Believe in Nice

The co-operator of this year’s F&I Dealer of the Year just wouldn’t bite. Asked about his Vancouver, Wash.-based group’s “Believe in Nice” tagline, Jason Hannah says his 63-year-old operation simply needed a catchy motto. The list of people and organizations his operation has touched says otherwise.

Dick Hannah Dealerships has raised $453,000 for the Children’s Cancer Association, supplied 953 pints of blood to the American Red Cross, donated school supplies to the Washington State School for the Blind, raised money for the region’s Boys & Girls Club and Council for the Homeless, planted more than 72,000 trees (one tree for every vehicle sold) in support of the National Arbor Day Foundation, and the list goes on.

Then there’s Dene Grigar. Her Creative Media & Digital Culture Program at Washington State University Vancouver was in need of financial support when she received an e-mail from Dick Hannah Dealerships two years ago. The group had taken its web services in-house and wanted to hire her students. The experience led to Dick Hannah bankrolling Grigar’s mobile media courses, which evolved into Autovation, an exhibit 10 of Grigar’s students built over nine months for the Oregon Museum of Science and Industry (OMSI). It uses two apps and augmented reality to highlight advances in automotive technology.

“We would not be where we are today without Jason and his sister Jennifer,” says Grigar, who put Dick Hannah Dealerships’ financial support alone at more than $100,000. “When they invested in us, other people invested in us. But they were first.”

Reminded of all those efforts, Hannah gives some ground. “We brought in these branding agencies to find out who we are, and I guess that’s who we are,” he says.

Three Generations

Dick Hannah Dealerships was founded in 1949 in downtown Vancouver by Bill Hannah, Jason’s grandfather. He was a third partner in the group’s first store, a Studebaker outlet. Nameplates that have come and gone through the years include Edsel, English Ford and American Motors, but there are also plenty of brands that have stuck, including the Honda franchise — the 22nd in the country — that Jason’s father Dick took on in 1974.

In 1993, Dick also was behind the development of the Vancouver Auto Mall, a 26-acre facility that now houses eight franchises. It was around that time that Dick turned to Jason and his sister Jennifer, who were in their 20s at the time, and told them it was time to step up.

“Dick was the dealer principal when I came to the association about 14 years ago, and I’ve seen him groom Jason and Jennifer,” says Vicki Fabré, executive vice president of the Washington State Auto Dealers Association. “They’re very astute dealers, just like their dad. I have the greatest respect for both of them.”

This past May, the association named Dick Hannah Dealerships as its 2012 Dealer of the Year, mainly because of the company’s contributions to the industry and the community. But there was something else that impressed Fabré: When Dick served as the association’s president in 2003, she visited one of his stores for a Hummer rally he invited her to. On one of the walls in the service area was the association’s code of ethics.

“That impressed me, because you know they’re doing everything in their power to adhere to state and federal regulations,” she says. “As most probably know, we have a very active attorney general.”

The attorney general’s office she speaks of is the same one that uncovered and alerted the rest of the country to the practice of payment packing back in the late ’90s. And as the largest auto retail operation in the state of Washington, the Hannahs go to great lengths to keep their stores out of its crosshairs.

“When I told Jason and one of the VPs that we were applying for the F&I Dealer of the Year award, Jason said, ‘I want to make sure they know if we participate in this, it’s about ethics for us,’” says Ralph Larson, the F&I director who oversees all 24 F&I producers for the group’s 13 stores.

Seeking Control

Larson started in the business in 1995, serving as an F&I manager for a large dealer group in Washington before serving as an agent for another six. He had always known about Dick Hannah Dealerships, and was vying for their business in 2007 when he got a call from Jason.

“I was prospecting the Hannah group when they called me up one day and said, “We’re going to make a change with our provider, but we’re not going with you,’” Larson recalls. “I said, ‘Oh, thanks for letting me down.’”

But the Hannah’s weren’t letting him down. Instead, they called to ask if he wanted to take over their F&I operation, as they were ditching the agent model and going direct with SouthwestRe.

“For a long time we’ve struggled with the agency model,” Hannah says. “Our concern was that we had outside people training our staff, and, because of the size of the group, we weren’t able to monitor what was being taught.”

The Hannahs had called on a number of F&I product providers to bid on the business, but not many were willing to play that way. Even the executives at SouthwestRe, who eventually won the business, were hesitant. The only reason they agreed to work with Dick Hannah, says Scott Craigmile, vice president of sales and marketing for SouthwestRe, was because none of its agents had a connection to the group.

“We would never take business away from our agents, but in this case, they came to us,” Craigmile says. “And when they made that decision, they went out and found someone with the experience you’d want for the position.”

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Cards Face Up

Larson says the role he assumed at Dick Hannah in March 2007 was very much like the one he held as an agent. But instead of managing 27 accounts, he only had to handle one. And he’ll be the first to admit he has no special talents other than he’s “really good at plagiarizing from the best.”

