Hit by tighter lending standards, a continuous decline in auto sales, and a reduction in leasing, dealers did all they could to survive 2008. These six F&I Pacesetters managed to stay above the fray and keep their dealerships healthy.

For Joe McCloskey, owner of the Colorado-based McCloskey Dealerships, being named a 2009 F&I Pacesetter is a reflection of his staff’s ability to work hard in the face of economic challenges.

In Troy, Mich., Gary Allgeier, the director of finance for Suburban Collection, said his dealer group survived 2008 because of its brand diversification and growth strategy. Allgeier said the key was viewing the difficult economy as a chance for the dealer group to leverage its resources and focus on positive long-term results in sales and F&I.

For Leo Bunnin, owner and president of Bunnin Automotive Group, 2008 was definitely a challenging year. But his conservative spending on inventory and advertising, and efforts to maintain relationships with customers allowed him and his dealer group to weather today’s economic storm. Despite the challenges, Bunnin maintained his dealer group’s support of the local youth, the medically ill and the elderly in his Southern California community.

Terry Gilmore, a dealer operator at Paradise Chevrolet Cadillac, said his Southern California-based dealership managed to have a good year despite his community getting hit hard by the housing crisis. Already preparing for a difficult 2009, the dealership is now focused on building and maintaining relationships with customers. And despite the challenging auto retail environment, Paradise continues to contribute to its local community.

In Salt Lake City, Utah, Mark Miller, chairman of Mark Miller Toyota, attributes his dealership’s ability to weather the down market to providing good customer service. And despite the challenging retail environment, the dealership continues its support of local foundations and service groups. The dealership is also the first one in Utah to have a nationally certified, environmentally friendly facility.

Josh Dreiband, vice president of Northwest Honda and Northwest BMW in Owings Mills, Md., said the dealer group’s success in 2008 can be attributed to the integrity and ethical behavior of his employees. Besides helping customers, the dealer group also reaches out to the community and sponsors local baseball and softball teams, as well as national children’s and cancer organizations.

These six Pacesetters share similar commitments to helping their dealerships get through a rough 2008. Their efforts are recognized here, and one will be selected this month as the 2009 F&I Dealer of the Year at the National Automobile Dealers Association’s annual show in New Orleans.

McCloskey Suzuki Isuzu

Despite the challenging economy last year, Colorado-based McCloskey Suzuki Isuzu continues to set an example as an industry leader by maintaining steady sales and profitability through full-spectrum financing. And despite a challenging 2008, McCloskey said the F&I Pacesetter award acknowledges his staff’s hard work in the face of economic adversity.

“This recognition is for our employees and company. As they meet daily challenges, frustrations and fears head on … sometimes they don’t realize how good of a job they’re doing,” he said.

The recognition comes on the heels of another industry award McCloskey dealerships received from the Association of Finance and Insurance Professionals (AFIP), which recognized McCloskey and his wife Anne for operating an exemplary dealership. The award was presented to the couple in September at the fifth annual F&I Conference and Expo.

For the first nine months of 2008, McCloskey said he wasn’t concerned about a recession and operated with a “business-as-usual” attitude. The mentality helped employees focus on doing their jobs, which is selling to all types of finance customers. The ability to provide full-spectrum financing is one reason why McCloskey dealerships earned the nickname “hybrid dealerships.” However, in fall 2008, increasing media reports about the recession and continuous decline in auto sales challenged McCloskey’s operation and its ability to weather the economic storm.

“The most paramount thing was we didn’t fall into the mental recession,” he said.
Instead, McCloskey and his team mapped out a plan to navigate the turbulent economic waters. He streamlined his dealership’s operations by eliminating underperforming staff and unnecessary advertising, reducing expenses on vehicles, and renegotiating with vendors. He also worked to reassure his staff that the company was in a strong economic position, and instructed them to focus on customers in the education, healthcare, government and military industries — customers who may be less affected by the recession.

