For as many differences as there are, this year’s F&I Pacesetters also share a host of commonalities in terms of their approach to performance, customer satisfaction and compliance. Each of them is now vying for F&I and Showroom’s coveted F&I Dealer of the Year award.
This year’s field consists of two operations from Ohio, two from Texas, and one each from Missouri and Utah. Each operation boasts active management teams, payplans that balance performance with customer satisfaction, and multi-layered compliance procedures. They each talk about quality of life when it comes to their employees, one of the reason’s this year’s F&I Dealer of the Year finalists boast long-tenured producers and low turnover rates.
Then there are the differences. This year’s field includes an operation that’s combined the roles of sales and F&I, but did so while bulking up its compliance checks and balances. Another operation posts interest rates in the showroom to be more transparent to customers, while another served as GM Financial’s pilot dealership when it launched its leasing product back in 2011. Another finalist was named “Best of State” in Utah.
The following profiles offer an insider’s look at this year’s F&I Pacesetters and the people who lead them. One of these operations will be named F&I and Showroom magazine’s 2013 F&I Dealer of the Year during a special lunchtime ceremony on Tuesday, Sept. 17, at 12 p.m.
Pictured are F&I Directors David Nichols and Bob Manson of the Cable Dahmer Automotive Group, located in the Kansas City, Mo., area.
Background Check: Under the leadership of Dealer Carlos Ledezma, the Missouri-based, four-rooftop dealer group operates two Chevy stores, a Buick-GMC-Cadillac franchise and one auto outlet for used cars. Cable Chevrolet was founded in 1957 in the Kansas City, Mo., area, and later merged with Dahmer Chevrolet in the 1970s. Last year, the Chevy group expanded when it acquired a Buick GMC Cadillac store, which has since doubled in volume.
The Numbers: Cable Dahmer averages about 560 units per month between new and used across all of its dealerships. Profit per retail unit (PRU) sits at $1,295 on new and $1,309 on used. Finance penetration for the store is at 76 percent, while service contracts penetrate at a rate of 48 percent. GAP penetrates at a 52 percent rate, while tire and wheel, theft and fabric protection penetrate at 17, 12 and 10 percent rates, respectively. Total annual gross revenue for the group is $32 million, with the group’s F&I operations accounting for $7.79 million of that total.
“If there’s a problem or an issue, we can see, ‘Is this salesperson lacking a certain piece of knowledge?’ From there, those are key areas that are going to kick up immediately rather than waiting until the end of the month,” says F&I Director Bob Manson, who oversees the group’s F&I operations.
Compliance inspections for all variable and fixed operations are conducted monthly by Automotive Compliance Corp. Deals are also reviewed monthly by Southwest Dealer Services. Findings are discussed during the group’s once-a-month roundtables. “We hold everyone accountable to their peers,” Manson says, noting that all F&I producers are certified with the Association of Finance and Insurance Professionals. “Accountability means so much here.”
The dealer group also places compliance managers at each location. They report to a corporate compliance officer. F&I managers are also video-recorded every six weeks to ensure compliance. The videos double as a compliance check and training tool.
Secret Weapon: Cable Dahmer’s philosophy is that employees should have room to grow and thus a reason to stay. That’s been the case for Manson, who took on the role of corporate F&I director last year after 19 years with the dealer group. It’s a long time to be in one position, he says, but it never gets stale. The group also recognizes employees for their loyalty to the company, several of whom have spent more than 10 years with the group.
What really drives the group’s success is the trust it places on employees. Financial statements are made available to all department heads, who collectively evaluate expenditures as well as spot areas needing improvement.
Industry Accolades: Chevrolet ranked Cable Dahmer No. 53 for U.S. retail sales in 2011. Ingram’s magazine ranked the dealership as the Top Minority-Owned Business in Kansas City, and the store held the No. 1 spot for market share in Kansas City from 1996 to 2011.
First Texas Honda switched to a hybrid manager model in 2010. The change led to a $200 jump in the F&I department’s average profit per retail unit.
Background Check: The Austin, Texas-based dealership is part of Continental Automotive Group, which originated in 1964 as Continental Cars and now consists of four dealerships, a collision center and wholesale parts facility. The Honda store stands as the only remaining locally-owned, family-operated Honda dealership in the city.
