F&I 20/20 © The F&I Professional’s Newsletter A Division of EFI™ VOL. 1, ISSUE 2 The return of Mad Marv on Digital Retailing page 17 $4.99 December-January Practice Makes Perfect 1
F&I 20/20 The F&I Professional’s Newsletter A Division of EFI™ VOL. 1, ISSUE 2 Top stories in this issue © F&I Spotlight Stump the Pro Stop Sign Show Me the Money Stump the Pro Tony Dupaquier continues his well known “Stump the Pro” role of tackling your most difficult questions about F&I, customer types and handling objections. You’re sure to be enlightened! Page 4 Stop Sign Shannon Robertson calls upon an Industry compliance leader in this issue with a strong message and a reminder about staying under the radar. Page 16 F&I Spotlight Every issue, we’ll feature an F&I pro in their personal element and how they unwind when they’re away from the store. They’ll share with you their hobbies, community involvement and why they love this great industry. Page 5 Show Me the Money G.P. Anderson opines about the kind of goals not found on a spreadsheet and why you need to adopt them. Head on over and check out this month’s feature of Show Me the Money! Page 8 Mad Marv Mad Marv returns to offer his take on industry trends and best F&I practices. In this issue he calls out the Digital Retail folk and their merchandising practices that some Dealers have gotten caught up in. Page 17 News Around Town Produced by NADA's Industry Analysis division, NADA Market Beat is a monthly report on U.S. new light vehicle sales; it replaces the NADA Monthly Sales Recap. at June 2020 Cox Automotive Dealer Sentiment Index – Fourth Quarter 2020 Derived from a quarterly survey that Cox Automotive issues to a representative sample of franchised and independent auto dealers from around the country, the Cox Automotive Dealer Sentiment Index (CADSI) measures dealer perceptions of current retail auto sales and sales expectations for the next three months as “strong,” “average” or “weak.” 2
W MM ell, we survived the first hair-pulling issue and are now back with more power-packed articles from professionals on the front lines to inspire, motivate and educate. From the amateur blogger to those in the mainstream media, the car business (F&I especially) has been under attack for decades. Like you, I fume when I read these so-called experts with an axe to grind trying to throw shade on our industry. They speak as if they spent a night in a Holiday Inn Express and are suddenly “woke” to the harmful secret stuff we car professionals keep hidden. The truth is, they’re just serving up last weeks article that was copied from one of their ignorant peers. They almost plagiarize each other in a mad race to meet a publishing deadline while doing practically no real research in a car dealership. It’s pathetic at best and downright laughable at the least. I’ll join you all in trumpeting the great men and women of this profession who daily do things the right way not only in their professional lives but also personally. I’m damn proud of what I see and read in EFI daily. The way you all jump in to solve a newbie’s simple question proves your greatness and dedication to this calling. Salud! Bits & Pieces………. Why Comply? “Someone is always watching. We should care about what they see.” James Ganther Esq. opines in Auto Dealer Today magazine on this simple yet critical question of significance. Naturally, we all intend to do the right thing yet should realize why it is we do certain things a particular way. Sometimes we don’t exactly know the “Why”. Ganther sheds some light on this in his usual flamboyant manner. Movements... Dan Mason was recently named Assistant VP National Sales Director for Principal Warranty Corp. He brings 23 years of retail automobile experience featuring cutting edge psychology based training to dealers across the country. Dan started his career as a lot porter and has held every position on the variable operations side of the dealership. Congratulations from all of us here at EFI 20/20. Bravo! Park Place Dealerships-in the Dallas/Fort Worth area-have quite an admirable reputation in the community. Many of the company’s leadership development classes are led by senior executives, with 90% of its managers being promoted from within. Park Place established a Women in Automotive Council to mentor and encourage their female members. Women hold positions at the highest levels, including parts directors and service directors, as well as sales, F&I and human resources managers. The company has been named to the Dallas Morning News “100 Best Places to Work” list for 10 consecutive years. Read about them here. 3 Gregory Arroyo garroyo@dealersocket.com Tony Dupaquier tonyd@theacademylive.com Shannon Robertson shannon.robertson@afip.com G.P. Anderson gp.anderson724@gmail.com F&I 20/20© is a bi-monthly Newsletter for the professional F&I Practitioner. This publication is a division of Ethical F&I Managers (EFI™) and is copyrighted. All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law. For permission requests, write to the publisher at: Marv Eleazer 4043 Liska Circle Valdosta, GA 31605 fordpantera@yahoo.com (229)460-3310 Editorial Board
Stump the Pro Cash Before Discount P icture this: The customer wants to purchase a product, you have them closed on the need for the product, however, it comes down to a payment issue. The customer is just uncomfortable with the payment or the ever so popular, “The payment is just too high”. We must either justify the payment or find a way to offer payment relief to the customer without sacrificing the integrity of the product. Unfortunately, an objection handling technique that maintains profitability is not the only direction. And for those of you in one price dealerships and states that all the products are rated, offering a discount is not a possibility. When the Business Manager simply discounts or offers a “cost” price for a product to a customer, you only diminish the integrity of the product you are trying to sell. You offered one price, then offer another, then another? If you were the customer and someone just continued to lower the price, I am sure you would do the same thing I would do, wait until the price got down to none, then agree to purchase. Before you start discounting or changing coverage, explain the benefits of additional initial investment, AKA cash down from the customer. The initial investment gives the customer benefits that will continue throughout the entire length of the loan. For those of you who worked in the old school 4 Square days, go back to your training roots of asking for cash down. The most predominant benefit of the initial investments is a lower payment. Everyone wants a lower payment. Additional benefits are the ability to build equity and trade more often with less finance charges. How you present this to your customer is