Finely Honed System Success at World Hyundai

It’s tough to be a player in the auto retail business, especially when your dealership is flanked by large auto malls nearby and is 30 miles from Chicago. Then try putting yourself last in the lineup at Matteson Auto Mall of Illinois, the largest campus-style auto mall in the United States, with very little foot traffic. In spite of tough odds, World Hyundai (Matteson, Ill.) still manages to dominate the special finance field. After less than a year and a half after breaking ground, with no prior store on the lot, World Hyundai is now among the top-10 Hyundai dealerships in sales in the United States, said Brian Malpeli, general manager of the Watson Automotive Group.

How does a tiny, relatively young Hyundai retail operation with barely enough space to showcase cars and scores of neighboring Hyundai dealerships (a search on Edmunds.com pulled up over 96 Hyundai stores in the Cook County area) stay competitive?

Such success is not an anomaly. A finely-honed system, believes Malpeli, is the only way for primary stores to successfully handle secondary business. “Systems run the people, and people run the systems,” he stated.

Drawing the Crowds
That well-tested system starts with attracting customers to the playing field. Roughly 80 percent of the traffic at World Hyundai is lead-driven, and their advertising strategy is aimed at the credit-challenged customer. Thus, by the time a customer walks in, the dealership likely knows if that customer is prime or subprime. While a portion of the ad budget goes to Internet and radio, the most promising results have sprung from blind television infomercials. The dealership continually runs three or four different programs, with names such as “Finance Recall” or “Drop the Payment Network.” The spots never mention World Hyundai—they simply advertise the chance to qualify for an auto loan at a low rate. The shows are literally “blind” spots, said John Amin, finance director, because the spots feature professional actors, with no hint of a dealership.

An interested customer will call the number on the screen, reaching World Hyundai’s business development center, where appointments for all salespeople are set. After making contact with leads, the BDC hands them off to the sales team. The sales team confirms the appointment and logs the customer’s information into Higher Gear, a CRM software that helps manage prospects, leads and follow-ups. On top of this, the sales manager calls and reconfirms appointments.

The lead appointments are transferred to a giant appointment board. All appointments are updated, reviewed and confirmed daily. “No one can leave until we make sure we’ve got all confirmed appointments for the next day on that board,” stated Amin.

The Playing Field
Given its small lot size (100-120 used cars and 150-200 new cars), the World Hyundai showroom is, by contrast, extensive and open. The general manager and two sales managers are stationed at desks in a long row. “Nothing is concealed,” described Amin. “Our only offices are the finance offices.” Throughout the day, communication bounces quickly between sales and finance.

More importantly, World Hyundai runs a blended floor. The general manager and two sales managers have all received solid finance management experience in the past. Between them, Amin and the finance manager, the dealership has the experience to tackle a full spectrum of credit needs.

Executing the Playbook
The first yard-marker of the sales process at World Hyundai is a simple questionnaire to determine the specific needs of the customer and satisfy the needs of the bank. After confirming the lead source, their personal information and proof of residence/income, the salesperson runs through roughly 10 questions with the customer. A few examples are: What is most important to you in a car? Style? Reliability? Affordability? On a scale of 1-to-10, how would you rate your credit? Is anyone else involved in the purchasing decision besides yourself? If so, may we contact that person?

The session is geared around the answers given by the customer. This minimizes the impression that the dealership is passing judgment, while allowing the customer to feel in control. Of course, it also prevents buyers from test driving vehicles they can’t afford.

At this point, if World Hyundai cannot accommodate the customer’s vision, they can easily refer the customer to another store within their Illinois-based auto group: Bob Watson Chevrolet in Harvey, Watson Motorsport in Midlothian or Family Hyundai Suzuki in Tinley Park.

The salesperson inputs the answers from the questionnaire into Higher Gear, whereupon it transfers to the hands of the sales manager who matches the customer up with at least three different vehicles in a range of styles. “If you show a customer two different car models and an SUV, usually one of those choices will work,” Amin commented. “Their choice will determine where we need to shift next.”