The Numbers: First Texas Honda’s F&I department recorded about $3.7 million in F&I revenue last year. The dealership’s finance penetration sits at 80.4 percent, while service contracts penetrate at a 45 percent rate. GAP, paint and fabric protection and tire and wheel penetrate at 44, 27 and 15 percent rates, respectively.
Secret Weapon: In 2010, the Honda store, which averages about 400 retail sales per month, switched to a hybrid manager model — combining the roles of the salesperson and F&I manager. Now, three years later, the dealership’s PRU has jumped $200 to $900 per copy.
Beau Barrett is the senior sales team leader of the store. He oversees the 13 elite product specialists (EPS), or hybrid managers, who handle deals from start to finish. The key to this hybrid process is the store’s no-haggle vehicle pricing, which sets the table for the F&I side of the store’s hybrid process.
“We’ve found that [our product specialists] have built more of a rapport with customers than our traditional F&I contractors,” Barrett says.
In fact, product specialists sell more products per deal, averaging $989 in PRU vs. the store’s traditional F&I producers, which average $900 per copy. Not only are the numbers adding up, but Barrett notices a higher level of customer satisfaction. “When we [administer surveys], I see a lot less of ‘It took forever’ and ‘I was there for six hours’ comments,” he notes.
Industry Accolades: First Texas was listed in the Austin American-Statesman’s “Top 10 Places to Work in Austin” for 2011. The dealership also earned the Honda President’s Award.
Setting the Pace: First Texas’ hybrid process, which was designed by American Financial and Automotive Services Inc., has caught the attention of Dealer 20 Groups and even Honda senior executives like John Mendel. “We have a lot of dealerships coming in from all over the country just to see what’s going on,” Barrett explains, praising the efforts of Tony Dupaquier, director of F&I training for American Financial.
When the Honda store’s Assistant General Manager Andrea Baker introduced the idea a few years ago, Barrett recalls it didn’t go over well. “She was the one sitting in the room with everyone in their suits and ties laughing at her. I guess you can say she got the last laugh,” he says. “We’re setting records, and these people are calling us back now wanting to take notes.”
F&I department members Joe Benson, Lisa Bourgeois, Jason Frampton and Jim Hutson stand outside the Ken Garff corporate office in Salt Lake City.
Background Check: Ken Garff founded his automotive business more than 81 years ago in downtown Salt Lake City after the service station he worked at closed for repairs. Today, the Ken Garff Automotive Group boasts more than 40 stores in six states and generates more than $1.5 billion in annual sales.
The Numbers: The dealer group reports an average PRU of $1,352 on new vehicles and $1,015 on used. Penetration for GAP stands at 58 percent, while theft protection sits near 54 percent. These rates far outpace service contract penetration, but Danny Cox, the group’s corporate F&I director, says that is changing.
When Cox came to the dealer group eight years ago, service contracts were penetrating at a rate of about 29 percent. Now, he expects to finish out the year at around 49 percent.
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“I think GAP has always been an easier sell for us,” Cox explains. “We’ve had to focus on how to sell service contracts and present them the right way, so we’re now closing that gap.”
Secret Weapon: Within the first 90 days of being hired, Ken Garff’s F&I managers undergo a three-day training session led by Ron Reahard, president of Reahard & Associates Inc. The training is the basis for the group’s one-page employee evaluation form, which is used to grade F&I managers on their performance and to provide feedback.
Cox reads every one of the random evaluations and pushes them out to his general managers. “It gives me an opportunity to see where we need improvement,” he says.
Compliance Check: As of 18 months ago, all financial transactions at Ken Garff dealerships are video-recorded. The recordings are used for evaluation purposes and to ensure adherence to the corporate compliance policy.
Cox selects videos with positive outcomes to share at the monthly compliance meetings he holds for 16 Utah-based Ken Garff dealerships at the group’s corporate headquarters in Salt Lake City. Finance sources are often invited to speak at these meetings on topics related to regulatory requirements.
Industry Accolades: Ken Garff Automotive Group has been named “Best of State” for eight years running in the merchandising and consumer services category.
Setting the Pace: Ken Garff spends in excess of $1 million each year to fund its “Keys to Success” and “Road to Success” programs. They are designed to promote literacy and good citizenship in Utah schools.
High school students are awarded “key cards” for exceptional grades and behavior throughout the year. They can redeem the cards for discounts on items such as ski lift tickets. At the end of the year, Ken Garff provides five brand new cars as raffle prizes. “Road to Success” provides a similar experience for elementary students, with bicycles as prizes.