paramount, this has always worked well for me; “Mr./Mrs. Customer, there are four primary benefits to you, when considering your initial investment, first is, the initial investment will help you lower your payment, it will also help you build equity in your vehicle, that equity will allow you to trade out of your vehicle more often, so you can drive a new vehicle more often and you will have lower loan cost. Taking those four benefits into consideration, lower loan cost, purchasing a new vehicle more often, building equity, or having a lower payment, which would benefit you most?” In most cases, the customer will respond that they want the lower payment. Your response is this, “Great, so would I, and since you told me that you want a lower payment and every dollar you put down now will give you that lower payment, with an initial investment of $X, XXX would allow you to have the products and services you need with that lower payment you desired” Never ask the customer, “Would that be ok? Will that work?” Or “Can you do that?” Tell the customer they can put down the initial investment. If you are uncomfortable with just telling the people, this is a great opportunity for a two-choice close. “You can do the additional investment and put your payment here or you can keep your original investment and have the higher payment, which would you prefer”? Either way, don’t ask a bad question after justifying cash. “Customer’s today need all the information to make an informed decision. Many customers do not want to be sold in the old traditional sense, however, if you allow the customer to have self-discovery, they are more accepting and there is a higher chance of them making the decision you would like them to make” As a Business Manager, is it our job to lead them to water or make them drink? Neither, it is to make them thirsty and show them how to quench that thirst. Remember, we are living in a WIIFM society. Please take into consideration, the amount of money you are requesting the customer to put down and the payment you are trying to achieve. Never try to back into a payment the customer has agreed to. In most cases, the customer will afford a few dollars more. It may not be twenty dollars more, however they may stretch seven to nine dollars. Also, do not ask for additional investment in the exact amount need to achieve the payment they previously agreed to. Ask for the investment in $250.00 and $500.00 blocks. If you ask for an amount exact to achieve the exact payment, the amount may seem too large and it is easy for the customer to say no. Although it is discouraged for professional negotiators to split the difference when working a payment and initial investment, split the difference between the two. Where can the money come from? The payment that’s due on their trade is a good start. If they’re trading a car back in they bought from you, any product refunds can be credited to their new purchase. Before you start reducing your profitability, changing coverage’s or get caught in a single direction negotiation, explain the benefits of the initial investment and more importantly, find out what benefits, benefits them most. 4 Tony Dupaquier is the Training Director at The Academy. As director, Tony is responsible for its curriculum, marketing, and overall growth and direction. With more than 30 years in the industry, he has held nearly every position in variable operations, from salesperson to general manager, and is a former Nissan National Walk-Around Champion. Tony has been a featured workshop presenter at the NADA Convention for a number of years, addressed international dealer groups on F&I and sales techniques, and spoken at numerous 20 Groups and dealer associations. He also contributes F&I articles to many industry publications.
F&I Manager Spotlight Walt Dobrowski is our featured pro in this issue M any things can be said when describing Walt Dobrowski but two words cannot be in the same sentence with his name and those would be ‘uninteresting’ and ‘boring’. However, many words do describe him well such as motorcycle enthusiast, yachtsman, doting father/grandfather, mentor, trainer and the list goes on. From his youth as a surfer dude to his mature days of personally mentoring young upstarts looking for guidance, Walt has led an exciting and rewarding life. And his story continues. Born in Rochester New York and having spent the first six years of his life there, his family moved to the San Francisco Bay area. Marriage and five children-all millennials-later, Walt now enjoys his four grandchildren and is active in their everyday lives. He maintains homes in Sacramento California and in Fayetteville Arkansas dividing his time between them every few months. And he plays as hard as he works too, which is uncommon in the dog-eat-dog world of the automobile business especially for someone as talented as he is. Motorcycles have been a passion since he was 17 years old. “When the kids started getting older, we picked up dirt bike riding. We were gone every day we had off in the summertime”. Though the dirt bike days are gone, his passion for riding is still strong. “We get to ride all year long here in California. This time of year you will find that most of my rides are for Toys-for-Tots and we have several ride events scheduled through the Christmas season”. He also loves winding back-road motorcycle trips to Lake Tahoe which is his favorite ride often inviting friends and work associates along. He’s also an accomplished yachtsman having owned several boats. On his love for yachting, he says, “I use to live on my boat and life was easy on the water. I often loved taking rides outside the Golden Gate bridge with colleagues to go whale watching. The San Francisco Bay is like a big lake with a lot of marinas to go have lunch and dinner. My favorite was Sausalito pier”. Family is most important to Walt and he spends lots of time with them. “I have a 22-year-old granddaughter-Ashley-and she has taken on my independent traits. She’s a corporate girl who was recently transferred to New Jersey. I’m so proud of her and her accomplishments! My 5-year-old granddaughter-named City-is my sidekick. We’re always finding something fun to do on the weekends”. It's safe to say that he’s a little ‘grandkid centered’. Most of his free time is spent loving on his 4 grandchildren. 5
