For all their differences, this year’s F&I Pacesetters share a host of commonalities in the way they approach F&I performance, customer satisfaction and regulatory compliance.
This year’s field consists of operations from Florida, Indiana, Kansas, North Carolina and Pennsylvania. Each boasts active management teams, pay plans that balance performance with customer satisfaction and multilayered compliance procedures. The following profiles provide a glimpse of this year’s F&I Pacesetters and the people who lead them.
Background Check: Davis-Moore Automotive, a dealer group headquartered in Wichita, Kan., was founded by Grant Davis in 1955. When Davis passed away in 2001, Dawson Grimsley — who has worked for the group since 1976 — took over as co-owner and president, along with Vice President Sean Tarbell and Treasurer Stuart Ray.
The dealer group is the largest in the state, operating five stores in Wichita: Davis-Moore Chevrolet, Davis-Moore Chrysler Dodge Jeep Ram, Davis-Moore Mazda, Davis-Moore Lincoln and Davis-Moore Fiat of Wichita. The dealer group also runs the Clint Bowyer Autoplex in Emporia, Kan.
The Numbers: F&I profit per retail unit (PRU) sits at $1,230 for new vehicles and $1,017 for used. Leading the way are service contracts, which penetrate at a 55% clip.
“Our biggest focus for products is on service contracts,” Tarbell says. “I think everybody really believes in [that product].”
GAP comes in at a close second with a 47% acceptance rate, while tire-and-wheel penetration sits at 38%. Revenue from the group’s F&I operations accounts for more than $4 million of the group’s annual revenue, which totals $179 million.
Compliance Check: “Like most organizations that run good finance numbers, we have the same process with every customer,” Tarbell notes. “Every customer is going in with a finance manager, and we menu-sell — we’re just giving every single [customer] the opportunity to buy products.”
The dealer group uses a Web-based menu from Ristken Software Services. It also video-records every transaction to ensure every producer follows the group’s process. Those videos are audited every 10 days. But the videos are also used for training, with F&I personnel reviewing each other’s presentations monthly to pick up new ideas or spot inconsistencies.
In addition, each of the group’s 11 F&I managers — who have 133 years of combined F&I experience — are certified by the Association of Finance & Insurance Professionals (AFIP). And a representative from EFG Companies, the group’s F&I product provider, visits Davis-Moore stores every two weeks to keep things running smoothly.
F&I Driver: Tarbell says the main driver of the group’s F&I revenue is its low turnover. Most of Davis-Moore’s F&I managers were promoted from the sales floor, and the dealerships’ F&I pay plans are closely tied to CSI.
“We do what we say we’ll do,” he says. “And people like doing business with us.”
Trophy Case: Davis-Moore won the Better Business Bureau Integrity Award in 2015 and boasts a slew of Reader’s Choice awards from Wichita’s local newspaper,
The Wichita Eagle. President Dawson Grimsley was a TIME Dealer of the Year nominee in 2011.
Setting the Pace: “We have a really good reputation in our community,” Tarbell says. That seems like an understatement, given that the dealership has supported dozens of organizations, including the American Red Cross, Kansas Humane Society, Special Olympics and United Way. And in August, for every car sold, Davis-Moore donated $50 to the Muscular Dystrophy Association.
“We just all believe that it’s important to give back and be involved,” Tarbell adds. “We’re returning the favor to the community for doing business with us.”
Background: This third-generation dealer group was founded by Bob Baierl in 1954 as a small, family dealership — a Chevrolet point — in Ambridge, Pa. In the early ’60s, Baierl’s nephew, Bill, joined the organization, and the two moved the dealership to Wexford, Pa.
Bill became president and CEO of the dealer group in 1962, then took over ownership in the mid-’80s. In April 2007, Bill passed away unexpectedly, thrusting the group’s current president and CEO, Lee Baierl — the founder’s son and Bill’s cousin — into a leadership role. Today, the operation counts 10 rooftops in Wexford, Pittsburgh, Seneca, Cranberry Township and Zelienople. It also employs more than 650 individuals, including Lee’s son — also named Lee — nephew Bob, who serves as vice president, and several other family members.
