Dealer Mike Dunnahoo attributes Star’s $2,400 per vehicle F&I to honest sales, full transparency and a staff empowered to treat the customer right.

Dealer Mike Dunnahoo attributes Star’s $2,400 per vehicle F&I to honest sales, full transparency and a staff empowered to treat the customer right.

A neighbor once remarked that Mike Dunnahoo had the gift of gab, then suggested a sales career. Knowing he liked to talk and get to know people, in a nod of agreement, he jumped into automotive sales.

His career began at a dealership in the Dallas/Fort Worth area, then he moved to an Oklahoma dealership. He quickly realized his heart remained in Texas. Dunnahoo returned to The Lone Star State to open a dealership in Abilene. 

Four decades later, Abilene, home to three private colleges and Dyess Air Force Base, is also home to the Star Family of Dealerships, a group of four dealerships representing Dodge, Chrysler, Jeep, Ram and Hyundai brands. The company now employs over 100 associates, who Dunnahoo says “are all family.” 

It is the focus on family that this seasoned auto retail veteran claims as the reason for the auto group’s success. Dunnahoo remains active in all facets of the business. His wife supports him in his business endeavors and their two children work in the dealerships. 

“We sometimes butt heads like family. But at the end of the day, we love each other and take care of each other. We also take care of our employees and their families,” he says. “The associates, in turn, take good care of our customers.”

Exceeding customer expectations and always acting with integrity has netted the Star Family of Dealerships well-earned industry recognition. Its accolades include a Best Dealership to Work For award, a Customer First Award, a Chrysler 5-Star Certification Award, and most recently, the F&I Dealer of the Year award, which recognizes dealerships with highly profitable F&I departments that show a commitment to regulatory compliance. 

F&I Growth

Dunnahoo remarks the Star Family of Dealerships has seen explosive growth in F&I PVR. The dealership set a benchmark of $2,000 per vehicle in 2021, but racked up an impressive $2,400 per vehicle, selling up to 150 new and used vehicles per month. 

The Star Family of Dealerships’ figure outpaces the average PVR of $1,500 reported in the “F&I Manager and F&I Director Survey Results-2022” by 37%. “PVR rose during the pandemic. This is partly because people now finance more than they ever have on a new or a used car,” he says. 

Still, he adds, Star offers incentives that sweeten the F&I pot for automotive customers. He explains, “When customers buy from Star, they don’t just drive away with a new car. They leave with a sense of comfort knowing their car will be cared for with The Star Difference program,” he says. 

The Star Difference program is a 90-day protection plan that covers door dings, windshield chips, key fob replacement, and tire and wheel protection. Customers also receive a Road Club membership that delivers roadside assistance, key replacement, trip routing services and discounts on hotels, rental cars and family entertainment.

Star covers the costs of these programs and has many customers extend the service plans beyond 90 days. “They can extend the programs for up to five years,” he says. “When we properly present these programs to customers, they offer a lot of value. One rim, for example, can cost up to $800. We sell many Vehicle Services Contracts.”

Dunnahoo explains customers cannot get the 90-day packages anywhere else—at least not within 200 miles of Abilene. “My competitors cannot even sell this package. It’s part of an agreement I made with EFG when we put the package together,” he explains. 

Though the program adds value and drives F&I product sales, Dunnahoo is quick to credit F&I managers with the rest. “We have fantastic people, and we are very transparent,” he says. The dealership also involves F&I managers early in a sale. They visit with customers to discover their goals before they get too far into the process. 

If a customer declines vehicle protection products, their F&I professionals protect the dealership by having the customer sign off on them. Should a customer return with a damaged rim and say the dealership never offered Tire & Wheel protection, for example, they can quickly show that they declined coverage. 

“Above all, I train my staff to be honest,” he says. “There is no car deal in the world worth being dishonest with a customer.”

He adds the “road to a sale isn’t the same,” anymore. “When a customer comes into your dealership, he knows more about that vehicle than some salespeople. They’ve been shopping around for a while,” he says.  

The sales process also became more transparent when the dealership changed to a transparent means of sharing the F&I menu. “We have a big tablet on the desk so we can share all information with customers,” he says. “There are no secrets.” 

Hire and Train the Right People

Good hiring practices help build a caring company culture, while a bad company culture can damage and drive away the candidate pool. Dunnahoo pushes a positive company culture and hires candidates that fit well within it. 

The company’s mission statement summarizes that the Star team’s success is “dependent on providing a positive experience in sales and service while supporting the community and our families. The Star Core Values dictate how to carry that out:

  • Customer service
  • Teamwork
  • Community
  • Consistency
  • Integrity

“We hire people who have understanding and empathy for the customer, and who don’t seem pushy,” he says. “We do not hire people we feel are likely to lie, steal or cheat just to put a deal together.” 

Dunnahoo also seeks individuals with an infinity for numbers and a solid understanding of regulations. Then, the dealership sends even the most experienced new hires to F&I school. “We send them to school for certification and then have EFG come in monthly to pull deals and evaluate them. We make sure our ducks are in a row, that every document gets signed off on properly, and there is no monkey business,” he says.

“Training never stops if you want to stay relevant,” he adds. “That’s why we have our F&I vendor check deals monthly and address any issues with members of our team and with me.” 

Well trained associates return the favor, remaining in compliance on every deal. 
Dunnahoo also empowers associates to care for customers as they see fit. “I empower them to be the good guy, to help the customer,” he says. “If they don’t take care of them, then they reach out to a manager, where that problem must be solved. Otherwise, the situation escalates, and it leaves customers with a bad taste in their mouth.” 

Dealing with Disruption

The prolonged shortage of semiconductor chips has automakers strategizing for their survival. They now prioritize the most profitable vehicles for production to maximize profits amid the shortage, but this leaves dealers with gaping holes in their inventories. Customer demand has skyrocketed at the same time. 

Some dealerships take advantage of these scenarios to sell vehicles over MSRP. Dunnahoo says research shows 82% of dealers now charge more than MSRP. The Star Family of Dealerships isn’t one of them.

Where the average price of a new car has edged past $47,000, according to a new report from Kelley Blue Book and data from TrueCar, Star is taking a long-term approach to vehicle sales. 

Dunnahoo explains, “If I pop a customer for $5,000 over MSRP, he will leave with a bitter taste in his mouth, and I won’t keep that customer down the road. I want my customers to stay with me. I will not add additional profit to a vehicle and take advantage of them. I want them to trade in that vehicle with me in three to four years.”

MSRP, he says, is very fair because he says, “I have brokers who will give me MSRP.” 

Put Community First

Being successful in business requires two things, according to Dunnahoo. “The drive to do it first and a competitive spirit. But there’s also a third component—being service minded in the community you serve.”

The Star family strives to lend a helping hand in the Big Country community whenever it can. They set up school supply drives, raffle off vehicles to support charities, and assist local schools through Booster Club donations.

Dunnahoo also gives back as an individual. He chaired the Chamber of Commerce, served as secretary to the United Way, was president of the local Boy Scouts chapter and served the Texas Trails Council. He’s also headed three school bond initiatives. 

The dealership puts $7,000 to $8,000 into its Community Fund every month. They are currently using the money to fund a place for airmen to hang out at Dyess Air Force Base. But in the past, they’ve used the money to support the American Cancer Society, the Heart Association, and the Alzheimer’s Association. Just to name a few.

He adds, “These things will not sell you a car today, but they might two years from now. But that isn’t why we do it. We want to give back to the community that has given us so much.”

Ronnie Wendt is an editor at Auto Dealer Today.