O f the words his friends and colleagues say of him, ‘enthusiastic’ is probably the one that describes him best. Ever polite and mannerly, a phone call with him inspires a positive attitude. You can actually ‘hear’ him grinning on the phone no matter the conversation. And if you have a problem, he’s all ears. Walt’s downtime doesn’t stop with his family and recreation. He also has conducted leadership classes for young entrepreneurs on Saturdays at a local coffee shop where many have graduated and went on to have rewarding careers and have taken leadership roles themselves. “I raised 5 millennials and I saw a need for leadership because of the new challenges young people were facing in this new world working environment. That’s why I started my leadership classes for young entrepreneurs in 2006.” You get a passion for millennials especially when all your 5 children are part of this age group. “So, I started leadership training with my son Jeff. The next thing I knew, several people were showing up to learn leadership. I began teaching from the 21 Irrefutable Laws of Leadership. I decided to meet on Saturday mornings at a local coffee shop. I continued these leadership pieces of training for over 5 years”. “I remember coach Tom Landry said in an interview that he is completely motivated by watching someone progress in life. Coach stated that was the primary reason for coaching”. Many people have had the opportunity to be in Walt’s sales, finance, and leadership classes throughout his 20 plus years with extreme success in their careers. Many of Walt’s trainees have gone on to be sales managers, general sales managers, GM’s, and dealership owners. One particular testimony reads thusly- “Walts training system is second to none. I have used its principles and techniques for 20 plus years. I was brand new to the industry 23 years ago and the passion and desire Walt brings to his training are a must-have. His training and sales techniques have earned their chops and are time tested. I have applied his system and went from being a sales rep to become a Dealer and I hope I can pass this system along to all I employ”. Another testimony reads- “When I was fresh out of high school and just getting started in the world of marketing and business, Walt generously spent time mentoring me in sales, persuasion, and leadership. I now run a lead generation marketing agency in the health space, and I’ve applied what Walt taught me to close loads of sales, grow and manage a team, and to inspire people around me”-Caleb Hodges pictured on right. On his automotive career, Walt says “I finished high school and moved to Maui to catch some waves. After getting over my island fever, I moved back to Sacramento where I answered an ad that changed my life. I was hired in the car business on August 18, 1977. But like many of us, he had a defining moment in his career. He was fired for non-production and wrecking a demo four months after he started selling. He remembers the scene very well. The owner called him into his office where every manager in the store was standing behind him at his desk. They all had contributed something that led to his firing. “Then one of the managers (Dewey McDaniel) spoke up as I was leaving and said, “I’ll take the kid under my wing and work with him if you other managers and the owner agrees”. It was a unanimous ‘yes’. To this day he still thinks the whole meeting was staged to scare the bejeebers out of him. It worked. “I remember Dewey taking me to lunch after and he told me with all sincerity. “You can do this kid”. For some reason I believed him. Later he went on to teach me everything I needed to know to further my auto career”. In 1980, while working as a floor manager, I asked the owner if I could move the Oak Leaf out of the sales office and into the storage room to print contracts. This saved time so I just put a few chairs in there and started signing people up. That’s how my finance manager career started.” After 20 plus years in finance, he decided to start a finance training company called the Menu Trainer. From there I was hired as a finance trainer and the rest is history. On his future in automotive. “My last training class was in January of this year. I retired my training curriculum with no plans on coming back. But then in September, Dan Mason gave me a call and asked me what I have been doing lately. I said ‘absolutely nothing’. Dan said “Good, you will be working with me”. “He said I want you to come and work with me at Principal Warranty Corp. He had some Highline stores that needed help. I immediately said ‘yes’. “So, now I’m back to work coaching management, finance, and sales and couldn’t be happier”. 6
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Show Me the Money Staying Steady in Turbulent Times G oals. The holy grail of business objectives. Expectations are if you don’t set goals you’re never going to succeed. And how many times have you heard the expression: ‘If you don’t know where you’re going, how will you know when you get there?’ So, we drag out our goal spreadsheets from last year, our calculator, the year-to-date reports of our departments and repeat the same thing from twelve months ago. A smile from our boss reassures us we’re responsible managers after we submit for approval and we go about our merry way. But what happens when things don’t follow our goal path? We panic and drag those spreadsheets back out to discover the downward trend. Then it’s a stressful mad race to get things whipped back in shape and at times, we come up short. We cannot always achieve all our goals, especially when we attach time-frames and expectations to them. And working harder is not the answer. As we've seen in 2020, there always will be unpredictable outside forces influencing our ability to complete a goal. Even though goals can help us, they aren't always applicable to the present situation and what's happening around us. At times, they often do not amplify the best of ourselves or our businesses. If anything, they're helping us compensate for what we aren't doing well. A lot of the time, these are the activities that we're not doing well: overcoming procrastination, keeping our focus, facing fears, and organizing our thoughts. I've found some people simply cannot operate without a list of goals. They're conditioned to believe it's the lack of a list of goals that is the problem so they ignore the real problem and bear down on achieving success as it’s associated with the spreadsheet. In other words, if there are no goals then there is no feeling of accomplishment, no boxes to check each day, and thus, no progress being made. And it's human nature to evaluate both others and ourselves by some measure of progress. Our goals are only as good as our imagination, and many times what we imagine is far less than what is possible for us to achieve. I don't always know what's going to happen, but I do know what I need to do when it happens, part of the pilot in me. How can someone live without goals? Listen, it’s not the lack of a goal that is most people’s problems. And I’m not talking about eliminating goals either. It’s the lack of proper goal implementation and order of importance that we need to focus on. Too often we associate goal setting with work product when the first thing we should be doing is focusing