“It’s something that’s near and dear to the Garff family’s hearts,” Cox says.
Kings Toyota stages a daily “save a deal” meeting that focuses on compliance for the Cincinnati-based store.
Background Check: Kings Toyota is one of 13 stores operated by the Cincinnati, Ohio-based Kenwood Dealer Group Inc. The location opened its doors in 1987 and is managed by Robert Reichert, president, and Gerry Carmichael, general manager.
The Numbers: The dealership currently averages 1.5 products per deal on about 300 new and 250 used vehicles retailed per month. Finance penetration is at 68 percent. As for F&I product sales, vehicle service contracts penetrate at a rate of 74 percent, followed by GAP at 49 percent. Paint and fabric protection, which is presented by salespeople, penetrates at a 40 percent rate.
Compliance Check: Kings Toyota stages a daily “save a deal” meeting, only the discussion centers on compliance rather than on sales opportunities. On Mondays, Wednesdays and Fridays, new-vehicle deals are reviewed for completeness and compliance, while used-vehicle deals are reviewed on Tuesdays and Thursdays.
The dealership also employs ADP’s menu, which Carmichael says helps with identity verifications, OFAC checks and other compliance requirements. Carmichael also uses the system’s compliance reporting to keep tabs on his producers.
The dealership also stages monthly business manager meeting to review CSI scores, deal documentation, sales results and menu utilization. Included in these meetings are F&I producers, Carmichael, the store’s TFS area sales manager and an independent compliance manager.
Secret Weapon: The biggest driver of performance is the dealership’s active management team. Ten years ago, Carmichael and Reichert decided to begin posting interest rates in the showroom after Toyota Financial Service (TFS), which captures 88 percent of the dealership’s financing deals, began “tiering” rates.
That transparency, Carmichael says, sets the table for better customer interactions in the F&I office, one of the reasons for the operation’s high product acceptance rates. Carmichael also attributes his F&I department’s performance to the store’s F&I payplans, which pay more on product sales and CSI than reserve. Carmichael also keeps individual work hours at no more than 44 hours per week.
“It’s more about quality of life,” Carmichael says. “That’s how you keep turnover so low.”
The relationship between sales and F&I is another secret to the dealership’s success. A big driver of that is the 10-minute meeting F&I producers lead before every shift. Producers will review product agreements so salespeople can make product endorsements. They are also spiffed for successful F&I product sales. “I believe it works because the salesperson has gained the customer’s trust to buy the car, so it would makes sense that they offer recommendations [for F&I products],” he says.
Industry Awards: Kings Toyota has been recognized by Toyota for customer relations excellence four times in the last 12 years, including last year. It’s also won the Toyota President’s Award six times in the last 11 years, including last year. And for 10 years, the dealership has been TFS’ No. 1 store for F&I product sales in Ohio and Kentucky.
Setting the Pace: The dealership supports a host of community causes. The Aubrey Rose Foundation, Arthritis Foundation, Flying Pig Marathon and Jeffrey G. Hoeh Golf Memorial are the organizations the store supports the most. The dealership is also a big supporter of local schools.
F&I producers at Serpentini Chevrolet are paid together on a pool. Performance is judged more on product penetrations and CSI vs. per-copy averages.
Background Check: The Strongsville, Ohio-based dealership is one of three stores operated by Serpentini Auto Group. The group was founded in 1980 by a then 22-year-old Bob Serpentini, the youngest first-generation dealer to ever open a Chevrolet franchise. The Strongsville store was purchased in 1998, but wasn’t moved from its original Berea, Ohio, location until 2003.
The Numbers: The dealership averages 2.5 products per deal on 300 to 350 units sold per month. Product sales account for two-thirds of the group’s PRU average, which sits well north of $1,000. Leading the way is GAP, which penetrates at a 61 percent rate. Vehicle service contracts are second with a penetration rate of 45 percent. The store’s charge-back rate sits below 7 percent.
Secret Weapon: There are several, including Nate Gault, who joined the group four years ago as a producing F&I director. He manages the finance function of his department’s F&I process, which allows his seven F&I producers to focus on selling product.
The process has helped the store establish strong relationships with its finance sources. Gault’s operation is currently GM Financial’s top producer and served as a pilot dealer before the captive launched its lease product in July 2011.
“They know we do it the right way,” he says of the group’s lender relationships. Gault also generates a lender report from his store’s MenuVantage system, and meets with each source every 60 days to review the results.