The Numbers: Counting new- and used-car sales, leases and budget cars, the group’s per-copy average hovers around $1,000. The group also averages just less than 1.5 products per deal, with service contracts and GAP leading the way. The group’s chargeback rate sits at 7.1%.
Compliance: While the group maintains the small-business approach it was founded on, there’s nothing small about its approach to compliance. And it all starts with Baierl’s board of directors, which counts two former bankers as members. According to Bob Baierl, the two board members have taken active roles in reviewing and improving the group’s compliance processes.
“They lived in a realm of compliance,” the executive says of the pair, “so they want to make sure we fall in line with what they’re used to.”
A deal checklist guides the dealership’s sales and F&I processes, with managers serving as checkpoints to ensure every procedure is followed. Last summer, the group installed the National Automobile Dealers Association (NADA)’s Fair Credit Compliance Policy & Program, with all deals beginning at the same starting point in terms of price and rate. If there is a deviation, sales managers are required to document the reason in the program’s form.
Baierl and Finance Director Dan Boyd also team up with the group’s F&I product provider, Resource Automotive, to conduct monthly deal audits. The results of those reviews are then presented during the operation’s monthly F&I meeting, where a new compliance topic is introduced and performance numbers are reviewed. The F&I director also works with each team member and assists with training and employee reviews.
F&I Driver: Consistent training and management involvement drives the group’s 14-member F&I team.
There are the group’s monthly F&I meetings, which serve to enforce the operation’s performance expectations, with each store’s numbers reviewed before the group’s entire F&I team. Prior to the meeting, Boyd and Baierl will visit each store to review performance and provide training.
The group is also looking to add a new level of accountability for its F&I producers. It’s currently developing an F&I scorecard that will be issued by the group’s “deal center,” where completed deals are sent from each store. The scorecard will rate producers on how well they complete and package deals.
Trophy Case: The group has earned a host of CSI- and volume-based awards and distinctions, including Chevrolet and Cadillac’s Mark of Excellence awards, presidents’ awards from Honda and Toyota and the Subaru Stellar Care Award. The group is also a member of the Kia Dealer Excellence Program.
Setting the Pace: In recent years, the group has contributed $5 million to the University of Pittsburgh for the Baierl Recreation Center, donated $3 million to the Baierl Family YMCA in North Hills, Pa., and contributed $1.5 million to the Sarah Heinz House. In all, the group supports more than 60 organizations, including the Passavant Hospital Cancer Center, North Allegheny School District, the Imani Christian Academy, the Cranberry Township swimming pool, the Pine Township Community Center and North Hills Youth Ministry.[PAGEBREAK]
Background Check: This North Carolina-based dealer group was founded in 1991 when David Johnson Jr. opened Johnson Lexus of Raleigh. The operation has since grown to eight rooftops, including a second Lexus location in Durham, N.C., a Honda point in Stuart, Fla., Porsche and FIAT-Alfa Romeo stores in Annapolis, Md., and Hyundai, Maserati and Subaru stores in Cary, N.C.
The Numbers: Johnson Automotive, which employs a team of 15 F&I staffers, is tracking a $3 to $4 million increase in F&I gross profit since installing a new F&I process last December. Led by Business Operations Director Greg Kostern, the group’s F&I team has realized a more than 25% increase in its per-copy average since making the change. The group’s product index has also grown more than 50%.
Compliance Check: Last August, Johnson Automotive installed the NADA’s Fair Credit Policy & Program. That meant every deal started with a standard interest rate and at MSRP. If forced to deviate, a sheet is included in the deal folder explaining the reason.