on getting our head right so we can accomplish the task in an as efficient manner as possible. “Our goals are only as good as our imagination, and many times what we imagine is far less than what is possible for us to achieve. I don't always know what's going to happen, but I do know what I need to do when it happens” I mentioned procrastination earlier. Think of how much more productive we all could be by doing the necessary things timely. Procrastination in F&I? That’s for newbies and amateurs. Putting off timely tasks will inevitably log jam your office in ways that will create nightmares. Learning to deal with your fears is another box to check off. Think about it for a minute. No matter how persuasive you are, you’re never going to convince that hard-minded customer who never bought in the past and has a snappy objection to every good reason you’re giving in defense of a product. Assume nothing. Manage your fears and organize your thoughts by following your process and don’t fear the ‘No’. Accept that some people simply won’t buy and move on. But if you harbor that fear, it will cause you to struggle in clutch situations so release it. If you do the work immediately in front of you, do it consistently and do it well, then you will be better tomorrow than you were today. The kind of goals I’m talking about can’t be measured on a spreadsheet. They’re the kind that becomes part of who you are professionally and are translated through your work. When you begin changing your thinking, the goals you set in your office will become easier to attain and more realistic. Hey, there’s a reason I call my F&I office “The House of Happiness”. “When a customer asks why the salespeople call it that,’ they will say, ‘Because everybody leaves his office happy and completely satisfied.” And, from my perspective, being better tomorrow than you were today is the only goal you need. Exiting 2020, an unprecedented year for the world, my wish is that you enter 2021 not simply imagining the possibilities but responding to them as they unfold. I wish you a happy and healthy holiday season, despite the pandemic. I hope you all have lots to be grateful for this year and much to look forward to in 2021, which is poised to be another unforgettable 12 months. 8 GP Anderson is a more than 25-year veteran of the auto industry and currently serves as finance manager for Thielen Motors in Park Rapids, Minnesota. He is ACE and AFIP certified.
Rep #1 & Rep #2 by:Tom Wilson Award winning F&I veteran extols the virtues of helpful reps and some sage advice for those who are not T “Knock Knock!” Rep #1 As the F&I manager, you look up from your desk and have one of two reactions. There’s Rep #1 smiling at you. ‘Oh no, not them again,’ you say to yourself and promptly stare intently at your computer screen. Like, it’s the last level of a video game while piling as much paper on your desk, (some from the trash can), as possible to make it look like you’re swamped. “Dude…I’m really busy. Is there something you need?” Thinking that this will prevent a lengthy visit, you add “Yeah, I’m totally buried right now. Do you have any pens you can leave?” The last thing you need is someone representing a company who stands in your office door-way, cracks open the company Hymnbook, and starts singing the company song. Yeah, we’ve all been there and it’s not productive. Even worse are the Reps who park themselves in front of your desk, unfurl a multi-page spreadsheet, and want to review all of the deals for the past month with you. Hey, they have a box to check, a follow-up report to write and an entry to log. As long as nothing gets thrown across the desk at them, they chalk it up as a successful visit and eventually leave you alone until the next time. All you’re thinking is, “I’m glad that’s over; at least I got a handful of pens out of them.” “Knock Knock!” Rep #2 “Ask Rep 2 for some good closes and they’ll share with you things that they’re seeing in your market that are working. They know your brand, your customer base and they know what motivates your buyers to buy the products that protect their investments” On the other side of the coin is the Rep who you look forward to seeing. These people bring true value to your office and respect your time. Most of these guys or gals have sat in your seat, walked in your shoes, and know what it’s like working ding-to-dong with no promise of a paycheck. They’re the Reps that see several dealers a week, (many of them your brand), and they’re more than willing to share best practices, cool effective closes, or they simply understand what you’re feeling at the moment. Sometimes, they’re just a good ear to share some of your woes with because they “get it”. These people live and work in your market and know your business. Ask Rep 1 for some good closes. They’ll open the Company Bible and cite chapter and verse of closes they’ve had since the mid1980s and claim that those closes would work if only you’d memorize and repeat the word track verbatim. Ask Rep 2 for some good closes and they’ll share with you things that they’re seeing in your market that are working. They know your brand, your customer base and they know what motivates your buyers to buy the products that protect their investments. Going forward, ask yourself some questions. “Does this person add value with their visits?” “Is this person just here to check off a box and drop off some pens?” “Does this person value me as one of their F&I Professionals, or am I just another log entry?” Are they dedicated to my dealer and me as a valued resource?” “When they visit, are they here to truly help me, or are they here just to say they were?” Many of these people are great resources so pick the brains of the Reps that service your store. They see a broader base of customers and dealers than you do and can be invaluable to help you improve your PVR and overall F&I operations. A true pro will work hand-in-hand with you to help improve your performance, your PVR, and streamline your operations. In today’s virtual marketplace, their direction and support can be priceless. Tom Wilson is a 30-year car business professional. In addition to being the recipient of the 2010 F&I Magazine’s F&I Pacesetter of the Year award, he was recently awarded the District Manager of the Year award for 2020 from Hyundai Capital Insurance and continues to support over 50 Hyundai, Kia and Genesis stores in his Virginia, Maryland and West Virginia district. 9 here’s been a lot said and written about the relationship between the Dealer, the F&I department, and the Representatives who service them. Ask yourself one simple question, “Am I getting what I want or need from this person?” Having lived half my life in car dealerships with a career on both sides of the desk, here’s what I’m seeing. Most Rep visits play out one of two ways.
