In Beaumont, Texas, more than eight years in the trenches coupled with smart decision-making has kept special finance at Kinsel Ford Lincoln Mercury Mazda alive and well. Much of the dealership’s success is a result of the special finance department’s strong foundation.

Finance Manager Steve Wagner worked with another manager of Kinsel Ford to build the department from the ground up, and over the years, Wagner has maintained good relationships with finance sources. Over the past year and a half, he’s become very resourceful at getting deals done.

Wagner said his department currently deals with six or seven special finance companies on a regular basis and has access to a couple more. Over time, he’s developed somewhat of a sixth sense in his ability to place deals. “From experience, I can pretty much tell where I need to go with a deal. For the customer’s benefit, we really try not to … shotgun.” Based on deal structure, he’ll pick the appropriate finance company and will submit the deal elsewhere only if necessary.

He takes a different approach when submitting a deal that many companies would buy. He said, “We have certain lenders that help us out, so they’ll be our priority. Then, of course, we have to try to keep everybody happy.” He said he’ll “look at the whole deal structure … and then submit it to the ones that we’re pretty sure are going to buy it.”

As the saying goes, “You scratch my back, I scratch yours.” As a result of Wagner’s hard work to maintain the relationships with SF companies, a couple finance company representatives were eager to call him this fall to let him know their companies were increasing originations. “Drive … called and … said they need to be more aggressive … AmeriCredit has called me. They’ve been nonexistent in the business for the last six to eight months … We’re seeing them open up.”

Overall, the SF business at Kinsel is improving, but when the market constricted earlier in the year, the finance department had to evolve. The dealership’ utilized a couple of alternative solutions to take care of customers when SF companies pulled back. “When they started really cutting back on the LTV and the carry, we had to get a lot of help from Ford Credit,” said Wagner. In order for the SF deals to work through the captive finance company, the finance department had to “do a lot of switching over to certified pre-owned” (CPO). He added, “If we sent [Ford] a [non-CPO] deal, their conditions, rates, whatever it may be, were so stringent … We did a lot of CPO units from March through July because … that was the only way we could move our used cars.”

When Kinsel’s finance managers couldn’t secure financing for SF customers through Ford Credit or independent finance companies, they had one more option—buy here pay here (BHPH). Kinsel Motors encompasses two BHPH lots (along with a Toyota store). One of the BHPH lots is next to the Ford lot, and when necessary General Sales Manager James McNutt said his staff will turn customers over there. “When we run out of options, and they have some down payment, by all means we try to capture their business.”

The BHPH lots, also known as Kinsel Insta-Credit, have been quite successful. McNutt said they actually turn business away because the dealer “will put only so much money out there … and keeps a pretty tight reign on it.” In September, the BHPH lots had to cut off sales by the 20th of the month at 50 vehicles, the cap for the month, and 50 is a high quota for that time of the year. The surge in business was unexpected, said McNutt, noting that the dealerships usually only do about 25 deals a month in the fall. The dealer agreed to increase BHPH business because the business they were getting was too good to turn down.

While securing financing for customers at the Kinsel operation evolved due to the economy, the used vehicle department has improved due to technology. Both used car buying and inventory management have evolved. “It’s funny. The old days of the used car manager saying he’s going to auction, and he runs to Houston and spends the day there … have changed,” said McNutt. He’ll call his used car manager at 10 o’clock at night and ask what he’s doing, and he’ll be at the auction.

“He’s sitting on the sofa buying cars in Tennessee,” said McNutt incredulously. “We’ve made some great purchases.” While some dealers are hesitant to buy from online auctions because they’re afraid the vehicles they purchase will be in worse shape than presented, he said, “We haven’t been burned yet. I think the key to it if you’re buying from an online auction is to pay the extra $100 to get an inspection done. If there’s a problem, you’re covered.”

