Fishing Season? I Don't Think So!

I read a comment by Peter Salinas in the Dealer Business Journal, May 2008 that rings true to me: “Not many thought the national credit woes affecting subprime mortgage industry would come to so dramatically affect the subprime used-vehicle business as much as it has.”

Do you agree? Are you surprised as well? What to do…? What can we do – we have to act. Now is the time to manage our business better. How can we make the most of every opportunity in this changing market?Start by putting up the “No Fishing” sign in the F&I department. Stop fishing for approvals that fit the customer. Get approvals and let the customer decide if it works for them. It is up to the customer to decide which options work for them. You limit opportunities by spending so much time and effort “fishing” for the "magic" approval (the one the customer will sign on the dotted line). Keep before you the fact that 100% of the customers who don't get the opportunity to buy, can't! If the customer never gets the chance to decide whether t hey can meet the terms and conditions of a lender’s approval, regardless of whether it was what that customer originally hoped for, it is impossible to know whether or not they can. Let them find a way to meet the terms of the approval. "Get money down or a co-signer" is the common response from the sales desk, and with those words, the customer leaves and goes down the street to a competitor that gives them the "opportunity to buy". Now is the time to seize these occasions to educate the customer and help him or her to adjust expectations. Take the time to walk them through the reasons for the terms offered and help them to see how to make it work. You need to spend more time consulting your customers in this tight credit market.

Today lenders scrutinize the business they are doing and, as a result, those little green check marks on DealerTrack and Route One are popping up less frequently. You must familiarize yourself with the lenders and their programs. If you don’t know your lenders, you won’t know what they will say “yes!” to. Loan applications receive more scrutiny than ever before. Are you in the habit of throwing deals against the wall? Results will be predictable. The good finance managers know each lender and the kind of deals they approve.

Have you looked at the process from your lender’s perspective? It costs a lender money when a dealership sends them a deal that won’t work in their program. Build a relationship by knowing and partnering with the lenders who handle the paper in each tier of credit. Knowledge of what they look for will position your dealership for better success at approvals.

While considering a lender’s perspective, demonstrate appreciation for they do by sending some of the better customers along with some of the more challenging deals. Say thank you tangibly – send lunch in, send some cookies or gift baskets. Your investment into the relationship will pay off in a workable partnership.

The market is tough right now. Adjust your expectations and do things differently. You may not be able to hit the home run every time. So what should you do? Move the cars when you can! You may have to take the occasional short deal or move an old-aged unit. Cultivate better business habits while persevering and you will see results.