Setting the Pace

In today’s hyper-regulatory environment, every dealer is working harder than ever to succeed under the strictest of guidelines. Some dealers, including each of the six finalists for this year’s F&I Dealer of the Year award (sponsored by The Warranty Group), have accomplished that feat while touting solid numbers for product sales, profit per retail unit and charge-back rates. The following profiles offer an insider’s view of those operations and the people who lead them. One of these operations will be named F&I and Showroom magazine’s F&I Dealer of the Year.

Dick Hannah Dealerships

Background Check: Founded in 1949, Vancouver, Wash.-based Dick Hannah Dealerships is the largest dealer group in the state. It is currently operated by Richard Hannah, president, and vice presidents Jason and Jennifer Hannah.

The Numbers: The dealer group’s profit per retail unit (PRU) on new vehicles has risen from $750 to $1,000 in five years. The operation’s PRU on used units is $1,200. Financial services for Dick Hannah penetrated at an 88 percent rate in 2011, while customer acceptance rates for service contracts and etch hovered at just above 50 percent. And since 2007, the dealership’s charge-back rate has fallen from 20 to 9 percent.

Secret Weapon: An F&I process to which all 24 F&I managers in Dick Hannah’s 13 stores must adhere. It’s a non-confrontational approach that F&I Director Ralph Larson implemented five years ago. Larson wants sales consultants to be fully versed in the F&I process so they can begin exposing customers to products early and often.

“We just want them to open up the dialogue so F&I is not an afterthought,” Larson says. “The menu is basically used as a closing tool, because our customers know everything about our products before our F&I managers get to the menu.

“Listen, you can’t expect customers to make a $120 payment decision in 20 seconds,” he adds.

Larson even maintained his non-confrontational approach when he discovered a few years ago that the local credit unions were getting his customers to cancel their loans, causing his charge-back rate to climb to 18 percent. Rather than fight them, he instituted a new policy that allowed the credit unions to get first crack at transactions involving their members. If they can’t offer an acceptable rate, Larson’s team can take over. The move hasn’t hurt F&I profits and charge-backs have fallen since.

Compliance Check: Dick Hannah Dealerships is hypersensitive when it comes to disclosures. Every customer interaction in the F&I office is video-recorded, and all 1,200 deals transacted each month by the group’s 13 stores are audited before being sent to the corporate office for processing. The audits, conducted by finance assistants at each location, check for three items: a menu, a disclosure waiver detailing which products the customer accepted and declined, and a lender recap sheet that discloses the rate and finance charge. If one of those forms is missing, the deal gets kicked back.

Larson also established pricing caps on all products. He knows the caps hurt the group’s average, but he knows it’s the right thing to do for the customer. “I’m proud of our numbers,” Larson says. “Maybe we could be more aggressive, but I like the way we do things here.”

Every six months, F&I managers are reminded about the store’s policies regarding behavior and compliance, a process automated by Compli’s human resources and compliance management platform. The dealership also requires that every F&I manager attain senior-level certification with the Association of Finance & Insurance Professionals (AFIP).

Industry Accolades: Dick Hannah was a 2011 F&I Pacesetter and was named the 2012 Dealer of the Year by the Washington State Auto Dealers Association.

Setting the Pace: Nothing captures the dealer group’s commitment to the communities it serves better than the new marketing campaign it rolled out this year. Instead of promoting the latest deals, the campaign promotes the dealer group’s consumer-first approach and its work in the community. The tagline: “Believe in Nice.”

“It’s not about marketing our store, it’s about getting people to understand that we’re nice people to do business with,” Larson says. “We want to let people know that we’re regular people with regular families who make a commission on the strength of the work we do for the customer.”

But actions do speak louder than words at Dick Hannah. The group has hosted telethons for the Children’s Cancer Society, hosted adoption drives for the Washington Humane Society, planted more than 70,000 trees for the Arbor Day Foundation and partnered with the Police Activities League. Last year, the dealership also sponsored and funded Autovation, an exhibit that students from Washington State University’s Vancouver campus created for the Oregon Museum of Science and Industry. It highlights advances made in automobile technology that have led to improvements in safety and fuel efficiency.

Next page: Hoy Fox Toyota

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Hoy Fox Toyota Lexus

Background Check: Hoy Fox Toyota Lexus was established in 1991 by the 39-year-old Hoy-Fox Automotive Group. The dealership currently stands as the largest Toyota dealership in El Paso, Texas.