Life in the Box The latest F&I tips and useable quotes from EFI G.P. Anderson: Just got off the phone with a customer that I helped get credit years ago, trading vehicles and he and his family purchased their first home. He couldn't stop thanking me for teaching him how to get credit. Thinking happy thoughts. Teasha McMillion: I use a dollar bill which is 6 inches long. Fold it in half and show customers that the profile of their tires is 1/2 of a dollar bill and most potholes are closer to 3/4 of dollar bill deep (refold it) . "So, wouldn't it make sense for less than a half a dollar bill $0.50 cents/day to protect your tires and rims?!" Yes I teach this as "The Dollar Bill Close" Steve Cohen: Stop offering multiple columns. Offer one and give them no initial options but one. Get the yes or get the no and find out which products THEY see the value in. When I used this method and learned the transition to a conversation, I never had more “full pop” deals than my entire finance career. Don Scott: I always have a copy of my manufacturer's Warranty Guide booklet in my office. I have highlighted the word DEFECTS like 9 times on the 2 summary pages. (We're a GM store.) I grab this book as I'm saying the part about, "Your factory warranty covers defects due to workmanship or materials of construction." Then I open to that page and ask them which word I just said they thought was most important. Then discuss the fact that manufacturers only cover things that are their own fault. Usage and wear and tear and not usually part of factory warranty. Justin Gasman: When a customer says to me that they can save me a bunch of time because they’re not interested in any of that “stuff”, I simply respond with “No problem. I can totally appreciate that. Let me get you out of here quickly.” And I continue to present value in things that I can get them interested in. Don’t fight the F types. Just move on because the deal after that could be your record gross. Dina Wilson: Customer today is lending manager at local credit union. Came in to purchase new vehicle and used captive due to rebate. Sales felt she wouldn’t buy anything. Do you change your presentation because of where they work?? (Their credit union offers a VSC as well.). Absolutely not! Two products (VSC plus Luxcare!) plus financing! It’s a great day doing that thing we do! Billy Maki: focused! I just witnessed a lady with a clipboard buy a platinum package...stay Tony Dee: See all that black burned stuff??? Can’t maintain any of it. It works, until it melts in the heat and fries the entire dash cluster. And NOPE, they do not have a VSC. Tom Brenholts: Salesperson: "This was a tough one!" Customer comes in my office and halfway through presenting option one she says: "That sounds good, we'll take that." You never know. 10
A little fun trivia ANSWERS from last issue... *What was the former name of George Angus’ Team One Research and Training™? Answer: Summit Systems *What year, make, and model of classic car does David Robertson of AFIP own? Answer: 1971 Chevrolet Chevelle Malibu Convertible *Tony Dee has two weekend pastimes. Name either of them. Answer: Remote Control planes and racing his Porsche *A well known FIM continues an annual holiday tradition that helps feed people. What’s his name? Answer: G.P.Anderson. He puts on a Christmas decorating gala at his home in Wadena, MN and takes donations for homeless. “Christmas in Wadena” can be found on YouTube And check him out here https://www.christmasinwadena.com/more-about-me *A well known dealer group launched a series of funny commercials with an unusual character. What’s his species and name? Answer: Suburban Auto Group created the commercials featuring a chimpanzee named “The Trunk Monkey” *Considered the “Father of F&I”-Billionaire Pat Ryan-launched the concept of stand alone F&I offices. What was his staple product? Answer: Credit Life and Accident & Health Insurance *Who was the founder of AutoNation? Answer: Wayne Huzeinga *Famed Ford GT40 race car driver-Dan Gurney-was the first to do this after a race. What was it? Answer: He was handed an expensive bottle of Champagne and instantly thought of sharing with every one by spraying it over the immediate crowd in the winner’s circle. *What department did Teasha McMillion begin her automotive career? Answer: Parts *Why do NASCAR races run on oval tracks go counterclockwise? Answer: Because the habit and acceptance of horse racing observed in England of running counter clockwise. The direction was mimicked in the first auto races and continues to this day on circular tracks. 11
Say What? No matter how long you do this job, you’re going to hear the most amazing and unbelievable things popping out of the mouths of customers and staff. Here is a sampling of things overheard in the F&I office. Enjoy! Chris Zilvitis: So funny story.... I told the customer that the bank needed to do an employment verification as their were things they had questions about on the stubs. So I ask the customer for a phone number for his employer and he says xxx-xxx-xxxx. I say “Sir that can't be the one for your employer”. He asks why not. I said “Because that's your cell phone number that I'm talking to you on right now!” Anyway the customer notices the YTD snafu and comes up with a story how HR got new software and it's all screwy and they'd send new stubs. So, he emails me one. The SAME bad stub with the end date ending BEFORE the period began, and a new stub fixing the YTD but nothing else. Gregory Altieri: Customer financed with us at 0% for 72 months. Her payment at the time was $578 and included GAP and a service contact. I received a note from her today that she wanted to cancel her GAP since she refinanced her loan. I was confused. I was even more confused when she sends me the loan docs showing she refinanced with a credit union for 84 months at 7% and her payment is now $702. Blew my mind. Marv Eleazer: 68yo guy and his 65yo wife opted for Joint Credit Life and I informed them about the truncated clause which ceases at age 71. 