All F&I managers are required to sign a form confirming they’ve reviewed the group’s compliance manuals and understand what’s expected of them in terms of ethics and compliance. And to ensure those policies are followed, the group’s F&I agency, Dealer Service Solutions, conducts three audits a month at each store, pulling a total of 15 deals per F&I manager. The group also completes mandatory compliance training three times a year.
F&I Driver: Installed as the group’s business operations director in August 2014, Kostern began working on a new F&I sales process after detecting customer resistance to the menu presentation, particularly in the group’s highly educated Raleigh market. He fine-tuned that process for most of 2014 before installing it in some stores in December and rolling it out groupwide this past March.
The new process eliminated the needs-discovery interview and delayed the menu presentation until after the F&I manager reviews the factory warranty, shares Johnson Automotive’s promise to its customers, reviews each F&I product and explains how they are designed to ensure customers have a positive ownership experience. Kostern refers to his process as a “conversational menu-selling system.”
Not only did the group break its all-time PRU and F&I profit records for the first seven months of the year as a result of the change, CSI scores soared and the group’s chargeback rate fell by 30%.
But what really keeps things moving in the right direction is the group’s focus on training. F&I managers are video-recorded as they run through their presentations, and those videos are reviewed and critiqued during the group’s monthly roundtable meeting. And every Monday, the team holds a conference call to discuss each store’s performance from the prior week.
The group also holds a monthly F&I boot camp for underperforming producers, an all-day training session designed to get them above the group’s minimum F&I performance standards. “I recently asked my guys if they were tired of training yet, as we have been doing a lot of it for the last eight months,” Kostern says. “And it does seem like we’re training around the clock. But I wanted to recreate that feeling of F&I school, because you never feel more confident as an F&I manager than when you come back from F&I school.”
Trophy Case: The group has earned a host of CSI- and performance-based awards, including the Lexus League of Elite award, Subaru’s Stellar Care Award, Honda’s President’s Award and Porsche’s Premier Porsche Dealer distinction. Kostern also made Automotive News’ “40 Under 40 Retail” list this year.
Setting the Pace: Led by owner David Johnson Jr., the dealer group participates in a host of charities and community events, including Toys for Tots, the Pediatric Brain Tumor Foundation, the Cystic Fibrosis Foundation and the Children’s Fight for Hope.
Kelley Automotive Group
Background: Kelley Automotive Group was founded by the late Jim Kelley in August 1952, the same day his son, Tom Kelley, was born. The family patriarch had already built a reputation for being a successful business leader by the time Tom joined the business in 1974.
Tom started as a salesman at Jim Kelley Buick and spent time in every department over a seven-year period before being promoted to general manager in 1981. In November 1983, Tom purchased the Buick dealership from his father and changed the name to Tom Kelley Buick.
Today, the group counts four locations in Fort Wayne — including Buick-GMC, Cadillac, Chevrolet and Volvo franchises — and two stores in Decatur, Ind.: Tom Kelley Ford and Tom Kelley Chevrolet Buick.
The Numbers: The 10-member F&I team’s per-copy average hovers around $1,200 for new and at just less than $1,000 for used. However, the group’s two high-volume stores in Fort Wayne — Tom Kelley Buick GMC and Kelley Chevrolet — average well north of that. Leading the way are service contracts and Kelley Automotive’s interior and exterior protection package, with the group averaging slightly more than 1.5 products per deal.
Compliance: The dealer group currently employs the NADA’s Fair Credit Compliance Policy & Program, with F&I managers noting in the program’s rate participation form why they deviated from the buy rate and by how much. There are seven different reasons to choose from, according to F&I Director Stephanie Hartman.
The group relies on its F&I product provider, Resource Automotive, and compliance solutions provider ComplyNet, to conduct regular deal audits. The group also uses Resource’s online training portal for compliance training. New hires are sent to Resource Automotive’s F&I School in Chicago before spending two weeks with Hartman, who trains them on the group’s compliance procedures and vehicle-delivery process.
