjudicate claims and work with repair shops to defend the insurance company, why not defend the consumer?”

Cullen added that Repair Assurance is a complementary product for the F&I office because it is priced lower than a service contract and can be used by the F&I manager as an alternative when the customer refuses a VSC due to price or payments concerns. It also is designed to increase service department retention by directing the consumer back to the selling dealership to get work done on their vehicle, especially with used vehicles.

Tony Fiorillo said he is excited about the quality service they can offer dealers and consumers.

“We feel fortunate to have a wealth of talent to bring into the company for consumers to turn to. The people we’re hiring have years of automotive experience and expertise in dealing with repair facilities from independent shops right up to OEM factory representatives. This product can really help dealers improve their CSI because now consumers feel the dealership is sending a repair advocate out with them when they drive off the lot.”

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Creating an Implementation Plan for Improved Performance

Do you have an image of your dealer’s potential that your dealer never seems quite able to achieve? Are you having performance issues at stores where they pay little or no attention to your recommendation? When was the last time you visited a store after discussing a specific procedure, policy or process only to find nothing has changed?

I’m sure all of your dealers and their employees hear what you’re saying, but do they actually understand and recognize the benefit? Are they able to translate your words into actions?

To significantly affect change, what may be needed is a different way to communicate your intentions and explain the benefits. A method of communication that places more emphasis on what it takes to get there, recognizes the advantages and holds people accountable to follow through.

Too often we rely on the speculation that the dealer and his employees can distinguish a positive change from a negative change. Successful implementation of certain process, procedure and performance improvements involves a steadfast plan that communicates the objective in terms of detailed actions or operations. It should state specifically what tasks need to be completed, in what order they need to be completed and the timeline in which they need to be completed. Certain individuals should be appointed to perform the tasks while providing them with the training, resources and the support to complete the objective.

Most important to sustaining the process, procedure or performance improvement is the monitoring and measuring of its progress and the impact it is having on the dealership’s proficiency.

Any time you want to implement a new program, process, procedure or enhance a store’s or individual’s performance, follow these steps and reap the rewards:

IDENTIFY: What is the program, process or procedure that needs to be implemented or reinstated? What area or level of performance needs improvement?

Be precise in identifying the objective. Don’t just say “we need 100 percent turnover at point of sale.” Instead, say “we need a proper 100 percent turnover at point of sale regardless of the circumstances. It doesn’t matter whether the customer agrees to buy over the Internet, phone or is here at the dealership.”

The key words being proper and regardless of the circumstances need to be explained by pointing out exactly what is meant by proper and what steps need to be done after each buying scenario.

DETAIL: What steps are needed to accomplish the desired results? Take a sheet of paper and write down every step that is significant to complete the objective. Write down the name of every individual who has a role in its success. Review the tasks and prioritize them as to their importance.

Now, list the tasks in a progression suitable for obtaining the desired results. For the initial task, a meeting needs to be facilitated with all the individuals listed as having a role in attendance. The meeting’s agenda must describe in detail the program, process, procedure or level of performance that needs to be implemented or improved. If the objective is related to individual performance, then a one-on-one meeting will need to take place itemizing each task pertinent to the individual’s performance improvement target.

The following steps detail how the “role-out” meeting should be conducted. When followed, these steps show a sense of urgency and emphasize the importance of implementing a plan of action.

  1. What is it that you want the meeting to accomplish? Establish specific objectives for the meeting.
  2. Prepare a topic-by-topic agenda of what is to be discussed, and note how much time will be allocated for each topic. Allow for a bit of slack time.
  3. Prepare a list of attendees. It is vital that the “captain of the ship” be present at the meeting. Be sure everyone on your list is available when you want to schedule the meeting.
  4. Send every attendee the meeting’s agenda. The agenda should include items 1-3 just discussed. Ask everyone to be prepared to take part in the meeting.
  5. Start the meeting on schedule, with a reminder that time is limited and a statement to the effect that your intention is to limit the discussion to the items on the agenda.

Your role is to be prepared and well rehearsed. At the start of the meeting politely but firmly cut off discussion by anyone who departs from the agenda. Don’t let one person with off-the-wall questions tie up the meeting. Deal with that person privately after the meeting is over. End the meeting when you said you would. Thank the attendees for their cooperation. Prepare and circulate the action plan documenting who, as a result of the meeting, is supposed to do what and by when.

WHO: Who will be responsible for its implementation? Selecting the right personnel to carry out the tasks is critical for a successful outcome. The selected individuals must have an unyielding interest in the completion of the program, process or procedure being implemented or reinstated. Assigning a champion for the objective is great way to ensure its satisfactory completion. Someone will need to be assigned the task of monitoring and reporting progress as well.

WHEN: What is the timeline for completion? Setting a timeline for each task along with a due date detailing the completion of the intended improvement, program, process or procedure will keep you on track and help avoid distractions. By tackling the tasks one by one, it allows you to move methodically to the next task and gets you closer to completion.

MEASURMENT: How will the process or performance be measure and tracked? Who will the results be reported to? As suggested earlier, the appointment of a champion who will monitor and report the results to the “Captain of the Ship” would be a great start. Before results are calculated, performance benchmarks and standard functions need to be established. The benchmarks and functions will vary depending on the objective. For instance, implementing the process of 100 percent proper turnover at the point of sale regardless of the circumstances will require a full explanation of the standard functions to follow for each scenario once a customer agrees to buy.