McCloskey’s resourcefulness, commitment to training and balance of full-spectrum financing have helped his business weather 2008’s economic downturn.
“Some of the dealerships that are suffering the most seem to be the ones that have not been in subprime financing and are just trying to get into it,” he says. “We’ve always had a 50/50 balance.”

Suburban Collection

Like other 2009 F&I Pacesetters, the Troy, Mich.-based Suburban Collection has had a successful year despite being faced with unprecedented challenges. The dealer group had increasing same-store sales for the first three quarters of 2008, and expected to have a record sales year as of press time.

Suburban Collection’s financial success last year can be attributed to Gary Allgeier’s single-minded pursuit of improving sales and F&I production. In fact, he viewed the tough economy as an opportunity to better leverage the dealer group’s resources for long-term results. “The groups that will survive and even thrive are the ones that aren’t completely distracted by the troubling economy,” said Allgeier, the group’s director of finance.

Allgeier also attributed the dealer group’s ability to survive the rough times because of its diversification and growth strategy. The company has 30 brands and 43 locations throughout Michigan and south Florida, making it the 14th largest dealer group in the country and No. 1 in Michigan. These dealerships include the No. 1 Saturn and Volvo dealerships in the United States.

The biggest threats to the dealership last year were what happened to leasing, and the impact the credit crunch had on the dealer’s lenders. Before captives and other financial institutions changed their lending policies on leasing, nearly 70 percent of Suburban Collection’s deals were leases. The dealer group has since dialed down that percentage to 40 percent of its total deals. “When leasing was growing, we worked hard to find products that resonated with customers, no matter how they pay,” explained Allgeier. “That has worked out very well for us now.”

He also credits Suburban Collection’s unique partnerships with its lenders as another reason for the group’s success. Allgeier said the key has been the group’s preferred lending partner network, which provides customers with extensive finance and lease options.

Bunnin Automotive Group

A third-generation auto dealer, Leo Bunnin feels a special connection with the industry. “I was born into it,” said the owner and president of Bunnin Automotive Group, which has five dealerships located in Ventura County, Calif.

With 26 years of experience in the industry, he was named “GM Dealer of the Year” in 2005. A year later he was named “Automotive Personality of the Year” by the Murphy Auto Museum in Oxnard, Calif. He currently serves as chairman of the 1,100 GM dealers in the Western United States.

The Bunnin Automotive Group wasn’t immune to the challenges presented in 2008. However, Bunnin said he maintained his philosophy of staying “aggressive in the marketplace to get your fair share.”

He also advocates watching expenses by controlling inventory and advertising budget. “Good habits are made in bad times,” he said. Bunnin’s policy for compliance is simple.

He wants his dealers and staff to be aware, attentive and educated about legal regulation. “It has to be a way of life,” he said. “You can’t stumble onto it — you’ve got to absolutely be aware of it every day.”

Bunnin remains optimistic about 2009 despite the gloomy prediction. He even sees an upturn in business — even if it is a slow, gradual one. He said the key will be restoring consumer confidence. “We have to get people to believe it’s okay to spend again,” he said. In addition, Bunnin stresses the importance of relationships with previous customers.

“New people are not coming to see you. You have to make sure you do everything you can to make them stay with you,” he advised.

Besides presiding over his auto group, Bunnin heavily contributes to his local community. He focuses his attention on the local youth, the medically ill and the elderly. He donates to Support for the Kids, an organization for troubled youth. Additionally, his contributions to the St. John’s Healthcare Foundation in California have earned him the Catherine McAuley Lifetime Achievement award from the foundation.

Paradise Chevrolet Cadillac

Although falling housing prices have caused declines in spending, Paradise Chevrolet Cadillac still had a good year in 2008. Dealer Operator Terry Gilmore attributes the feat to his dealership remaining untouched by the housing crisis. “We’re just starting to feel it because … the growth in home building is just starting to slow down,” Gilmore said. “We’re seeing it a little later than most people.”

The Temecula, Calif.-based dealership, founded in 1992 by Gilmore and Dealer Principal Robert Gregory, has strict policies regarding compliance. Safeguards include audits, a dedicated compliance officer, and a customer identity theft prevention system. Employees also go through ongoing F&I training and review.

