|Sometimes it doesn’t take much to figure out what makes a good dealership work. Start by looking at the dealer. What is important to him, and what is his commitment level? Chip Fadeley, owner of Free Bridge Auto Sales, believes in discipline. So much so, that this 52-year old dealer still works out at the gym for two and a half hours, four days a week. He would make it five, but he needs that fifth day at the auction to keep the dealership supplied with inventory.|
Fadeley entered the work force right out of high school at a local finance company. By the age of 19, he was branch manager, which was so unusual that the finance company had to research if he could legally sign checks and bind the branch in their commercial transactions.
At 21, Fadeley entered the automotive business, and for the next 18 years he moved in and out of the industry. He was always happiest in the automotive business but never happy working for anyone else. Fadeley chuckled when he said it took him “just 18 years” to figure out he needed to open his own dealership.
By the time he made that decision, he already knew the business model he wanted for his dealership – BHPH with a related finance company. Free Bridge Auto Sales opened their doors in late 1992, and his related finance company was up and running before he sold the first vehicle.
Finding the right software was high on Fadeley’s list. In 1993 he finally found the software company that could provide everything he needed for his BHPH/RFC business model. “I’ve been in this business since 1974 and have dealt with many software companies, but I never had one that could deliver what I needed or wanted until Compass Systems. Their software covers all aspects of my business including sales and inventory, accounting, my finance company, payroll, and my service department. I rely on them to provide everything I need, and they always come through for me. It’s important to me to keep a close watch on every aspect of my business and Compass gives me the tools to do exactly that.”
Why chose this business model? “I knew I wanted a related finance company from the beginning for multiple reasons,” stated Fadeley. “Tax planning was the first reason, but the repair issues that arise with BHPH customers ran a close second. No customer was going to come to my lot and hold my payments hostage over a repair that they felt they were entitled to.”
Don’t take that statement as a hard nosed approach to assisting customers with repair needs. Fadeley spent more than $33,000 on goodwill adjustments in the first seven months of 2005 helping his customers. “I will work with a customer up to the point that they try to take advantage of me. I want their vehicle running and them making their payments, but I make it very clear that it is goodwill. If they don’t make their payments, the finance company will repossess their vehicle.”
The same disciple that Fadeley applies to his workouts is applied to the collection process of his finance company as well. It starts with the first payment: Don’t miss it, or your vehicle will be repossessed! The finance company will work with a customer, so much so that they will waive most late fees if the customer just comes in to work it out. For those that don’t make payment, expect liens, garnishments or any other collection method allowed by law.
Six collectors pursue an aggressive array of legal options, calling upon an attorney only when an attorney is involved on the defense side. If you purchase a vehicle from Free Bridge Auto Sales, consider yourself married to the finance company for 17 years or until you pay for your vehicle in full. In Virginia, a judgment is valid for 7 years, but filing it on the circuit court docket adds an additional 10 years.
Seventeen years is a long time to collect an outstanding debt. In 13 years of operation, 1,133 open collection accounts totaling more than $5.1 million have been amassed. The good news is that in 2004, more than $350,000 was collected against their bad debts. Free Bridge is serious about collections!
“I have acquired a pretty extensive legal education over the years, and I play by the rules,” says Fadeley. All vehicles repossessed by the finance company go to the auction. Free Bridge will bid on those vehicles and will usually be the high bidder on 20 to 25 percent of those vehicles.
What about ongoing operations in the dealership? Free Bridge sells 35 vehicles per month consistently with their disciplined approach. Fadeley believes in branding so much that he registered Everybody Rides® with the US patent office several years ago. Free Bridge relies heavily on TV and radio to brand their Everybody Rides® slogan. Mention Free Bridge Auto Sales and the 150,000 plus people in the surrounding 45 mile market radius, and they will immediately say, “Everybody Rides.” Mention Everybody Rides®, and they will immediately connect it with Free Bridge Auto Sales.
The tiered interest rate program at Free Bridge ranges from 10.9 to 34.9 percent and keeps customers coming back. The rate each customer pays is based on their ability to pay, as well as their payment history with Free Bridge. Returning customers who pay well earn lower interest rates on future purchases.
The dealership is a family affair for Fadeley. Two sons are involved in the sales side of the business as sales managers, and one daughter works in the finance company and will eventually make all credit decisions. Two younger children have been key marketing personalities adding character and humor to the Free Bridge commercials for years. The 8-year old has been marketing for dad since the age of one.
“The goal is to get the children to the point that they can run the show,” claims Fadeley. “What is intuitive to me won’t be to them for several years, they just don’t have the experience yet.” Based on Fadeley’s discipline, it won’t take long.
Vol 2, Issue 10
Used-vehicle values fell by an average of 1.9% in October, the largest decline since January but on course with seasonal patterns, according to the latest report from Black Book.