75 month contract BTW. She asked "Well, if he dies right before age 71 will I have to keep making payments until I'm 71?" He looked over at her and said "NO! You would get the title without any more payments." Then he tossed this zinger "She'll probably die before I turn 71 so maybe I'LL get the title!" I banged my head against the table when he said that. Her jaw had dropped at this point in shock so he finally said "Come on woman. Let's leave." Joey Gormus: It finally happened. A objection that I don’t have the slightest rebuttal for. Anyone have an answer for this one? “The world is ending on November 1st so we don’t need any of that stuff” Cash deal and no I’m not kidding. This is a travel trailer-not a car! Chris Cochran: Customer came in to purchase a new Toyota from us. Toyota was offering 0%. The customer sits in front of me and I suggest, kindly, to him that since he is getting 0% that he may want to consider NOT putting $6000 down and keep that money in the bank. He told me that he had to put that money down to get to the payment he wanted. (Funny enough right there but the story is not over). After signing all of the documents I requested the $6000 and the customer told me he had to go to his bank and fill out the PERSONAL LOAN DOCS before they would give him the $6000!!!! (not over). I proceeded to ask why he thought paying 12.99% on a personal loan for cash to put down on a 0% vehicle loan was the smartest thing to do. He looked me dead in the eye and said "I don't trust car dealers and there is NO WAY I am actually getting 0%". I proceeded to show him the RISC that showed NO INTEREST!!!!! Later that day he walked in with his $6000 personal loan check. I laughed at him and said have a nice day. 12
The F&I Prophet-George Angus-has something to say The Return of “Payment Packing” L The first question is, will it work? Well sure, it’s called payment packing. You work a payment that includes the F&I and ancillary products, and if you need to negotiate, you give up products that don’t affect the gross profit on the vehicle. I get it. “Packing” is the deceptive practice of misrepresenting monthly payments to consumers during auto sales and lease negotiations in order to facilitate the sale of automobile related products and services; the key word being “deceptive.” But is it deceptive? Proponents have told me that as long as they tell the customer what is included and the price, they are not violating any rules. Really? My first question is, “Is the deal first closed and “consummated” with a clearly disclosed, bare payment before the products are added?” 13 ately, I have been asked (more often than usual) by dealers, agents, and F&I professionals about a trend in dealerships where the sales department includes F&I and aftermarket products into the payment during the sales negotiation. Some have even tried to eliminate the F&I turn and F&I Manager altogether. Déjà Vu all over again. First, I am amused when this idea is presented to me as a “new” approach. You see, (for those of you lucky enough to be too young to remember), what they are describing is the way we did business in the 1970’s, before F&I became industry standard. When I first started selling cars in 1975, we (salespeople) did the sale from front to rear, including presenting Life, A&H, service contracts, and chemicals. We also did all the paperwork, by hand. But if you had an exceptional sales department, the sales staff would chip in and hire someone to do the deal paperwork and chase down the loose ends for us. Sound familiar?
Why is this important? In 1999, the National Association of Attorneys General defined and denounced payment packing with a resolution: WHEREAS, “packing” is the deceptive practice of misrepresenting monthly payments to consumers during auto sales and lease negotiations in order to facilitate the sale of automobile related products and services; and …the key word being “deceptive.” Just ask Sage Auto Group, an eight-rooftop group in Southern California. The Federal Trade Commission (FTC) announced they would be part of a settlement totaling more than $3.5 million to customers who fell prey to the dealership group's deceptive practices in 2014-16. Part of the allegation against the dealer was that Sage Auto Group was also accused of including products in payments the customer didn’t know about or thought were free. “Since 2015, [New York AG] Schneiderman has obtained more than $17 million in restitution and penalties as part of his office’s crackdown on the practice of ‘jamming,’ or payment packing.” In 2015, “Three jointly owned dealerships, which claim to be the largest combined Honda dealerships in the country, …agreed to pay $13.5 million to settle charges that they not only sold F&I products that violated state and federal laws, but also allegations that they payment packed, or ‘jammed,’ the questionable products into customer deals.” And get this-Since 2015, [New York AG] Schneiderman has obtained more than $17 million in restitution and penalties as part of his office’s crackdown on the practice of ‘jamming,’ or payment packing! So, what is the rule? First, a little background. Back in the 1990’s, when we were developing the first F&I menus and experimenting with, and testing the F&I menu concept, we spent a lot of time making sure the menus and processes we developed, and the training we provided in their use, stayed well within the FTC and state’s Attorney General’s compliance guidelines. At that time, there was a new wave of compliance enforcement action regarding the way car deals were being negotiated and the use of deceptive negotiating tactics. From Washington State in 1997. And from the Orlando Sentinel in 1997 While Washington State was leading the way on enforcement of these issues, other states began to take enforcement action. And, as we attempted to make sure we met the various state guidelines, we were advised that, regardless of state to state interpretations of deceptive practices, the law that applied to deceptive practices in financing came under federal law, the Truth in Lending Act (TILA) of 1968. 14