“You put systems into place and processes that require the same thing to happen every time,” explained Gilmore, who said the best compliance tool is the dealership’s menu system.

“The menu allows us to review each transaction and to see if something was missed, or if a particular person wasn’t doing it 100 percent,” he noted.

Gilmore predicted that the trade cycle and declining repeat business will be the toughest challenge to overcome in 2009. “People who normally trade every couple of years will not be able to trade in their vehicle this year,” he said. Still, Gilmore thinks his dealership can be more successful going after repeat business, as he said relationship building is more effective than advertising to attract new customers.

A dominant presence in the Temecula Valley and a known community supporter, Paradise already has a head start when it comes to building relationships. In 2007, Paradise contributed more than $250,000 to the community, local schools and chambers of commerce. Gilmore also helped build the local Boys and Girls Club in 1992, and continues to be closely involved with the organization as a volunteer and board member.

“What’s going to separate us from other dealers in the market is we’re going to get some customer consideration simply because of our involvement in the community,” he said.

Mark Miller Toyota

Mark Miller, chairman of Mark Miller Toyota, believes the key to his dealership’s success is its attention to customer service.

“That’s always been our No. 1 mission,” he said. “We take care of customers and employees. Our slogan is ‘Famous for Customer Service.’ We have to live up to that every day.”

The Salt Lake City-based dealership, considered the largest in Utah, also focuses on hiring the right employees. “For sales, you want someone with a good ego drive, yet empathy,” Miller explained. “Having empathy means the ability to put themselves in the other person’s shoes, to help the customer find the right product. That’s a unique combination.”

Compliance is another priority for the dealership. In fact, the dealership was already compliant with the Federal Trade Commission’s Red Flags Rule by the original Nov. 1 deadline. The dealership also ensures that the F&I office reviews every deal for complete paperwork, signs menus on every deal, and is dedicated to continuing education for its staff.

“We’ve always done a lot of training,” Miller said. “We were one of the first dealers in the country to be certified by the NADA. We also do a lot of training for a Toyota Signature Dealer.”

The dealership is also dedicated to community service, as it supports organizations such as the United Way, the University of Utah Hospital Foundation, and the Children’s Center of Salt Lake City. Miller and his wife also serve on the boards of various foundations. The dealership has also attracted attention for its environmentally friendly building, as it was the first dealership in Utah to be certified by the U.S. Green Building Council’s Leadership in Energy and Environmental Design.

Northwest Honda and BMW

Northwest Honda and BMW has a simple philosophy when it comes to business. It’s this philosophy that has driven its success. “Do unto others as you would have them do unto you,” said Josh Dreiband, vice president of the Owings Mills, Md.-based dealer group.

“What we always tell our employees is, ‘If you can’t say grandma after it, then you shouldn’t be selling it to that customer,’” he said. “So if you wouldn’t sell it to your grandma, don’t sell it to your customer.”

The dealership focuses on providing a positive car-buying experience for customers by giving them affordable prices and quality customer service. Compliance is also a top priority.

Aside from reinforcing ethical behavior among employees, the dealership also relies on Automotive Compliance Consultants Inc. to conduct a quarterly review of the store. Employees also regularly attend mandatory educational seminars to keep up to date with compliance laws impacting the dealership.

The store has also invested in transforming its building into an environmentally friendly operation. The building features a “green” roof, 60,000 drought- and frost-resistant plants, insulated glass panels, a main heating source that uses recycled oil from cars, automatic sensors that switch lights on and off when people enter and exit rooms, and a car wash that uses reclaimed water.

“Ed Dreiband, owner of Northwest Honda and BMW, built and created for his community these eco-friendly products to support several generations, and to serve the common goal of less energy consumption,” Josh Dreiband said.

The dealership also supports several community service organizations and programs, such as Toys for Tots, local baseball and softball teams, and the Susan G. Komen Breast Cancer Foundation.