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Calculated Move

September 2009, F&I and Showroom - Cover Story

by Justina Ly

Like most franchise dealers, Hank Sames has seen better days. Even with the reputation of having the oldest Ford franchise in the state of Texas, his dealer group wasn’t immune to the crash of the credit markets. However, the fourth-generation dealer is counting his blessings for a choice he made nearly two decades ago. It was a decision that has given him a fighting chance to survive what has been the worst economic recession since the Great Depression.

What Sames did back in 1991 was plunge his dealer group — which sells Ford, Lincoln-Mercury, Mazda and Honda — into the buy-here, pay-here (BHPH) arena. Today, his in-house finance operation generates a loan portfolio worth $27 million. It also contributes 25 percent of sales to the Sames Auto Group.

“I wanted to sell cars to everybody. I felt like we were missing a big market because of people who had bad credit,” said Sames. “And I believe that our willingness to change and do new and different things is one of the reasons why we’ve survived all of these years.”

Equal Opportunity Selling

With a degree in finance from the University of Texas, Hanes has always been a student of the world of finance. And when he started questioning why his dealership had to turn away credit-challenged customers, opening up a BHPH operation seemed like a logical next step. However, it wasn’t until he and his sales manager attended a training session and visited a BHPH dealership in Indiana that his idea became a realistic goal.

“I started thinking along the lines of, ‘Why isn’t our business run more like a grocery store?’ What I mean is, when someone walks into a grocery store, they don’t qualify them as good credit, bad credit,” he said. “And when we visited that operation and saw what they were doing, my sales manager and I looked at each other and said, ‘Golly, we could do this.’”

Sames invested $500,000 into his venture and put his equal-opportunity selling philosophy into practice. Vehicles that the dealership planned to sell wholesale were mechanically repaired, cleaned up and displayed on his franchised lot. “We sold them,” Sames recalled. “We had no staff. The girl who was our receptionist was our collector. She only had about five or six accounts to collect. People would come into the dealership to make their payments.”

Since making those first sales, Sames’ business has flourished into six BHPH operations in Austin, Corpus Christi and Laredo. The stores are clean, attractive buildings with plenty of good signage, all of which is meant to make BHPH customers feel respected.

The vehicles sold are 10 years old or less, and have no more than 120,000 miles. The stores currently complete about 120-150 deals per month, a noteworthy figure considering the current economic environment.

And despite the challenging economy, the recession has been a blessing in disguise, as it has weeded out competing lenders and ushered better quality customers into Sames’ BHPH operations. “There’s a lot more business out there,” he said. “But with a buy-here, pay-here operation, you have to be careful because you can run out of capital so quickly.”

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