Since there seemed to be some differing opinions from the "experts" on how a dealer could assure compliance with these rules, we went directly to those enforcement agencies for advice and clarification of the rules. We then applied their recommendations to our training. Then, in 2010, the rules were updated and clarified when Congress passed the Brownback Amendment to the Dodd-Frank Act which specifically carved out a special exemption giving sole enforcement and rule making authority regarding motor vehicle dealers to the FTC. Subsequently, the FTC clearly defined deceptive practice (and “payment packing”) with a clear definition of proper disclosure during TILA regulated financing agreements and payment negotiation. Attorney Generals agreed and have also determined that not doing so is a deceptive practice. “The FTC has determined that the Truth in Lending Act requires that, when the customer negotiates a payment, before they agree to a final payment, (they call it consummation) they must be given “written disclosure” of certain terms of the agreement such as APR, monthly payment amount, length of the loan and a full, written disclosure of the payment before any add-ons were included in the payment calculation”. By far, the most effective process is still to separate F&I from the sale of the vehicle. “F&I is a completely different process than selling a car. What we have learned is to allow the F&I process to evoke the positive, security driven motivators that cause people to buy F&I products and create top performance. The F&I process must be perceived by the customer as a separate, isolated function from the sale of the vehicle” Having the sales department use a base payment disclosure to negotiate and then do a proper turn to a professional F&I manager has become an integral part of our process because it makes the whole process produce, by far, more income, enhances the customer’s experience, and oh, as an added bonus, you never have to worry about someone saying you weren't honest or that the proper disclosures weren't being done. I am not an attorney and this is not legal advice. Dealers can make their own determinations as to how risky this practice is in their stores. But after working with enforcement officials in the past, I am quite sure that the practice of including F&I and ancillary products to the negotiated payment will be clearly seen as a deceptive practice by enforcement types, no matter what our opinions are. I understand that some people would like to speed up F&I, eliminate a step, (maybe eliminate those F&I commissions), and truly believe they can do it without deceptive practice. But there was a reason the industry took the F&I functions out of the sales process and created the F&I department. It’s because the F&I process is a critical function in terms of compliance, efficacy, and production. And it should be conducted by trained professionals. It is simply, a better way of doing things. 15
Under the Radar Terrence J. O’Loughlin, J.D., M.B.A. F or almost two decades, I prosecuted car dealers in the state of Florida on behalf of the Florida Attorney General’s Office. If I readily knew the name of a car dealer that was not good news for that dealer since it meant that consumers were complaining about him. If I wasn’t familiar with the name of a dealer it meant that he had stayed under the radar. Once a dealer is on the radar the Attorney General pays close attention to his business which is not a good result. It becomes fertile territory for legal action. If a dealer is ever sanctioned it will be freely sanctioned again should there be legal cause to do so. A case in point is a Midwestern dealer who was sued by his Attorney General’s Office recently. However, it wasn’t a typical lawsuit as this particular dealer had already signed a settlement agreement previously with this Attorney General, several years before. In other words, this dealer had violated the law previously, and had signed a Voluntary Assurance of Compliance (AVC). Violating an AVC brings down upon the perpetrator the wrath of the legal imperator. The Law that all Dealers Need to Fear In 1914, sixteen years after the very first dealership was opened in 1898, the Federal Trade Commission (FTC) was created. As part of this federal act, the FTC was charged with enforcing cases based upon unfair and deceptive acts and practices, or UDAP, to which it is commonly referred. All states have passed similar statutes that are called little FTC acts. UDAP in the Various States UDAP in the various jurisdictions generally have titles such as the “Consumer Fraud and Deceptive Business Practices Act” and these laws state that they are acts to protect consumers, borrowers, and merchants against fraud, unfair methods of competition, and unfair or deceptive acts or practices, in the conduct of any trade or commerce and to give the Attorney General certain powers and duties for enforcement. “The general standard for violating UDAP is engaging in business behaviors that have the tendency or capacity to mislead a consumer” The majority of cases are based upon deception (lying and cheating) versus unfairness (imbalanced or prejudicial transactions against the consumer). For a prosecutor, this is not a high standard to surmount. In other words, dealers can, without a high degree of effort, be sued on a UDAP basis. Dealers should be acutely aware that government regulators, private plaintiffs, and class action attorneys all might use the UDAP statute to sue them. AVC’s and AOD’s The UDAP statute provides attorneys general with numerous tools and settlement options, many of them quite expensive to the target. For example, damages may include statutory penalties, consumer restitution, as well as legal and investigative costs. The standard of proof is low for these damages. Depending upon the state, the attorney general can enter into an agreement with the target called an Assurance of Voluntary Compliance (AVC) or an Assurance of Discontinuance (AOD). These agreements generally are not filed in court but are between the state and the defendant where the defendant agrees to pay damages and may admit to various compliance infractions, promising never to engage in those practices again. Should the defendant be caught engaging in those practices again the damages can be severe. Typical Attorney General Allegations From my Attorney General career, I tabulated various dealer violations of the law. My current list includes 153 of these possible violations. Common violations include false advertising, not honoring agreed upon terms, payment packing, fraudulent spot deliveries, power booking, and misrepresenting contractual terms and conditions. If a dealer wishes to attract the attention of a state regulator, false advertising will accomplish this task. Advertising cases are the easiest cases to make for the state. Staying Under the Radar Dealers should plan on two strategies: Strategy 1-Avoid getting noticed. Strategy 2-If they get noticed, be prepared. The primary way to avoid being noticed is