Over the past year many domestics have had their collective lunch handed to them in the new car business. I have received countless phone calls from them looking for help to augment their ailing profit centers. They have all come to the conclusion that they are ready to make the commitment to Special Finance, which is a terrific place to start to recover the lost profits of the new car department.
Now, if they could just snap their fingers to make it happen.
The problem used to be education, or understanding how to make it happen. Dealers would often train the person they were putting in charge of the department, only to have that person be hired away, or leave, forcing them to go back to square one. Now, more dealers and their general managers have come to grips with the fact that they themselves must learn what elements must be in place to achieve success, so as not to be left high and dry. All they need to do now, is to put the right person or people in place to run the department and, voila, instant success.
Just put the “right” person in place. If only it were that easy.
I receive what seems to be endless e-mails and calls from dealers looking for Mr. or Ms. Right. They all start out… “Greg, who do you know…” Many of these dealers have been to the well once before. They brought in the “hired gun”, the person that has made the rounds and yes, can produce - with a cost. And his or her specialty is “hairy” deals; deals with funding problems or suspicious documents. Generally, these hired guns last 60 to 90 days; at which point in time the dealer is ready to swear off SF forever.
At some point, they call me. They are all looking for the same thing. A person with integrity that is a great producer, well organized, dedicated to the job with good people skills and the ability to be able to make deals happen with people in sub-prime credit. You know, the Boy or Girl Scout with a pocket protector who can sell ice to Eskimos. They grow on trees, don’t they?
Where do you find them? It certainly can be a real dilemma. Unless you are extremely lucky (if this happens, be sure to play the lottery that day), you aren’t going to find that type of person walking in the front door or answering a classified ad. If someone does, check their references very, very carefully. I would almost tell you not to waste your money advertising locally. Once your dealership has developed a reputation for having a strong SF department you will see more opportunities, but if you are just getting off the ground, it is not likely to happen.
The primary traits you are looking for beyond excellent character are: 1) the ability to look at a customers credit statement, credit bureau file and the available finance companies’ programs and know which program best fits the customer 2) to be able to quickly identify which vehicles are best suited for that financing program 3) to be able to structure deals for maximum gross profit and 4) to be disciplined enough to follow a consistent funding regimen.
So, what options are there? There are really three places to find the individuals that should become your best candidates.
Option number one: Individuals from the finance company side of the industry. This pool of talent would include both the auto finance companies that dealerships work with on an indirect basis, as well as the personnel working in the consumer offices of local or regional finance companies.
Many of the field representatives of the finance companies have at one time or another been in the retail business. More importantly, they now should have a good understanding of the philosophies and policies of auto finance companies and should be able to communicate well when working with these companies’ buyers and funders.
The employees that work in the offices of direct consumer loan finance companies make excellent prospects as they are already buying and collecting sub-prime auto loans from consumers,among other types of loans. They are also under significant pressure to sell credit life and disability insurance and other similar products. These managers are generally not overly compensated but most often have to make collection (and repossession) calls. Since they make lending decisions every day, they can obviously read customer statements and cross reference credit bureau information. This makes for an easy transition into the SF department. Teaching them the “car” side of the business is a relatively easy process.
Option number two: Mortgage loan processors or brokers. This is another excellent source of talent because individuals in these positions must have the same skills as a SF manager and must have attention to detail and organizational skills to place and package mortgage loans. These individuals work with significant documentation requirements, as well as with individuals with sub-prime credit. They are already used to selling loans to mortgage lenders and having to work with lenders’ complicated grids and scoring sheets.
Compensation for a loan processor will normally be below what you would expect to pay a SF manager. A broker, depending on their skills, may be a different story, but with today’s rising mortgage loan rates, you will likely find some brokers that will fit into your budget.
Again, just like with the first option, you will certainly have to teach them the “car” end of the business – not a difficult task – and remember, what these candidates are now doing is arranging loans for people using real estate as collateral. All they will be doing is switching types of collateral in the position of SF manager.
Option number three: The best to place to start – is internally within your own organization. This is the best place to start. It is better to hire at the bottom and promote from within your own organization, if at all possible. Not only does this foster good employee satisfaction (demonstrating to your staff the opportunity to advance within the organization) but your existing employees already know your dealership’s culture.
Depending on the size of your staff, there can be a number of candidates. Keeping in mind the traits mentioned, a desk or sales manager that is already reviewing deals as they are being worked or an F&I manager with an affinity for getting approvals worked out with finance companies would make logical candidates. While strong desk, sales and finance managers are all very important, most dealers would agree that it is easier to fill and train those positions than it is to do the same with a SF Manager.
In this situation, you would be best served by posting the job within the store, along with the job description. Interview everyone within the store that applies. You need to do this for morale as well as discrimination purposes.
The key to interviewing any of these candidates is to be prepared. Have a printed job description to present to candidates at the beginning of the interview and use it as a basis for your interview. Having it prepared will also help you analyze candidates’ qualifications much more objectively. Also have your compensation package – which is based on the job description – prepared. You don’t need to formally present a compensation package during an initial interview, but candidates will certainly want to know a pay range for the position. Save the details for the follow-up interview when you make a job offer.
There are two things to keep in mind whichever talent pool you choose to look at. First, just because someone can or has done a good job selling to people with sub-prime credit does not mean that person is capable of reviewing credit statements and able to identify a deal with the most appropriate finance company. Don’t fall prey to the Peter Principle (promoting someone to their highest level of incompetence).
Second, the person needs to have good math skills and be able to understand how to structure a deal for maximum profit (working the deal backwards). In our initial interviews, we provided applicants a test that included four sample deals, a calculator and gave them to 20 minutes to structure the deals. It gave us a very quick and clear idea of the thought processes the individual would use (and eliminated a number of prospects). Note: If you would like a sample of this test, drop me an e-mail and I’d be happy to send it to you.
What it boils down to is that you have to become a recruiter. If you don’t already have the person internally, and you aren’t likely to find them walking in your door, you must be proactive. Simply saying, “That person doesn’t exist in my market,” is a copout. Hiring Mr. or Ms. Right doesn’t ensure your success, but hiring Mr. or Mrs. Wrong will certainly doom you to failure. Most importantly, in today’s market, you simply cannot afford to let another day of missed gross profit opportunities pass by.
Vol 3, Issue 11
Ford Motor Co. and Volkswagen Group announced the first formal steps toward a partnership that will produce new commercial vehicles and pursue shared innovations in mobile services, autonomy, and electrification.