Gault also uses the menu system to generate scorecards for each F&I manager, which he reviews with each producer every Monday to keep production on track.
Another driver of performance is the F&I payplan. Producers are paid together on a pool. And rather than looking at per-copy averages, Gault focuses solely on product penetrations and CSI, which sits at 99 percent. “If it ever drops, they know the repercussions,” he says.
Compliance Check: Aside from requiring a menu on every deal, Gault utilizes Dealertrack’s compliance software suite for OFAC checks and identity verifications. Deals are audited regularly by Gault and Resource Automotive, the group’s F&I product provider.
Transparency is also big at Serpentini, as F&I managers are told to disclose the compensation they earn for arranging the customer’s financing. It’s a practice Gault says results in the store’s low charge-back rate. There’s one other thing Gault does that he believes helps with his department’s compliance efforts.
“I don’t work my people more than 45 hours per week,” he says. “I’m a big believer in you have to have a good home life to have a good work life.”
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Industry Accolades: Serpentini is a Top 30 Chevrolet store in the country, earning Chevy’s Dealer of the Year award in 2010. The dealership also earned General Motors’ Jack Smith Leadership award in 2008.
Setting the Pace: The husband-and-wife team of Bob and Kathy Serpentini are actively involved in several community causes. Kathy spearheads a local women’s group in support of cancer research at Akron Children’s Hospital, and chairs the group’s Denim & Diamond benefit. Bob donated $100,000 to renovate one of the high school’s football fields. He also donates at least three cars per year to the local high schools to support their athletic booster clubs.
Star Dodge’s sales management team poses with a sign about a dealership construction project.
Background Check: In 1999, Mike Dunnahoo and his partners purchased the Star Lincoln Mercury and Dodge dealerships in Abilene, Texas. In 2001, they picked up a Hyundai dealership — as well as Toyota and Honda stores, which were later sold. During the recession, the group added to its rooftop count when it purchased Chrysler and Jeep franchises.
The Numbers: Dunnahoo, who is the dealer principal for Star Dodge, says that while the dealer group does not sell a “whole smorgasbord” of products, it is good at selling what is offered. Average PRU for new vehicles settles around $1,500 and $1,250 for used, with product accounting for 60 percent of that profit.
Theft protection is one of the dealer group’s top sellers, clocking in with a 68 percent acceptance rate. The etch product if offers is presented twice — by both the salesperson and the business manager. Salespeople also receive a $10 cash spiff for every theft protection product they sell.
“My people believe in it obviously, because their numbers are so strong,” Dunnahoo says of etch sales.
Secret Weapon: In February, Star Dodge introduced Reynolds and Reynolds’ DocuPAD to its F&I process. Dunnahoo experienced a lot of pushback from his managers, but persisted.
“I said that if they wanted to be paid … they were going to use it 100 percent,” he says. “If they failed while using DocuPAD 100 percent of the time, then I’d believe it didn’t work.”
Following a refresher course from Reynolds and Reynolds, managers renewed their commitment to the DocuPAD. The department’s per-copy average immediately jumped $200, Dunnahoo says.
Pictured are Finance Directors Jared Jackson and Jeff Zinsser.
Compliance Check: Star Dodge’s managers take an annual compliance course in Irving, Texas. It’s led by EFG Companies’ Hector Lebron, who has had a relationship with the dealer group for nearly four years. Dunnahoo says he enjoys bouncing ideas off of him. With guidance from EFG, the dealership has gone from selling 105 units per month in 2010 to selling more than 200 before the close of 2013.
Lebron is known for rolling up his sleeves around the dealership, and if a salesman is in a slump, he’s their go-to guy. “Sometimes they’ll open up to him when they wouldn’t open up to one of us,” Dunnahoo says.
In addition, all deals are audited on a quarterly basis, and employees receive continuing education on the topic of compliance.
Industry Accolades: In 2012, Star Dodge Chrysler Jeep was named “Best Dealership to Work For” by Automotive News.
Setting the Pace: Before Star Dodge adopted it three years ago, the neighborhood bordering the dealership had the highest crime rate in Abilene. What the dealership accomplished since is being used as a model for programs in other neighborhoods in the area.
“We adopted the neighborhood and started having some block parties and organizing committees,” Dunnahoo says. “We pick a resident every quarter and fix up their house, including everything from cleaning up to painting. Sometimes we’ll replace stoves and heaters.
“We want those people to have pride in their neighborhood.”
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