Last fall, after several years of success running the special finance department for Longmont Ford in Longmont, Colo., Greg Alore set a new goal for himself: He wanted to be a Diamond Dealer. He knew that Capital One Auto Finance’s preferred dealer program offered flexible rates for subprime buyers and that his parent company’s Denver store, Freeway Ford, was already signed up. Alore wanted in.
When the general sales manager at the Denver store called to tell him he was on his way to a Capital One event at Invesco Field, home of the National Football League’s Broncos, Alore sprang into action. Knowing that the executives were flying in from the Dallas area, the longtime Cowboys fan pulled his Marion Barber jersey off the hanger and headed for Mile High to make his pitch.
“Three weeks later, I was a Diamond Dealer,” Alore says with a laugh. “Our first month out of the shoot was November. We booked 14 special finance deals with Capital One, and that wasn’t even a whole month.”
With Capital One now on board, along with GM Financial (formerly AmeriCredit Corp.) and several other finance sources, Alore expects his department to move at least 10 new and 35 used units each month in 2011. It’s an ambitious goal, but he’s confident he and his staff are well on their way.
A New Game Plan
Alore’s devotion to the Cowboys is a byproduct of the 25 years he spent working as a dealer and consultant in the Dallas/Fort Worth market. In 1980, the Detroit native steered his Pontiac Firebird south to take an entry-level sales job at a Ford dealership in Abilene. Many years and several dealerships later, he took a consulting gig at F&I Holding Service Life.
“My specialty was training salespeople for the proper turn to F&I,” Alore says. “They sent me to Colorado once a month, and one of those stores was Freeway Ford.”
Impressed by his work, Freeway Owner Mike Peebles offered Alore a chance to jump back in the trenches as the new-car manager at the Longmont store. The picture brightened further when Alore was asked to run Longmont’s special finance operation in 2007.
“It was a broken department,” Alore says. “I’ve always said that special finance is the lowest hanging fruit, but we were only booking 14 or 15 deals a month. There were a few things we needed to do differently.”
Alore was surprised to learn that his four-person staff was fielding leads from no fewer than eight providers, resulting in a morale-killing barrage of duplicates. He narrowed the providers to DealerLink Inc. and one other, then implemented a new process for making calls and setting appointments. Longmont’s appointment setters are now responsible for making up to 40 calls a day.
Alore’s strategy for bringing in subprime buyers — what he calls the “accountability battle” — creates buy-in by allowing customers to visit the dealership on their own terms.
“These folks don’t want to expose their credit history over the phone,” he says. “Remember, the same person you’re talking to has already been beaten up by bill collectors. If there’s any resistance, we say, ‘That’s fine. Don’t let anybody else pull your credit either. Just come on in.’”
‘Xs’ and ‘Os’
Walking into Longmont’s special finance department, you’ll find a flow chart Alore created for tax season. It directs each customer’s app to a lender or lenders based on his or her criteria for credit score, income, stability and stips. He also has listed a few finance sources that can work with customers with open bankruptcies, a new addition to Alore’s lender spread.
“We ran a campaign targeting bankruptcies in the last quarter of 2010,” he says. “That deal mustered 20 or 25 sales. We were a novice at BKs, but we figured it out.”
The key for Alore was partnering with lenders such as Prestige Financial and Tidewater Motor Credit, both of which offer programs catering to “pre-341” customers — those who have filed for Chapter 7 or 13 but have yet to officially declare their assets. It is, as Alore puts it, “a low point” for those customers.
“But after their debt is cleared, and they’re in a great car, they’re elated,” he says.
Alore wears his passion for helping subprime customers on his sleeve. He says he never hesitates to spend a few extra minutes with a customer to offer counseling or review stips — even if they’re not likely to buy that day. He credits that personal touch with driving referrals.
“We tell our customers, ‘Text your friends, let them know,’” Alore says. “We just had a referral who walked in and said, ‘I heard you’re awesome.’ He drove away in a 2010 Impala.”
Like he does for every referral that results in a sale, Alore rewarded the texter with $200 — and not in the form of coupons for oil changes. “We just give them a check,” he says.
A Team Effort
Alore’s time on the consulting side taught him that rebuilding his department would require buy-in from management. His team handles every lead that is paid for by the special finance budget, as well as every customer with a TransUnion score of 620 or below.
“It’s an automatic turn to SF,” Alore says. “There’s no resentment. We worked through that as a team. And that extends to inventory, our business model, our plan, our execution.”
Longmont’s business model calls for 180 used units in stock on a three-month turn. His focus is on quality, late-model vehicles — another factor that separates Alore from his competitors. One recent customer drove a spot-delivered, high-mileage minivan onto the Longmont lot with three kids in tow.
“She pulled up in a 2000 Windstar with 150,000 miles on it that some other dealer ranched her on,” Alore says. “I put her in an ’07 Sienna at 12.9 percent. We’ll make maybe two points, and she’s in a nice, nice car.”
The vehicles are sourced mostly from auctions, and Alore has buyers on the lookout for special finance units from as far away as California and Michigan.
“There has been a better supply over the last few months, and I’m hearing [the auctions] want to get rid of everything after 30 days,” Alore says. “I don’t know if there’s an ideal special finance vehicle, but our California guy just brought in a bunch of Ford Escapes. Even when it comes to Corvettes, Mercedes and Hummers, he thinks of special finance.”
Alore believes that, as the economy continues to recover, the lessons he and his staff learned during the downturn will result in further gains. He points out that many dealers, including a few of his competitors, turned their back on the subprime market prematurely.
“I went into a 20 Group meeting in Colorado Springs with my dealer, and Greg Goebel spoke to the group,” he says. “Part of what he was talking about was risk. It’s true. Dealers are afraid of getting in too deep.”
The Longmont team persisted, and their reward was a Top 10 ranking in used-car sales for all of Colorado. Alore says he won’t relinquish that distinction willingly.
“It blows me away that there are still dealers out there who won’t do it right,” he says. “Yes, there is risk. There always will be. But if you’re thinking big for 2011, it’s here in special finance.”