The benchmark may vary in the beginning depending on the magnitude of the situation. Monitoring progress on a regular basis will help to determine the increase in the benchmark as it moves along. Such monitoring will also identify potential problem areas and provide assurance that functions are meeting the objectives.

Use this information to further adjust and optimize your plan. Failure to measure, track and hold people accountable through the utilization of reports puts the objective at risk.

Whether you’re trying to establish specific procedures, increasing product proficiency or roll out a new service contract, adhering to the five essential components will significantly increase your chance of reaching the desired result.

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Auto Dealers Could See New Financial Regulations

Le-Eunice L’Minggio of Delavan, Wis., getting by on modest disability checks from Social Security, needed a car for regular weekly visits to her aunt on Chicago’s South Side.

The sales team at Thrifty Car Sales of Melrose Park, Ill., helped her pick out an $8,000 2004 Ford Freestar station wagon with a cracked mirror, a busted bumper, a broken taillight covered in tape and wipers that clawed the windshield, USA Today reported.

After she signed some papers, made a $1,200 down payment and drove home in the Freestar, things started to get weird. The dealership’s finance manager summoned her back a few days later and told her that she needed to lie to the finance company to get a loan. Specifically, he wanted her to say she was working at a steel mill for $5,000 a month. When she refused, he demanded full payment for the wagon. She returned the Freestar instead, but the dealership wouldn’t give her back her down payment.

L’Minggio, 64, went to federal court and won $13,200 in damages. But the dealership had gone out of business. “We were unable to collect the judgment,” says her lawyer, Michelle Weinberg.

Car shoppers such as L’Minggio might soon have a new advocate when they start to talk financing at their local car dealerships. Congress on Thursday began working on a final version of sweeping financial reform legislation that could subject auto dealerships to regulation by a new consumer financial protection agency. If the measure survives, dealers’ F&I (finance and insurance) staff would be regulated like bankers and mortgage brokers.

The powerful auto dealers’ lobby is fighting back. “Main Street auto dealerships should not be in a Wall Street reform bill,” David Regan, vice president of legislative affairs at the National Automobile Dealers Association, said in a statement last week. “Auto dealerships are not banks.” The association warns that new regulation would drive up the cost of auto loans.

Auto dealers last year persuaded the House of Representatives to exempt them from regulation by the new consumer financial protection agency. But the Senate version of the reform bill would let the new agency crack down on abusive auto-lending practices at dealerships. Now, envoys from the House and Senate are trying to work out differences between their two versions. And the lobbying has resumed in earnest.

In a report last year, the Cambridge Winter Center for Financial Institutions Policy concluded that exempting auto dealerships would be a “step in the wrong direction for consumer protection in auto finance.” The non-partisan think tank noted that auto dealerships originate 79% of auto loans and leases and “that auto finance is demonstrably susceptible to unfair and deceptive practices.”

Moreover, Cambridge Winter argues that an exemption would give auto dealerships’ finance departments an unfair advantage over credit unions and small banks, which would face regulation. Not surprisingly, credit unions and community banks want to see auto dealers treated like any other lender. “What they do is fundamentally the same as what a mortgage broker does,” says Steve Verdier, director of congressional relations at the Independent Community Bankers of America.

“The dealers all say, ‘We don’t get involved in financing,’ ” says Virginia lawyer Robin Abbott. “Nothing could be further from the truth.”

Avoiding Embarrassment

The finance departments at auto dealerships check car buyers’ credit histories and market and price loans that end up being made by banks or the finance arms of auto manufacturers such as General Motors or Toyota. Dealers “routinely mark up loan offers, typically collecting the equivalent of half of the resultant excess finance charges as bounty,” Cambridge Winter reported.

Abbott says some of her clients have fallen victim to one of the most common scams in auto lending — the “yo-yo” financing trap.

It works like this: A car buyer, usually with an iffy credit history, comes into the dealership, trades in a car, reaches what he thinks is an agreement on loan terms, and drives away in his new car. What the happy car buyer probably doesn’t realize was that among the many papers he signed was one acknowledging that the deal was contingent upon a third-party lender approving the financing. A few days or weeks later — if the dealer hasn’t found a willing lender — the buyer gets a call summoning him back to the dealer to negotiate a new loan or return the car.

Many consumers will agree to tougher loan terms to avoid embarrassment after showing off the new car to their friends.

“Don’t let the manager … keep you from being able to read the documents, telling you just to ‘sign here,’ ” says Rosemary Shahan, president of Consumers for Auto Reliability and Safety in Sacramento. “Take the filled-out forms and go sit down and … pore over them. You may find that you negotiated a good deal verbally, but what is in writing could be very different. … If they switched the terms on you, walk away.”

Consumer advocates say unscrupulous dealers prey disproportionately on young, financially unsophisticated soldiers, which is why the secretaries of the Army and the Air Force have come out publicly in favor of subjecting auto dealers to consumer financial regulation. Regan of the dealers’ association rejects the charges, saying there’s no proof that auto dealers target military personnel.

The legal office at Camp Lejeune in North Carolina put together a list of Marines there who have been victimized by auto dealers. Among them: a Marine who traded in a car only to learn that the dealer hadn’t paid off the trade-in, leaving him with two monthly car payments and only one car.

“Outside every military base in the country, there is a string of car dealerships selling overpriced cars,” says Tom Domonoske, a Harrisonburg, Va., lawyer who trains military attorneys on consumer law. Soldiers “leave home for the first time. They are making decisions with their own paycheck in a way that other 18- or 19-year-olds aren’t. … They walk on the car lot, and the car dealer takes them to the cleaners.”

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