The Numbers: The finance team at Hoy Fox Toyota Lexus closed out 2011 with a 63 percent year-over-year improvement in F&I profit and a 43 percent jump in the group’s average PRU. Hoy Fox’s team of six F&I producers averaged $1,650 per copy on new vehicles and $1,450 on used. Financial services penetrated at a 90 percent clip, while the department claimed acceptance rates of 60 and 65 percent for service contracts and GAP. The penetration rate for credit insurance was a respectable 35 percent.

Secret Weapon: There’s a spirit of camaraderie among the members of the F&I team. David Amaya, general manager of the dealership, says the group meets every morning over coffee and doughnuts to review deals and compare numbers. They also eat lunch together inside the dealership every day, without fail.

“That’s really been the key to their success,” says Amaya. “Some of those meetings are very competitive, but in a good-spirited way."

It was Amaya who made the decision to send the team to GSFSGroup’s F&I training two years ago, setting the stage for a big year in 2011. But that decision was only part of the F&I department’s turnaround.

“I went around asking customers what they thought of the products we offered, and they said they wanted something that has a little more value to the tangible product they’re buying, which is the automobile,” he says. “So, once we made the decision to make big changes to the department, I knew we had to get buy-in from the team.”

To do that, Amaya handed each F&I manager a copy of “Good to Great” by Jim Collins. Among many lessons, Collins tells readers that success is achieved when team members are able to reflect on how they might be impacting a process or business outcome. “It taught us that we each needed to make a change first, and egos were not going to be acceptable,” Amaya says.

Once he had the department thinking like a team, Amaya handed them another book: Scott Alexander’s “Rhinoceros Success.” Like its title, the book teaches readers to be thick-skinned like a rhino and to charge their way to success, a mindset the F&I team operates under every single day.

Compliance Check: The dealership employs GSFSGroup’s “Signature” process, which requires F&I Director Victor Martin Del Campo to inspect every deal for errors or missing information. He will also determine the right lender for each deal before handing it to one of his six F&I producers.

Monthly deal audits are performed internally and by GSFSGroup. They’re checking for two items: a menu and a product-disclosure waiver the dealership sources from American Financial and Automotive Services Inc. Additionally, 20 percent of each producer’s pay plan is linked to CSI scores.  

Each member of Del Campo’s team also is certified by the AFIP and by GSFSGroup. The team is currently pursuing Senior Certification with AFIP and must complete semi-annual compliance training online. All of this has earned the dealership an “A+” rating with the Better Business Bureau.
Industry Accolades: Hoy Fox Toyota isn’t just a Toyota Diamond Dealer, it’s also a past recipient of the Toyota President’s Award, as well as GSFSGroup’s Gold Dealer Award. Bob Hoy, owner of Hoy-Fox Automotive Group, was inducted into the Texas Automobile Dealers Association’s hall of fame.

Setting the Pace: The dealer group is involved in the American Cancer Society, the El Paso Marathon Kids event, and the Rio Grande City Nursing and Rehabilitation Center, among other causes.

Next page: Landers Toyota-Scion

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Landers Toyota-Scion

Background Check: This Little Rock, Ark.-based dealership opened its doors in 2003. Owned and operated by Steve Landers, Sr., the store is part of the 35-rooftop RLJ-McLarty-Landers Automotive Holdings LLC.

The Numbers: Since 2006, the store’s metrics have jumped drastically. In each of its two best months so far in 2012, Landers Toyota-Scion brought in more than $1 million per month in F&I revenue — up from approximately $260,000 per month back in 2006. The uptick is largely due to better vehicle sales, which rose from 300 units per month to at least 650 per month in the same period. The F&I team currently averages around $1,380 per copy.

Secret Weapon: High standards and values. “I’m proud to say that I work for Landers,” says F&I Director Jon Roberts. “I’m proud that our owner allows us to do the right thing, and that makes a big difference. I’ve worked at another dealership where they don’t always do the right thing, but that’s not the case here.”

One example of the store’s commitment to doing right by the customer is the digital board that hangs in the showroom. It displays current interest rates offered by Toyota Financial Services, making clear the store isn’t relying on dealer participation to achieve its high per-copy average. The dealership sends about 80 percent of its deals to TFS, and the captive responds by buying deep. But the store does go to great lengths to get its credit-challenged customers approved at prime rates, and management will go to bat for customers to make that happen.

“If [the deal] doesn’t get done at a prime rate, we rehash the deal with the lender,” Roberts says. “If we can’t get it approved, the dealer rehashes the deal with the lender. So we get a lot of deals done that maybe should be subprime that we end up taking as prime. We do this so the customer isn’t stuck in a costlier, longer term loan. We also want to be able to sell them what they need, and they need product more than they need interest rate.”