After the demo drive is complete and a customer has agreed to purchase, the finance director or manager emerges to shake hands and congratulate the customer on the showroom floor. “We’re going to review some personal information,” Amin will say. “Would you like to do this in my office?” Amin’s goal here is not only to confirm details, but also to take away any apprehension about meeting the finance director, or in his words, “the guy in the box.” He also wants to help protect private information. “Deals are heavily monitored,” he said. “Offices are kept locked when the managers are not present and paper shredders are everywhere.”

The Strategy for SF Success
Through Hyundai Motor Finance Company (HMFC), World Hyundai wields the power to extend credit to customers who normally might not qualify for a conventional finance program. For example, HMFC may be able to provide optimistic payment options at special rates (i.e., 3.9 percent, 4.9 percent, etc.) versus traditional special finance rates of 18-20 percent. “We use this as an opportunity to shorten a customer's term of payments, for example 60 months versus 72 months, while still maximizing profit all the way around,” said Amin. Often, this means helping customers shorten their trade cycle. “Burying a customer in [car payments], with no hopes of getting out just alienates them from ever being able to buy from us, let alone anyone else, for a long time,” Amin added. “Customers are mindful of this and appreciate our guidance in helping them make a smarter buying decision.”

It comes to no surprise that, of the 150 units the dealership sells each month, roughly between 80 and 90 are special finance deals.

While HMFC is a large part of the game plan at World Hyundai, the finance professionals complete the strategy. It is not by accident that all of the dealership’s managers are skilled in the finance office. “Our owner and general manager take credit for that,” said Amin. “They look for that finance experience when they are hiring.” Malpeli added that he is willing to spend money to hire people with the best sales track records in the business. Interestingly, while the Hyundai managers regularly meet at their “headquarters” store (Bob Watson Chevrolet) to observe operations, dealers on the lookout for special finance solutions from other parts of the country are making regular visits here as well.

The Dealer Playbook
Scott Salcone, a dealer principal in the Watson automotive group, recently requested 10 scenario-based questions from all managers and department heads at each store. “He wanted 10 questions related to buying, funding, exceptions, etc., and is going to combine them into one big book,” said Amin.

The questions challenge managers to think about how they must navigate through a host of problematic finance scenarios. For example:
• By simply looking at your inventory, can you match up “customer X” with a 70,000-mile car? Can you get 72 months of payments? How about 48 months?
• Two customers want to apply for credit. What if one has a license to drive and one does not?
• Your approval has been signed with the name “Joe Smith” on the bottom and ”Mary Smith” on top. Can you submit a contract with two different names, even though your approval says otherwise?
o On this scenario, Amin commented: “A lot of times you may have a mother and son who are on the loan together. Based on her history, the mother’s credit may be stronger, but she only wants to be a cosigner.” Through certain finance corporations, like HSBC, the names can be flip-flopped. “Just knowing this definitely helps you make the deal.”

The scenarios and questions may seem elementary at first glance, Amin admitted. “But in the heat of battle,” he explained, “having answers to those scenarios, as well as for more intricate questions, right off the top of your head, saves time and avoids funding problems down the road.”

Having a Stacked Offense Helps
Meanwhile, the Hyundai brand is still gaining speed. According to the annual Best Global Brands survey conducted by Interbrand and BusinessWeek magazine, Hyundai Motor Company ranked 72nd in global brand awareness for 2007, up three notches from the previous year, and eighth in overall automobile brand awareness.

Amin credited the Hyundai name with giving them that extra ‘push’ every dealership covets. “Hyundai is a hot brand right now,” he stated. “Market share is increasing day by day. People see the name Hyundai and they are excited. Many times, they are leaving in a brand new car that they want, not something we had to put them in.” He continued, “Not only are we helping increase the market share; we are also making headway with used cars, too.”

Amin believes the advertising, sales process, finance experience and power of the Hyundai brand all band together to move World Hyundai across the playing field in an aggressive, Chicago-based market. “It’s a perfect fit,” declared Amin. “In my opinion, you couldn’t ask for a better combination.

Special Finance Insider Vol. 2, Issue 1