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Special Finance®

The Maine Attraction

September 2008, F&I and Showroom - Feature

by Tariq Kamal

Headquartered in Trenton, Maine, Linnehan’s Credit Now! Auto Co. is the biggest used-vehicle dealer in the state. It offers in-house financing, five locations and a huge inventory of cars, trucks and off-road vehicles. President Ryan Linnehan represents the fourth generation of Linnehan dealers, and he allowed Special Finance an exclusive look inside his family’s company.

SF: Who started the company, and what kinds of vehicles did they sell?

RL: Linnehan’s was founded by the late Harold (Tommy) Linnehan and John Linnehan Sr. in 1950. Since then, four generations of Linnehans have continued the tradition. The company started off operating under franchise agreements — ultimately reaching a total of 15 — before we decided to focus strictly on used vehicles.

SF: What drove that decision?

RL: We believe that the future of the automobile business lies in top-quality, value-priced used vehicles. People everywhere need dependable and reliable transportation, and they want to find a dealer they can trust. When you’re selling a new vehicle, you’re selling the exact same product as the dealer down the street, and there are only so many ways to set yourself apart. The fact that you’re selling somebody else’s product essentially reduces you to a commodities broker. That makes price the only point of negotiation. That, of course, leads to low margins. Unless you have other departments carrying the load, the result is a low ROI.

In the used-vehicle market, no two vehicles are the same. Different mileages, different conditions and different histories make them unique. Add outstanding benefits and services, and you’ve got a legitimate reason to ask for a premium price. For all those reasons, we decided to focus on the used side. We’ve since expanded to become the largest used-vehicle dealer in Maine, and our finance company, Atlantic Acceptance Corp., is the largest privately owned used-vehicle lender in the state.

SF: Were used-car sales a big part of the business in the

franchise days?

RL: Absolutely! Linnehan’s has always specialized in used vehicles. When we were franchise dealers, we would often find that the new-car and fixed operations were essentially just providing support for — and sometimes being subsidized by — their used-car sales. So despite new-car sentimental attachments for my grandfather, it was really a pretty easy decision.

SF: How was the company able to grow to five locations?

RL: Growing is the easy part. Controlled growth is the challenge! In the late ’90s, we actually had six locations. We often sold more than 300 vehicles per month. But we didn’t have the level of control necessary to be sure we were providing a consistent level of customer service. So we consolidated the three most remote locations into the three larger stores. We then focused our efforts on maximizing net profits and cash flow positions. As a result, we were able to make nearly the same profit from half the locations.

We’ve continued to grow since the consolidation, but we centralized as many operations as we could. Our headquarters holds the BDC and our finance and underwriting, collections and customer service departments.

SF: Can you describe your lead-generation efforts? What’s the advantage of having your own BDC, and how is selling vehicles different in Maine?

RL: For years, we spent tons of money on marketing. Like every other dealer, we invested in all manner of traditional media like TV, radio and newspaper ads. Unfortunately, we had never really been successful at accurately charting our response rate.

We created our BDC in 1998. It handles all our leads, including Internet, which is now a huge part of our business. Having our own BDC gives us the ability to log all the calls and which ad they’re responding to. By tracking those numbers, we’ve been able to focus our marketing efforts on the most effective ads. We reduced our ad budget by about 80 percent with almost no impact on our sales rate.

Starting the BDC also allowed us to build our own customer database. I still get a little sick when I think about the 50 years that went by before we started that project, but we now have over 70,000 records in the system. It’s already helped our repeat and referral business to expand, and we believe there is still a lot of untapped potential. We call it the Gold Mine, which is appropriate because we want our sales team to be constantly prospecting in there!

As for the particulars of selling in Maine, it’s a fairly rural state, so our population base is quite spread out. When a lead calls in to the BDC, we can often discuss their vehicle needs and get their financing approved before they have to make a long drive to the dealership.

We also have a home-delivery program. We’ll take the vehicle right to the buyer’s house, and there’s no obligation to go through with the purchase. If they don’t like it, we’ll drive it right back to the lot and try again. If they do like it, which happens most of the time, the driver has all the paperwork on hand. They can complete the deal at the kitchen table!

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