Page 39 - GIADA-April2017

BUY HERE PAY HERE
GIADA Buy Here Pay Here: Where Do We Go

AUTOMOTIVE PRODUCTS From Here?

BY CHUCK BONANNO

In late 2008 we witnessed a financial melt- experienced many “cycles” of strong sub- deal which requires more dealer invest-
Save big money on dealer forms & supplies for your dealership. down in this country spurred on by the prime participation by banks in the past ment or more borrowing to keep up. So,
collapse of sub-prime mortgages and but this cycle has been not only deep but if you have adequate capital you have
mortgage securities. This event created has endured much longer. The cheap cost cleared the first hurdle. The next chal-
the “Great Recession”. While this was all of capital and the lack of other high ROI lenge is marketing to customers.
bad news for our nation’s economy, a fun- (Return on Investment) markets has cre-
ny thing happened in the Buy Here Pay ated a very long cycle. This is not to say We have witnessed a major shift in how
Here world. There was, for lack of a bet- that sub-prime auto finance will go away; we attract customers. Many of the dealers
ter term, a renaissance for Buy Here Pay it never does. It does, however expand in the 20 Groups I moderate have gone
Here dealers. and contract. away from traditional media partially or
totally in favor of digital marketing. They
During the next few years, dealers had the I read everything I can about the perfor- have also become much more transparent
pick of cars and the pick of customers as mance of these bank portfolios and ABS with message and pricing. Consumers
there were few auto financing options for (Asset Backed Securities) and ALL signs demand it. The next step is the dealership
credit challenged customers. The econ- point to a retreat but it hasn’t had a ma- experience. Customers are shouting that
omy also created millions of poor cred- jor impact yet. It seems that every time they want digital communication and de-
it customers. This environment led to a large player pulls back another one sire the ability to get credit BEFORE com-
growth opportunities for the BHPH deal- enters. I am optimistic that we will be- ing to the dealership. You need to create
er. It also created a situation where cus- gin seeing major changes in this market an online shopping experience and a
tomers felt job opportunities were limited over the next twelve months. This is high simple (read: short) dealership visit. You
(so they stayed employed) and one where risk paper and extremely hard to collect. need to present your program as a value
they recognized that credit options were Nobody knows that better than BHPH proposition that clearly states benefit to
limited so they took care of their current dealers who work extremely hard to cre- the customer and you must prove that the
credit (car loan or lease) much better. ate relationships and keep people driving. relationship will be ongoing and not end
And, then, a funny thing happened… With that being said, there will be a peri- at vehicle delivery. You will also need to
od of “disruption” where customers who show your customer you care after the
Wall Street and venture capitalists were need transportation find that financing sale. You need to have programs that keep
faced with limited high yield opportuni- options have shrunk and that the best op- cars running and keep customers paying.
ties as mortgages became nearly impos- tion is dealer financing. Customers have This pays huge benefits down the road
Balloons | Banners & Flags | Books | Floormats | Folders | Forms | Keys & Tags sible to originate. They looked to other always wanted the “best car” they can fi- and will be evidenced by the number of
Labels | Laser Forms | Promotional | Stickers & Decals Supplies AND MORE! high yield investments and they discov- nance. customer referrals and the number of re-
ered the deep sub-prime and sub-prime peat customers.
GIADA now offers all Georgia automobile dealers over 700 great products automotive finance sector. So beginning So where do we go from here? We need
in 2013, heavy investments were made to be ready for this market shift. That There is a great opportunity if you are pre-
that are regularly used in their day-to-day business. in this space to capture short term high requires sufficient capital, a marketing pared and if you are serious about helping
yield returns. So the frenzy began. Buy plan, quality product (backed with real the “unbankable” customer. There will be
Here Pay Here dealers were no longer warranties), a superior sales experience more and more customers in our wheel-
the best transportation option as these and most importantly, a loan servicing house in the future. Good luck. n
banks and finance companies began experience where the customer feels and __________________________________
mining deeper and deeper. Since this sees value. Chuck Bonanno is the National Director
phenomenon began, credit challenged of the NIADA 20 Group program. He has
customers have been able to find financ- Capital is more important than ever as nearly thirty years of experience in the in-
ing including far newer and far more ex- we have experienced tremendous rises dependent dealer space and is an expert on
COUPON: RECEIVE 15% OFF FIRST ORDER OF FORMS market share and the quality of custom- down payments (mostly market driven). er, author, trainer and consultant. You can
pensive cars. BHPH dealers began losing in vehicle cost coupled with diminishing Buy Here Pay Here. He is a national speak-

er degraded even further. Dealers have This leads to higher and higher cash in contact Chuck at chuck@niada.com.
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giada.org/dealersupplies
GIADA Independent Auto Dealer APRIL 2017 | 37
LIMITED TIME OFFER. EXPIRES APRIL 30, 2017.