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! [PAGEBREAK]

SF: When was the finance company formed, and from whom did you derive the necessary expertise?

RL: We started Atlantic Acceptance in 1992. Our first instruction for the finance side was a seminar by the DeVoe Group. Our corporate and tax attorney assisted with the initial formation. To stay on top of the changes in the industry, we voraciously devour all the industry publications. We attend nearly all the conventions and trade shows and participate in two different 20 groups. We try to interact with key industry people whenever possible.

SF: How might another large dealership determine when it’s time to start their own finance company?

RL: There are a number of factors, and they vary from state to state. I would suggest they start by consulting with an accountant and attorney who know the industry. But one benchmark that is commonly mentioned is contracts receivable. When that figure reaches the $500,000 mark, it may be cost-effective to start your own finance company.

SF: Who is in charge of financing, and do you consider Credit Now! to be a full-spectrum lender?

RL: Our finance and underwriting department is headed by Mark Bursey. It’s a key position, and we feel very fortunate to have a person of his character and drive. Mark does an excellent job of juggling all the competing interests involved in that department while keeping his eye on long-term success.

When it comes to building relationships with finance companies, it’s important to start with a foundation of utmost integrity. We understand that it is in our best interest for them to do well, so we make sure they get timely and accurate information.

We want the lenders to look forward to seeing a Credit Now! customer arrive in their DealerTrack queue. There have even been times we’ve called our buyer to double check that a computer-generated approval is correct. We could just roll the deal based on the approval, but we earn more business by helping the finance companies when we can. Mark and his team make sure we have the stips and paperwork for every deal collected, signed and overnighted to the funding offices. We want the funders to know when they see a Credit Now! deal, they can process it quickly and easily.

We offer financing options for all credit tiers. We have some clients with excellent credit, many at the opposite end of the spectrum, and everybody in between. We work with more than 30 financial institutions, including Atlantic. That allows us to offer options to anybody who visits our dealership.

SF: Do you work with local or regional credit unions?

RL: Yes, and we have several among our group of potential financing options. We’ve noticed the credit unions in our area becoming more aggressive in the market in recent months.

SF: Do any of the locations have a service or parts department?

RL: We actually outsource all our service work. We have a network of more than 150 shops across the state. Our customer service department handles any customer calls after the sale, and they can schedule an appointment for the customer at whichever shop is most appropriate. This approach allows our leadership team to focus on sales and finance.

SF: Can you describe how an emphasis on customer service and the community can help a business like Linnehan’s to thrive?

RL: Providing outstanding customer service is at the core of everything we do. That goes for every step of the process, from purchasing and reconditioning to lead generation to sales and finance. At some dealerships, that’s where the relationship with the customer ends. We try to set ourselves apart with the level of service we provide to our customers after delivery.

We look at it as the beginning of a long-term relationship. If we foster that relationship the way we should, a one-purchase customer can become a multi-transaction client. To that end, we offer a three-day, money-back guarantee and an outstanding customer service department.

Of course, it also helps to have been in business for as long as we have. Repeat customers and referrals account for well over half of our sales. It’s like the old adage: A happy customer will tell one friend about your company, but an unhappy customer will tell 10! We do everything within reason — and sometimes beyond! — to make sure every customer is satisfied with the vehicle and the deal.

As far as community support goes, we think it’s important to give back. We support many of the local charities and organizations, especially the YMCA and the Make-A-Wish Foundation, for which we have been able to act as WishMakers for several children. We even have a dedicated Web page that details our efforts: Linnehans.com/community.

SF: Can you tell our readers about some of the benefits of keeping Linnehan’s family-owned for four generations, and what it's like to grow up in the business?

RL: We are very thankful for the team of associates we have, and for the longevity and consistency among our key employees. It really makes for a family-like atmosphere, even though there are currently only three Linnehans on staff. We do have a few other sets of second-generation employees on our team, which is pretty cool.

Growing up around the company has given me the opportunity to see the business from many angles, and I had the opportunity to work in almost every possible position in the company. I think that experience has made me better equipped to understand exactly what is and isn’t feasible at every level.

SF: As a dealer who has seen countless economic ups and downs, what advice can you offer for surviving through tight times and remaining optimistic?

RL: Looking back at our company’s history and economic history in general, markets tend to be cyclical. So, to use your terminology, for every “down,” there has been an “up.” Enduring the tough times isn’t much fun, but we can take solace in the expectation that things should get better at some point. Dealers who have planned well can survive and thrive during even the slowest times.