September 2012, F&I and Showroom - Cover Story
In today’s hyper-regulatory environment, every dealer is working harder than ever to succeed under the strictest of guidelines. Some dealers, including each of the six finalists for this year’s F&I Dealer of the Year award (sponsored by The Warranty Group), have accomplished that feat while touting solid numbers for product sales, profit per retail unit and charge-back rates. The following profiles offer an insider’s view of those operations and the people who lead them. One of these operations will be named F&I and Showroom magazine’s F&I Dealer of the Year.
Dick Hannah Dealerships
Background Check: Founded in 1949, Vancouver, Wash.-based Dick Hannah Dealerships is the largest dealer group in the state. It is currently operated by Richard Hannah, president, and vice presidents Jason and Jennifer Hannah.
The Numbers: The dealer group’s profit per retail unit (PRU) on new vehicles has risen from $750 to $1,000 in five years. The operation’s PRU on used units is $1,200. Financial services for Dick Hannah penetrated at an 88 percent rate in 2011, while customer acceptance rates for service contracts and etch hovered at just above 50 percent. And since 2007, the dealership’s charge-back rate has fallen from 20 to 9 percent.
Secret Weapon: An F&I process to which all 24 F&I managers in Dick Hannah’s 13 stores must adhere. It’s a non-confrontational approach that F&I Director Ralph Larson implemented five years ago. Larson wants sales consultants to be fully versed in the F&I process so they can begin exposing customers to products early and often.
“We just want them to open up the dialogue so F&I is not an afterthought,” Larson says. “The menu is basically used as a closing tool, because our customers know everything about our products before our F&I managers get to the menu.
“Listen, you can’t expect customers to make a $120 payment decision in 20 seconds,” he adds.
Larson even maintained his non-confrontational approach when he discovered a few years ago that the local credit unions were getting his customers to cancel their loans, causing his charge-back rate to climb to 18 percent. Rather than fight them, he instituted a new policy that allowed the credit unions to get first crack at transactions involving their members. If they can’t offer an acceptable rate, Larson’s team can take over. The move hasn’t hurt F&I profits and charge-backs have fallen since.
Compliance Check: Dick Hannah Dealerships is hypersensitive when it comes to disclosures. Every customer interaction in the F&I office is video-recorded, and all 1,200 deals transacted each month by the group’s 13 stores are audited before being sent to the corporate office for processing. The audits, conducted by finance assistants at each location, check for three items: a menu, a disclosure waiver detailing which products the customer accepted and declined, and a lender recap sheet that discloses the rate and finance charge. If one of those forms is missing, the deal gets kicked back.
Larson also established pricing caps on all products. He knows the caps hurt the group’s average, but he knows it’s the right thing to do for the customer. “I’m proud of our numbers,” Larson says. “Maybe we could be more aggressive, but I like the way we do things here.”
Every six months, F&I managers are reminded about the store’s policies regarding behavior and compliance, a process automated by Compli’s human resources and compliance management platform. The dealership also requires that every F&I manager attain senior-level certification with the Association of Finance & Insurance Professionals (AFIP).
Industry Accolades: Dick Hannah was a 2011 F&I Pacesetter and was named the 2012 Dealer of the Year by the Washington State Auto Dealers Association.
Setting the Pace: Nothing captures the dealer group’s commitment to the communities it serves better than the new marketing campaign it rolled out this year. Instead of promoting the latest deals, the campaign promotes the dealer group’s consumer-first approach and its work in the community. The tagline: “Believe in Nice.”
“It’s not about marketing our store, it’s about getting people to understand that we’re nice people to do business with,” Larson says. “We want to let people know that we’re regular people with regular families who make a commission on the strength of the work we do for the customer.”
But actions do speak louder than words at Dick Hannah. The group has hosted telethons for the Children’s Cancer Society, hosted adoption drives for the Washington Humane Society, planted more than 70,000 trees for the Arbor Day Foundation and partnered with the Police Activities League. Last year, the dealership also sponsored and funded Autovation, an exhibit that students from Washington State University’s Vancouver campus created for the Oregon Museum of Science and Industry. It highlights advances made in automobile technology that have led to improvements in safety and fuel efficiency.
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