|Now, I may not be the most cultured guy in the world, and I am after all, a used car dealer, not a professional writer, by trade. And I really hope that aren’t any literature lovers reading this that will be offended if I slightly modify a famous literary quote. So with apologies to ol’ Bill Shakespeare, we’ll take a couple of minutes to ponder one of life’s greatest mysteries. “To sublet or NOT to sublet.”|
OK, so maybe, it’s not something great philosophers spend hours debating on top of a mountain, but it is an important decision that affects the bottom lines of those of us in the buy here pay here (BHPH) business. And the “correct” answer to this mystical question may vary from dealer to dealer.
There are plenty of reasons NOT to sublet. It can be more expensive. It gives you less control. You give up a potential profit center. Perhaps you already have the necessary facilities and equipment.
We made the decision when we sold our last new car dealership that we wanted to really narrow our focus to the areas in which we could most excel and be most profitable. In our case, that was selling cars, and providing financing for them. We would sublet anything else that didn’t directly affect one of those areas to an outside expert. Taking that approach can really help you dial in your operation, and motivate you to hone your expertise in the areas you feel most benefit your operation.
Even if you sublet all reconditioning and after-sale repairs, it is still imperative to have a trusted manager internally to oversee the process, and continually monitor the relationships with the various shops to which you sublet vehicles. Subletting will allow you to operate your business leaner from a personnel standpoint, but having the right person in this key position is not an area that should be overlooked.
The subletting decision is probably not a cookie-cutter choice that works the same for every dealership, and depending on your situation, either model could be successful. Perhaps one way to look at it would be if you already have the facilities and equipment, as well as background in the service end of the business, this could be an area that is a perfect fit for you to handle internally. However, if you aren’t blessed in those areas, it might be wise to consider subletting that aspect of your business, in order to better focus on the areas that can most improve your bottom line.
In the next issue, we’ll continue to consider the topic of subletting, as it pertains to some specific areas that are very relevant to BHPH dealers. Until then, I’m going to try to enhance my Culture Quotient by reading up on my Shakespeare…well, as long as I can find my CliffsNotes, that is!
A record year for dealer participation programs pushed CNA National past the $500 million mark in distributions since the company’s inception.