Audubon Credit Center Launches During Turbulent Times

Nestled in a small cabin with a fireplace, one wouldn’t expect to find an up-and-coming special finance department, but that’s the locale of the Audubon Credit Center, the newly-opened special finance department at Audubon Chrysler Center in Henderson, Ky. Mind you, the dealership did not build the cabin for housing the special finance department. It previously housed used car sales, which moved to another building, leaving the cabin vacant just when the dealer decided to implement SF.

Now, it’s safe to say that dealers weren’t standing in line to open up special finance departments in the last quarter of 2008 because, let’s face it, starting a SF department from the ground up is no easy task even when the economy is stable. It involves having the right people in place, getting subprime finance sources on board, having the right inventory on the lot and successfully advertising to the credit-challenged customer base in your market.

Dealer Larry Bennett, who’s owned Audubon for more than 20 years, had been considering SF for a few years and finally decided to implement it into his business in late 2008, despite market conditions and subprime finance companies tightening up. Why then, in such a tumultuous economy? Two reasons:

1.  The personnel he needed to make the department a success became available.

2.  He wanted the additional income because the overall market was down.

At Audubon Chrysler Center, which also houses Dodge and Jeep franchises, the tagline is, “Where the Viper sits high in the sky,” referring to a Dodge Viper placed atop a pole at the entrance of the dealership This tagline, while catchy, doesn’t exactly project the message, “We cater to the credit-challenged customer.” So, it was important that the implementation and advertising of the new SF department was done properly. To ensure the department was a success, Bennett enlisted the help of Tom Nalley, a confident (yet soft-spoken), savvy, 16-year special finance veteran, who helped open and now manages the SF department at Audubon.

For this particular department, an old-fashioned rustic cabin is an appropriate location because although the department itself is brand new, the different components of it are not. The employees are all seasoned in SF, and the advertising is primarily traditional with only a portion of it focused online. The inventory buyers don’t use any fancy tech-tools to purchase, and although the relationships the department itself has with the finance companies are new, the personnel within the department have been developing their individual relationships with the companies for years.

Nalley has not only cultivated lasting relationships with finance companies; he’s also created relationships with several SF professionals in his area, which is why the department has such experienced individuals. His connections allowed him to build a department with a solid lineup of employees and finance sources that any burgeoning SF department would envy. After just two months in operation, his department was signed up with 12 different finance companies, all of which he works with on a daily basis.

Plus, the five-person Audubon Credit Center staff – hand-picked by Nalley – has more than 50 years of combined SF experience. Nalley’s connections brought two skilled salespeople and a second SF manager to Audubon, all having built rapport with a substantial number of customers in their market. The third salesperson was right under his nose, already employed at Audubon, and had over a year of SF experience under his belt.

With finance companies and an experienced staff in place, buying inventory was the next step. Three people at Audubon purchase SF inventory: Bennett, Nalley and General Manager Steve Watson. Nalley said they go to the auctions looking for vehicles that fit the programs of the different finance companies. He added, “We assume that most companies are going to use 115 percent of NADA trade, so we try to buy a percentage back of that.” Additionally, they look for low mileage, late model cars to fit the programs.

The final piece of the puzzle for this SF department was advertising. To raise awareness of the “Grand Opening” of the Audubon Credit Center, billboards like the one pictured went up around Henderson and in the neighboring city of Evansville, Ind., which (although in another state) is less than 10 minutes away. The main thoroughfare connecting the two cities has three billboards strategically placed on it, with others placed on well-traveled streets in both cities.

The billboards created a solid flow of traffic for the department the first two months, generating between 60 and 80 leads each month. To be able to track the response from the billboards, Nalley said they have a unique 800-number posted on them. Of these leads, he said they’re getting approvals on one out of six and, of those, closing one out of 10. He said those numbers are down from his previous experience, but he added that the decline in the closing ratio of these leads was due to the market, not because the department was new.

Another campaign recently implemented that has turned out to be more successful than the billboards was targeted direct mail, which he planned to continue through February 2009. Specifically, the mailers were sent to consumers with certain credit scores and credit profiles. While the campaign was only in its second week at the time this article was written, the leads from the mailer were outpacing the leads from the billboards, and they were closing better. Nalley said the closing ratios of the leads from the targeted mailer were right in line with what he’s used to—getting approvals on one in four and closing one out of five approved.

The department has also begun to focus some advertising and marketing efforts online. They’ve added banners to the Audubon Chrysler Center Web site that resembles an old-fashioned “WANTED” poster that states, “Wanted, Good People with Bad Credit,” which is linked to their online application. The dealership is also “offering incentives [online] such as gift cards to get people through the door,” said Nalley.

Two other forms of media Audubon is utilizing to get word out about the new Credit Center are radio and newspaper. Nalley said the radio is generating leads, but not as many as the newspaper ads, both of which invite people with “less than perfect credit” to call. Newspaper ads also include the names and photos of everyone in the department. This serves two purposes: to let credit-challenged customers know who to ask for when calling or visiting the dealership and to let past customers of Credit Center employees know where they can find the person who helped them get into their last vehicle. Other newspaper ads list certain credit blemishes that customers can have (like repossessions, open bankruptcy, charge offs, tax liens, divorce and medical bills) and still get financed.

With all the necessary components in place, the Audubon Credit Center was able to complete 25 special finance sales the first month in operation. “With the economy the way it was, that’s 25 new deals [Audubon] didn’t have before,” said Nalley. Although, they did quite reach their goal of 40 units in December, they still managed to put more deals together than the first month.  

“We’re off to a much better start this month [January 2009] than we had the two previous [months],” Nalley said, meaning the department was well on its way to reaching 40 that month. Ultimately, the goal is to reach 50 to 60 deals per month by March 2009. Once the department reaches 50+ deals per month, it’ll account for approximately 25 to 30 percent of the dealership’s total sales. “We’re going to get there,” Nalley declared confidently.

The Audubon Credit Center has all the elements in place to become a success story—a location for the department (a unique one at that), experienced personnel who’ve already built rapport throughout the market, a good lineup of finance sources, advertising that works and inventory that matches up with the finance companies’ programs. Plus, even more recently, Nalley upped the department’s approval rate. “We’re actually getting approvals now on everybody because we’re hooked up with [Credit Acceptance], and [in December], we ended up closing one out of five of the people that were on this lot.”

Nalley may be right on track with his prediction. The Credit Center certainly seems to be well on its way – the old-fashioned way – to getting to 50+ deals per month.

Vol. 6, Issue 2