to know the law and follow it. In addition, if consumers ever complain, redress consumer complaints with dispatch, as they are radioactive. Dealers should attempt to resolve them before they are filed with a regulator. The majority of dealer prosecutions are the result of consumer complaints. This Midwestern dealer continued to have complaints filed against him after the AVC was signed which triggered the lawsuit. It could have been avoided. The second strategy entails having a written and active ethics and compliance program at the dealership. Some dealers employ rogue personnel from time to time who may place the dealership in legal peril. The affected dealer can defend himself by demonstrating that he is trying to observe the law by employing these programs. They are defenses and may just avoid further regulator action. efforts into account. If a dealer becomes proactive and employs these two strategies, he should avoid ever having to enter into an AVC or an AOD. The ultimate strategy, of course, is for all dealers to behave ethically. By doing so, dealers can avoid a lot of “legal hurt” and will not be on the radar. Prior to joining Reynolds in 2006, Terrence O’Loughlin worked for 16 years in the Economic Crimes Section of the Office of the Attorney General, State of Florida. Terry has routinely assisted numerous states’ agencies regarding motor vehicle fraud and written articles for Consumer’s Digest, F&I Magazine, Consumer’s Research, and more. He is also a regular columnist for P&A Magazine. 16 In my days of prosecuting dealers, I certainly took these
Digital Schmidgital Retailing Mad Marv I t seems that everywhere you look these days, someone is writing about their version-or opinion-of what Digital Retailing is all about. Spreading the good word that’s somehow going to revolutionize the way we market, sell, and finance automobiles seems to be their plan of action. True, there has been a huge exodus from the days of newspaper and television advertising. The internet has taken over and reigns supreme so what are we to do? As a kid, the newspaper was a sacred item to be first read by my father as he would read it while supper was being prepared. I was a big fan of Joe Palooka and Alley Oop comic strips. And sometimes my impatience would get the best of me. Careful not to break the rubber band, I’d gently unroll the paper and ease out the comic section to catch up with my characters. Afterward, I’d restore the paper back to its original state. Much to my surprise, dad would often shout out “Who’s been messing with my paper?” Of course, my lame reply would be something like “Why does it matter?” His answer was clear “It doesn’t read the same”. This was his way of reminding everyone the newspaper was a personal right of his to unroll and read before anyone else and we had better remember that in the future. Of course, the paper was stuffed with car ads, but I didn’t notice until I started selling cars. It began to matter a lot then because that was the main way dealers advertised. Back then, I read them all familiarizing myself with the competition, so I’d be armed when a customer came on my lot. But, times have changed and we now are bombarded with so-called Digital Retailing (DR) advertisements for everything from ravioli to real estate. With the clever design of pop-up ads on our smartphones and other devices every time we do an online search, these ads make our digital lives less enjoyable. The car business has seemingly caught on as well. Scores of companies are out there trying to sell DR platforms to dealers as though theirs's is the only one that will yield results. ‘Subscribe to our process for just $XXXXX per month and customers will not only be able to shop from the privacy of their homes but can completely transact a car deal online!’ They go on to say, ‘Imagine the customer getting approved and e-signing their documents then making an appointment simply to pick up their new car!’ ‘Sign here and you’ll have exclusive rights to our product in your market. This will enable you to capture market share and save money.” Almost sounds like a ShamWow towel commercial doesn’t it? Yeah, I know I’m having a little fun here but what’s the real problem they’re trying to address? ‘Time savings’ immediately comes to mind because everyone tends to agree that the car buying process-especially that of F&I-seems to take too long. Well, let’s put some things into perspective for a moment. “According to a study in LendingTree.com the average financed amount for a new car in the US has now increased to $32,480 and Americans-on average-are shelling out $550 monthly. Overall vehicle debt has increased by 41% between 2010 Q1 at $698 billion to 2019 Q3 with Americans owing $1.2 trillion. And that’s a “T” not a “B” This study doesn’t take into account the love affair Americans have with the automobile-just what their spending. Most customers get excited about that new car smell which spurs them to emotional ownership. DR folk have no clue about that emotional attachment and so they remain in a quantum flux merely addressing the mechanics of the purchase rather than the emotional drive of the buyer. But shouldn’t buying and financing a car be faster? Perhaps, but here’s a clue; It takes as long as it takes. All the important study’s prove people still want that belly-to-belly process of interacting in a live sales setting. Choosing a car plus repayment options can often takes hours. As a professional FIM, one of the smartest things we can do is develop a good Meet & Greet process keeping the customer informed. Again, it’s not how long it takes-it's how long it seems to take that matters. While the deal is simmering, get everyone involved by introducing the customer to the fixed ops, the cashier and show them the amenities of the customer lounge. A salesperson should take time to familiarize them with the complex array of equipment on the car such as memory seats and syncing their phone. There’s a lot a SP can do to keep the customer engaged rather than sitting idle waiting for bank approval. Teach everyone to get proactive and the time spent won't seem so long to get into F&I on a busy Saturday. Nobody knows the car business better than we do so, advertise all you want using Digital Retailing but leave the sales process to professionals. Good luck and keep closing. 17
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