“I don’t sit at home at night writing pitches that are going to change the world,” Larson says. “All I do is try and find out what other successful people are doing and bring it to us.”

From the start, Larson and the Hannahs saw eye-to-eye when it came to what was on the menu. As Jason describes it, “We only sell products we ourselves would buy.” The group’s two most successful products, service contracts and etch, claim acceptance rates of more than 50 percent, while GAP penetrates at a 38 percent clip. The department also sells window tint and paint protection.

The Hannahs also were in favor of Larson’s pricing limitation model, which forbids producers from selling products under or over a certain amount of profit. All transactions are video and audio recorded as well, with Larson, who also doubles as the group’s compliance officer, in charge of reviewing the tapes.

Despite all those checks and balances, the store’s numbers are more than respectable, averaging $1,000 in profit per new vehicle retailed, and $1,200 on used. “I’m proud of our numbers,” Larson says. “Maybe we could be more aggressive, but I like the way we do things here.”

Describing the operation as “hypersensitive” when it comes to compliance and disclosure, Larson requires that his producers attain senior-level certification with the Association of Finance & Insurance Professionals. The group has also automated the distribution of store policies, which happens every six months, through Compli’s human resources and compliance platform.

Additionally, all 1,200 deals transacted each month are audited by finance assistants at each store before they’re submitted to the corporate office for processing. They 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.

“We play with our cards up,” Larson says. “There’s no smoke and mirrors, no weirdness, no pulling strings.”

All in the Approach

When Larson first arrived, he had to figure out who his team would be. That meant some people had to go, and new people had to come in. But once he had his team, Larson began shaping it around a process that is, by all accounts, driven by the menu.

“There are two things that make them successful,” says Craigmile. “For one, it’s the process that everyone follows. But they also have very good people. Ralph, again, gets a lot of credit for that.”

Since Larson was hired, the group’s PVR average has risen by about $250. A big reason for that is the extensive product knowledge Larson picked up as an agent. As he says, implementing and standardizing a process helped, but being able to teach his people how the products worked is what made the biggest difference. And that training extends to salespeople, who play a key role in Larson’s process.

“We want our salespeople talking early and often about F&I products,” he says. “Listen, you can’t expect customers to make a $120 payment decision in 20 seconds.”

That’s why the menu is used as more of a closing tool than a presentation tool. Customers know everything about the group’s F&I offerings before it makes an appearance.

Bill Fulk knows the group well. He’s the COO for Columbia Credit Union, the eighth largest credit union in a state that’s dominated by the lending segment. In fact, Columbia finances more than 300 deals per month in Clark County, Wash., alone, 100 of them originating out of the eight franchises Dick Hannah operates there.

“My first impression of the Hannah family was they are seasoned veterans who understand the business very well, not just how business was done 20 years ago, but how it’s done today,” he says. “And we can trust they’re shooting straight with us, that there’s no gamesmanship being played.”

That’s exactly how Larson approached a problem he discovered several years ago: When Larson arrived, Dick Hannah’s charge-back rate stood at 20 percent. It’s fallen to 9 percent since, but there was one hiccup a couple years ago.

“What we found were the credit unions were remarketing to our customers,” Larson explains, noting that in the Idaho, Oregon and Washington markets, credit unions finance 53 percent of auto deals.

But instead of battling it out with the credit unions, Larson employed a policy that allowed them to get the first crack at deals involving their members. If they can’t offer an acceptable rate, Larson’s team takes over. “One of the reasons I think we have a good relationship with them is because we look at them as a trusted business partner,” Fulk says. “And when I say trusted business partner, I mean they treat the customer fairly and they treat the lending relationship with us fairly.”

Out of the Limelight

Larson will be adding a new job to his list of duties on Dec. 1. That’s when the group officially opens up the first two Allstate property-casualty agencies slated for all 13 of the group’s showrooms. Larson will also oversee the 30 to 40 people who will man the offices. It’s a lot of work for an in-house F&I director, but he wouldn’t have it any other way.

“The Hannahs are really good business people that could be in any business, frankly,” he adds. “They’re not car people, they’re just good business people who want to do business the right way.”

Charlie Robinson, president and COO of Resource Automotive — the sponsor of this year’s F&I Dealer of the Year award — is well aware of the group’s reputation. “This is a well-deserved honor for an operation that is known throughout the industry for doing things right,” he says.

When told of Jason’s refusal to bask in the moment, Grigar wasn’t surprised. She says she was met with the same reaction when the university wanted to present Jason and his sister with the school’s Heritage Award. Jason went fishing and asked his sister and his father to accept the award.

“It’s a very successful business, but he’s not one to brag too much about it,” she says. “I just adore him and Jennifer. He’s the risk-taker, someone who sees something and goes, ‘How can I make that work?’ Jennifer is the practical one, the one going, ‘Let’s see what that’s going to cost.’ They’re the perfect duo.”