Compliance Check: Landers Toyota-Scion video-records all customer interactions in the F&I office. The videos are used for training, but they also ensure that producers adhere to the group’s strict policies and procedures.

“We do it to make sure there’s no misunderstanding of what we said and what we did, but I’ve never been asked to review the videos in the seven years I’ve been here,” Roberts says, adding that the recordings are mostly used for training. “We’ve never been involved in a lawsuit and we’ve had no complaints filed against us with the attorney general’s office. We just don’t do [business] that way.”

Trophy Room: Landers has been a recipient of the Toyota Motor Co. President’s Award every year since 2001. The dealership also is a member of the President’s Cabinet, has been named a Gulf States Toyota MVP Award winner since 2005, and was a recipient of the Toyota Board of Governors Award in 2010 and 2011. It’s also earned the Toyota Signature Award every year since 2008, and was on the Toyota Customer Service Advisory Board in 2010 and 2011.

Setting the Pace: The dealership also sponsors or chairs a number of charities and their boards, including the American Heart Association, American Cancer Society, Juvenile Diabetes Association, American Red Cross, and the Little Rock Boys & Girls Club. Landers also participated with Go Red for Women 2011, part of the American Heart Association, and was a top donor for the AHA Heart Walk in 2011.

Next page: Nyle Maxwell Dealerships

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Nyle Maxwell Dealerships

Background Check: Nyle Maxwell came out of retirement and repurchased two of his current stores from Group 1 in October 2009. The group now counts four stores: two Chrysler-Jeep-Dodge-Ram stores, a GMC outlet and a FIAT store, all located in the Austin-Round Rock, Texas, metropolitan area.

The Numbers: The group’s F&I team, made up of seven producers, averages two products per deal while maintaining a 7.5 percent charge-back rate. Additionally, the F&I department at the group’s Chrysler stores maintain CSI scores of 93.4 percent for financial arrangements, and a 95.4 percent score for “honesty of financial arrangements.” The dealer group’s Chrysler store also is the No. 1 most profitable store, according to Chrysler, and the No. 7 most profitable Dodge-Ram-Jeep store in the nation.

Secret Weapon: Maxwell says his people are what make his company go. That’s why employee satisfaction means just as much to him as customer satisfaction. And the way he believes you keep employees inspired and motivated is through regular training. As he puts it, if his employees know how to take care of his customers, the bottom line will take care of itself.

Compliance Check: Maxwell doesn’t view compliance as a burden. He sees it as a chance for his operation to protect its customers. That’s why he didn’t hesitate to invest in DealerTrack’s suite of compliance software. “If we’re not in compliance, we can’t sleep at night,” Maxwell says.

The group also conducts regular deal audits, which ensure that a menu and a disclosure form are included in every deal jacket. An employee handbook also is distributed companywide to ensure that all policies and procedures are followed, and his F&I producers are certified by the AFIP.

Industry Involvement: Nyle Maxwell is a member of the Austin Automobile Dealers Association, the Texas Automobile Dealers Association and the National Automobile Dealers Association. One of the group’s general managers also sits on the Chrysler National Dealer Council, while another serves as president of the local General Motors Ad Association.

Giving Back: Nyle Maxwell donated approximately $80,000 to charitable organizations last year, including the Hope Alliance for victims of domestic violence, the Dell Children’s Medical Center of Central Texas, the American Cancer Society, area schools and numerous other organizations.

Maxwell also sits on the board of directors for Dell Children’s Medical Center, and has hosted the foundation’s annual fund drive at one of his stores. He also sits on the board of directors for the Seton Health Care Network and the Williamson County YMCA, and is currently a member of the Austin Area Research Organization. He also is a founding chair for the Austin Children’s Hospital and currently chairs the Round Rock Community Foundation. “I guess I don’t sleep,” he says. “We just want to be good corporate citizens.”

Next page: Robbins Auto Mall

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Robbins Auto Mall

Background Check: Robbins Auto Mall is a family-owned dealer group that’s existed in Humble, Texas, since 1928. Owned and operated by Bill Robbins, the group’s third-generation dealer, Robbins Auto Mall consists of a Chevrolet and Nissan store.

The Numbers: The two dealerships rake in more than $5.9 million in F&I revenue on about 3,400 to 3,600 vehicles sold annually. The F&I team averages about $1,950 per copy on new cars and $1,550 on used, with financial services ­penetrating at a 78 percent clip. The F&I department acceptance rates on vehicle service contracts and tire-and-wheel protection were 76 and 41 percent, respectively, last year.