While online auctions are good ways to stock the lot, the best way to get used vehicles for special finance deals is through customer trade-ins. McNutt prefers trade-ins because he and his buyers don’t have to “fight every little used car lot trying to buy the same car.” The buyers also scour traditional auctions, newspapers and for used cars. “We’re looking everywhere to find ideally those $5,000 to $10,000 cars, but … they’re really hard [to find] now,” he said.

To help manage his used vehicle department, McNutt relies on vAuto. When buying vehicles, he uses the appraisal tool, which he said includes Manheim, NADA and BlackBook data. The program also helps price the dealership’s online inventory. McNutt said, “It tells us how competitive [our pricing is] on the Internet. We use it for our complete operation in used cars other than [as] a desking tool.”  

It’s imperative to have the right cars on the lot at the right price, but even more important is having customers. To create more opportunity for the SF department, McNutt increased Web traffic and online credit application completions by selecting the right media channels to market through. He recently ran the most cost-effective advertising campaign he’s ever done—a blind ad targeting special finance customers on Facebook.

The ad was simple, with only text that said, “Need an auto loan? Bad Credit? Slow Credit? Get pre-approved before you start shopping. Save time and money. Quick online application and same-day approval.” It was linked to the dealership’s credit site,, which is a blind SF site, save for the dealership’s name in small print at the bottom of the home page, designed to get credit applications. McNutt said the site went from generating about five applications a week to 30. “I spent $188, had over one million impressions and 371 people clicked the ad to go to our Web site. I can’t get that for $200 anywhere [else].”

The spike in traffic to the site caused the company hosting his credit site to call him to see what he’d done to drive so much traffic to his site in such a short amount of time. More importantly, McNutt was able to trace 12 sales (some weren’t even SF) back to the campaign, making the cost per sale for that campaign less than $16. With display ads on Facebook, specific targeting is available, and he opted to have the ad seen only by people in Beaumont. “The [number of] members on Facebook that had the potential to see that ad was like 54,000. It wasn’t a big sampling, but it worked,” he said.

Internet-driven marketing seems to be the key to more sales at Kinsel. The dealership also runs successful e-mail campaigns. McNutt said, “You can spend $3,500 on a newspaper ad, and you don’t even have a customer come in on it. You can spend half that, e-mail 150,000 people in your area and you see some results off that.” The dealership ran its first e-mail campaign in December 2008, and that month the dealership’s main Web site had almost 3,900 clicks, up significantly from 1,000 clicks it got in December 2007.

The increase in the Internet department’s sales was another indicator that the e-mail campaign was successful. The department went from accounting for six percent of the dealership’s sales to almost 25 percent. Before the e-mail campaigns, about 10 sales a month were traced back to the Internet department, and the dealership started delivering about 35 cars a month through the Internet department after the e-mail blasts.

Always evolving online, McNutt is looking to redo the Kinsel Ford Lincoln Mercury Mazda Web site. While the dealership is ahead of many dealers in some aspects, he still sees room for improvement. “Our Web site is not quite up to par. We’re still working on it … We know what’s the key now—make everything easy and give as much information as possible, especially in used cars.”

Currently under the microscope at Kinsel are third-party leads. McNutt said, “We’re debating whether they’re profitable or not … they’re expensive, and they’re hard to make work. I don’t care if they’re pre-approved or not.” He’s finding his other marketing efforts produce better returns and customers. “It’s much easier getting somebody that’s local ... that’s either applied online or to one of your e-mails. You know they’re interested … They just seem to be a lot more receptive than the guy that’s just applied online with a major company that sent you a lead.”

All the while, Kinsel Ford has been operating with leaner management and SF staffs. The leaner staff isn’t a result of layoffs, but rather due to attrition. Instead of filling the manager position that opened up, McNutt and the other managers picked up extra duties, and the sales floor is now blended. “We tried [separate departments] before, but with the way business is right now and with leaned-out management teams, [a blended floor] has just worked out better for us,” he stated.