F&I Driver: Hartman, who started at the company eight years ago after graduating from the University of Dayton, drives the dealer group’s F&I operations. But she’s quick to credit Kelley’s veteran F&I team — half of whom have been with Kelley Automotive Group for 10 or more years — for the success of the group’s F&I operations.
To keep her team sharp, Hartman holds a weekly F&I meeting to review the group’s written policies, strengths and weakness. The team also discusses the buying trends of the group’s finance sources; often, Hartman will invite a lender representative to address the group. Twice a month, the F&I team reviews product presentations with Resource. F&I managers also conduct role-playing exercises and Hartman will sometimes ask a producer who is doing well with a particular product to share his or her approach.
Trophy Case: The group’s Tom Kelley Buick GMC is the No. 1 F&I store in Indiana. The group has also earned a host of CSI-based awards from the brands it represents.
Setting the Pace: The group supports a number of organizations, including the Boys & Girls Clubs of America, Big Brothers Big Sisters, the Vera Bradley Foundation for Breast Cancer, the McMillen Foundation and the Make-A-Wish Foundation.
Background Check: Orlando, Fla.-based Reed Nissan has a long history. The family-owned business spans three generations and started 65 years ago as a retailer of Nash vehicles. It became a Nissan franchise in 1964, making it the 19th-oldest Nissan dealership in the country and the second-oldest in the state of Florida. This year, Dealer Principal Raymy Reed expanded the business by purchasing a second Nissan store in Clermont, Fla.
The Numbers: Profit per retail unit (PRU) at Reed Nissan sits at about $1,900 on new and $1,400 on used. Finance penetrates at a 91% rate while GAP clocks in at 70%. Acceptance rates for service contracts and prepaid maintenance sit at 63% and 45%, respectively, while tire-and-wheel penetrates at an 18% clip.
Compliance Check: General Manager Aaron Hill says the dealerships’ impressive product penetrations and per-copy average are the result of a storewide focus on doing things “by the book.”
“We don’t bend the rules, and we don’t stretch the rules,” Hill notes. “And because of that, we just do a really good job. It’s amazing how the good guys actually can win.”
Car deals at Reed Nissan are heavily scrutinized by multiple parties. In addition to having an attorney conduct a biannual audit of the stores’ deal jackets, Hill and his finance director hand-pick deals every month to ensure the paperwork has been completed properly. The dealership also has two designated finance assistants who comb through each deal with the help of a compliance checklist.
“Because of that process, our contracts in transit are always extremely low,” Hill explains, adding that the dealerships utilize an electronic menu from MaximTrak. “And we’re insanely process-driven.”
And the dealerships’ nine finance managers — seven at Reed Nissan and two at Reed Nissan Clermont — have all graduated from an OEM-run compliance program.
F&I Driver: Hill believes the one factor that really separates Reed Nissan from its competition is an emphasis on promoting from within. Since Hill joined the operation three years ago, all finance managers have been promoted from the sales floor.
“I don’t want to bring in other people where I don’t know what their bad habits are and I don’t know how they’ve been taught,” Hill explains.
Management also keeps every employee’s eyes on the prize by paying salespeople the same percentage of commission on finance as they receive on the front end. The policy keeps Reed Nissan employees on the same team and improves F&I income overall.
Trophy Case: Reed Nissan is a six-time winner of Nissan’s coveted Circle of Excellence award and took home the OEM’s inaugural Global Award this year. Recipients of the Nissan Global Award are among the Top 50 Nissan dealers worldwide, ranked by retail sales volume.
Setting the Pace: Reed Nissan’s dealer principal is well known for his philanthropic spirit, and his personal work within his community has inspired a dealer partnership with three local charities: The Pet Alliance of Greater Orlando, Coalition for the Homeless and Community Based Care of Central Florida. In the first half of 2015, the dealership donated a total of $100,000 to those charities, spent an additional $150,000 on TV commercials to promote their causes and campaigned to find mentors and adoptive parents for foster children through the Community Based Care program.