Category Archives: F&I and Showroom

Time to Pay the Piper

I’m sure you’re all familiar with the story of the Pied Piper of Hamelin. Although more legend than truth, it’s based on events dating back to the Middle Ages, around 1284.

As the story goes, the German town of Hamelin hired a piper who promised to solve it’s rat infestation by luring them into the Weser River with his magical pipe. As the story goes, the dastardly Mayor of Hamelin refused to pay the piper the gold he had promised. In retaliation, the piper used his pipe to enchant the children of the town. They followed him to Keppenberg Mountain, where they were magically swallowed up.

One theory is that the piper was a professional rat catcher, and the children who disappeared were actually victims of the plague the rats carried. The earliest known record of this story is from Hamelin, where the piper’s image was set in stained glass in the town’s now-destroyed church. So, yeah, the pied piper was a real person.

No, I’m not using this month’s column to analyze this Brothers Grimm fairytale. I just see some parallels between the Mayor of Hamelin and the modern car dealer, with the piper being that salesperson or manager who was run out of the business because of an increasingly reduced pay plan.

Read the whole article here on F&I and Showroom.

Habits of Highly Paid Sales Professionals

In the past 40 years, I’ve interacted with hundreds of thousands of car sales professionals who work for thousands of dealerships in 49 states. Every month, they start over again at zero, with this month’s hero going back to the starting line as a new race begins.

Regardless of pay plans and how they are structured, there are always those few who consistently make incredible money, often rivaling the income of attorneys and physicians and other highly paid professionals. It’s not uncommon for top producers to sell 25 to 30 units a month, every month.

On the other end of the spectrum are those salespeople who make just above minimum wage. They perpetually whine and complain and make excuses. They can get by and live on that kind of money, but they never seem to dig their way out of the hole of mediocrity. In the middle of the pack, you’ll find salespeople whose income is like a rollercoaster, with good months followed by bad months. One month they’ll knock the cover off of the ball; the next they crash and burn, never stringing two good months together. Consistent or inconsistent, these Eight-Car Freds (or Fredrickas) sell just enough to get by and keep the sales managers off of their backs.

Read the whole article here on F&I and Showroom.

To Lease or Not to Lease

Writing about leasing requires that I don several hats, as it’s important that I clarify the processes and move dealerships to a better strategic policy.

When wearing my sales or desk manager hat, I need to know the best way to present my leasing vs. retail figures to a customer. I also need to know what considerations impact my decisions. I also need to know when to covert a customer to a lease.

When wearing my general manager hat, I have to consider what is best and most profitable for the dealership. As a sales professional, I have to consider when and how to present the lease proposition to customers. I also have to know what to tell them.

It amazes me when I see that leasing accounts for a majority of sales in some regions of the country, particularly in New York and New Jersey. I mean, leasing used to be more prevalent in the high-dollar luxury stores. That’s obviously not the case anymore.

Read the whole article here on F&I and Showroom.

The Lead-Gen Death Throes

They came dancing into our lives back in the mid-’90s and totally transformed our industry. In fact, I recall the first time I saw Autobytel exhibiting at the National Automobile Dealers Association (NADA)’s convention. I shook my head and said, “That ain’t gonna happen.”

Well, it did happen, and we all saw a growing parade of competitors in a vicious dogfight to dominate the space. My hat’s off to the few who prevailed.

The real game-changer, however, was Scott Painter and TrueCar. Painter’s business model reflected his thinly disguised contempt for car dealers. Unlike other lead-generation providers, whose primary purpose was to connect car buyers with dealers, TrueCar’s main objective was to set prices and broker deals at a loss for the dealers. We all know how that worked out.

But hundreds of other companies followed TrueCar’s lead and got into the brokering business. But the landscape is rapidly changing, and the paradigm has shifted enough to loosen their stranglehold on dealers.

Read the whole article here on F&I and Showroom.

Solving the Dealership-Life Imbalance

The car business is tough. The hours are long. We work nights and weekends. If you’re not here, you’re not selling cars. If you’re not selling cars, you’re not making a living.

I’ve been in the retail side of this business for 40 years. I’ve seen many things change and evolve, but the extreme work schedule really hasn’t changed that much. Many salespeople and managers find themselves putting in up to 60 hours a week.

What do you want, a 40-hour workweek? You already know the answer. “Suck it up, buttercup! We need coverage!”