Secret Weapon: The connection between the F&I and sales departments. Salespeople are trained to talk early and often about the ­operation’s F&I offerings. Bonuses and other incentives are offered to sales consultants for successful F&I transactions, and are paid 5 percent of backend gross. Two years ago, the F&I department created the Eagle Awards, which are awarded to salespeople who deliver the best “TO.”

“We reward our sales staff ourselves. We want to say thank you to them,” F&I Manager Eddie Barker says. “That means more to the sales staff. They wind up being our greatest asset.”

The F&I managers treat their customers with the same level of appreciation. In fact, their customer-first approach is the main reason the operation’s charge-back is so low.

 “If you give a customer the lowest finance rate upfront, the chances of them refinancing are minimal,” Barker said. “It’s the right thing to do and it has allowed us to maintain a huge pool of repeat customers. And when they come back two or three years later to buy a new vehicle, they’re not going to be upside down on their trade.”

Compliance Check: F&I managers are expected to conduct their own daily self-audit to ensure clean paperwork, that a menu was presented and that the store’s compliance checklist was completed on every deal. Deal audits also are conducted by the group’s product provider, EFG Companies.

The group’s general manager and comptroller also conduct deal audits to ensure correct paperwork. “They consistently make sure our i’s are dotted and our t’s are crossed,” Barker explains.

The dealership requires that all products are presented on every deal, and pay plans do penalize producers if they don’t adhere to that mandate. The store also conducts weekly management training that focuses on customer satisfaction.

Trophy Room: Robbins Nissan is a recipient of the Nissan Owner First Award of Excellence. The Chevrolet store’s F&I department also is ranked in the Top 5 in the nation, while the F&I department at the Nissan store is currently ranked No. 1 in the region. The Nissan store’s F&I operation also is vying to be No. 1 or 2 in the nation.

Setting the Pace: Robbins Auto Mall supports causes like the Humble Rodeo, which support educational programs that further student achievement. The group also sponsors the city soccer league, and the Robbins family donates to low-income housing developments, among other causes.

Next page: Southwest Kia

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Southwest Kia

Background Check: Since 2001, Southwest Kia has served the Dallas area. It is owned and operated by Shahab Salehoun, who, in recent years, has added and turned around four struggling stores.

The Numbers: The group’s F&I ­operation takes in about $18.1 ­million annually, with producers ­averaging almost $1,400 in profit per deal. ­Financial services penetrated at an 81 percent clip last year, while the department’s acceptance rate for service contracts stood at 69 ­percent.

Secret Weapon: Creating a nice environment for both employees and customers. The F&I department, which consists of a director and three managers, works 40 to 45 hours per week. Two years ago, General Manager James Seale decided to give his producers two days off per week to keep them fresh and motivated. “There’s a big difference in attitude and morale since we did that,” he says. “They’re not married to the job.

“I just don’t believe in working my F&I department to death. It keeps them motivated. It gives them a better quality of life. You need to enjoy your life, and staying at the dealership 80 hours per week is not enjoyable.”

Seale’s only requirement is that his team achieves the store’s goals each month, including a 70 percent acceptance rate on service contracts and a $1,700 average per deal. If that happens, he says he’s open to anything that keeps attitudes positive and producers motivated.

“It’s all about attitude. We go in with the attitude that we want to succeed in every aspect. My philosophy is that I don’t have to be No. 1, but I want to be in the top in every area,” he said. “Our expectations are high, and that’s why we have a 95 percent CSI score. Customers leave here very happy.”

Compliance Check: Southwest Kia’s processes are monitored by JM&A’s performance development center and field staff, as well as by an in-house compliance officer. The group also conducts daily deal checks, and upper management gets involved in training. To assist with compliance, the dealership uses DealerTrack’s compliance software.

“Everything’s disclosed,” Seale says. “We always want to make sure we’re not missing anything.”

Trophy Room: The dealership ranks in the Top 10 in national sales volume for all U.S. Kia stores. Kia also lists the dealer group as one of its Top 30 operations for exceptional sales and customer service, a distinction the group has earned for the last 10 years.

Giving Back: Southwest Kia works closely with the American Red Cross. In recent months, the dealer donated funds to the organization for every customer who took a test drive, raising $10,000 for the Red Cross. The team also partnered with the local business community to solicit family-friendly and community-minded activities to North Texas.