Recently, on one of my blogs, a young car salesman new to the business asked how he could achieve some sort of balance between family life and the demands of the dealership. As is all too often the case, his wife, parents and in-laws are constantly on his back for not spending enough time at home with the kids. Sure, he’s making money — double the income from his previous job — and their quality of their life has greatly improved. But they’re beating him up and treating him as if it was his decision not to be home.

Read the whole article here on F&I and Showroom.

Killing F&I

I’ve been writing about this for years. As a matter of fact, I’ve screamed it from the mountaintops until the echoes rang repeatedly around the industry. I’ve watched it gain momentum as a consortium of vendors, manufacturers and other assorted rogues and pirates dreamed and schemed up a plot to assassinate the F&I department.

They’ll sell it to the dealers by promising to reduce the time it takes to complete a sale. They’ll talk about the magical customer experience it creates when the horrible F&I process is eliminated. They’ll tell you any competent salesperson can present and sell the products and make the proper disclosures. You’ll ask who exactly will deliver and disclose the contract and all the documents and get the deals worked. That’s where it gets a little sketchy.

But that’s not even the sketchiest part. Let’s look at the real motives behind this slow-motion trainwreck.

Read the whole article here on F&I and Showroom.

Preventing Sales Manager Burnout

For you sales managers out there, I bet you can remember the excitement you felt when you earned that prestigious title. But that feeling didn’t last long, did it? In fact, it probably came to a grinding halt. But not every manager experiences burnout. I know plenty of sales managers who matured into the position to become super performers.

For the rest of you, let me slap a little cold water in your face. If the glamour of the position has faded and your career is paralyzed and stale, I’m here to tell you that you are likely the problem. The good news is you can change that immediately. See, the No. 1 reason sales managers become frustrated and ineffective is they don’t know how to be a manager.

You can quickly spot manager burnout by how these individuals refer to themselves. Hey, there’s nothing wrong with being a desk manager. I mean, if that’s your dream, then be a desk manager. But from my experience, the desk manager works for the sales manager.

Read the whole article here on F&I and Showroom.

10 Ways to Improve Gross Profit

Do you work for one of those dealerships that believes in this hype about it being impossible to make gross selling cars in today’s market. The manufacturers allows us to mark up new cars 3% to 5%, but then these overpriced vendors promise car buyers savings of $3,500 on a $20,000 car.

Manufacturers aren’t completely innocent, however. They continue to ratchet up those stair-step programs that have dealers chasing the money as they unload vehicles at losses in order to meet unrealistic volume objectives (Nissan). Then some idiot said the industry needs more transparency, which really means drop your pants and give it all away.

I’m not saying we need to hit home runs on every deal, nor am I advocating for deception to make gross. What I am advocating for is discipline and process, with a smidgen of persuasion and finesse thrown in. The following are 10 ways to do just that.

Read all about the 10 ways here on F&I and Showroom.

The Cover-Up

We as Americans have always thought of ourselves as the good guys. That’s because our nation is founded on principles like truth, justice and the American way. So why is it that big companies and government officials seem to be blatantly violating this nation’s laws with little to no consequences?

We saw it when Wall Street came crashing down in 2008. And now we’re seeing an epidemic of criminality and cover-ups by automobile manufacturers. Is this behavior new? Is it some breakdown in decency that just recently began to happen, or has this been part of the accepted culture for a long time?

Of course, the latest in this long series of dubious activity resulted in General Motors (GM) agreeing to pay $900 million in what was labeled a “criminal settlement” over a cover-up of ignition switch defects. Those defects are linked to 124 deaths.

Read the whole article here on F&I and Showroom.

Prospect Holding On Line One

It’s not a new problem. In fact, it’s been plaguing dealerships everywhere for as long as I’ve been kicking around the car business. And no matter how many times I call attention to it, I continue to see it happening in dealerships everywhere: Most deals that are blown and lost forever in a car dealership are lost because someone mishandled the initial phone call.

Keep in mind that effectively marketing a car dealership today costs most dealers upward of $500 a unit. Then there is the $300 or more some lead sources charge just to deliver a low-profit deal. But I’ll give it to dealers. They do measure closes and conversions to appointments. What they don’t do, however, is measure deals lost on the phone. How many potential customers call in and can’t get connected? How many are mishandled by a salesperson or the receptionist?

I don’t have the stats to back it up, but I believe today’s menu-answering options are blowing a lot of deals. That’s why the first thing I do at every dealership I work with is examine how complicated or confusing their phone system’s menu options are. My advice to dealers is to simplify the menu options and allow callers to press zero for a live operator at any point.

Read the whole article here on F&I and Showroom.