The one thing the recession hasn’t changed is the demand for automobiles. Cars are wearing out and costing more to repair than they are worth. The types of vehicles required to meet the needs of the car-buying public continues to change, and the transition to “greener” modes of transportation shows no signs of abating. So, from a purely car sales standpoint, it’s business as usual — if one assumes that the salesperson is fully versed on the benefits and features of the product lines being sold, and is adroit enough to tie them to a prospective buyer’s needs.

The one thing that has changed for a growing number of car buyers is the ability to find a lender willing to fund their purchase. In other words, a customer isn’t a buyer if he or she can’t get financed. That’s why the first stop for a customer should be the F&I office, as structuring doable deals with today’s cash-strapped, negative-equity-burdened customer may be the only way of improving the odds of making a sale.

“You will want to be proactive in directing the customer to a car for which the bank is likely to approve a loan,” said Glenn Roberts, national training and business development manager for Zurich. “Since F&I or sales can’t afford misfires or do-overs, it’s critical that customers are placed in the right car on the sales floor.”

The concept has had a big impact at Burt Automotive Network, which operates eight dealerships in the Denver metro area. “We actually have our F&I staff come out of the office and sit with the customer at the salesperson’s desk,” said Hank Held, senior vice president and corporate legal counsel. “They can help the salesperson qualify the customer for a vehicle he or she can afford. This step has dramatically increased our aftermarket sales.”

Backing Customers Into the Right Vehicle

To segue from the initial greet and rapport-building stage to an introduction to the business manager, dealership personnel can try this line: “Mr. Doe, it’s my job to see that you leave here today with the vehicle that best meets your needs. As you have seen on TV and in newspaper ads, the dealer-offered funding options available to you are unprecedented. They can now positively influence which vehicle you may decide to buy. Let’s get some basic information to set this no-obligation process in motion.”

At this point, a rare cash buyer will surface; however, for all but the most rabid credit union disciples, most customers will be curious enough to see what’s available. It’s crucial at this juncture to secure the customer’s credit score and an approximation of what his or her negative equity might be.

Now, the starting point you identify for your prospective buyer may not be where he or she wants to be, but in the hands of a skilled salesperson, conducting a proper assessment of the customer’s credit worthiness provides the information necessary to direct him or her to a vehicle that’s realistically affordable. And as the old adage goes: “If you put a customer in a car that costs more than he can afford, it’s the dealer, not the customer, who makes the greatest actual dollar sacrifice in sale gross, finance reserve, and lost income from F&I product sales to save the deal.” And as is too often the case, the spent paperwork ends up in the dead deal file.

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Moving More Used Cars

Another change that’s worth mentioning in sales meetings is how the salesperson approaches the credit-challenged buyer, especially if the customer is in the market for a new vehicle when what he or she can really afford is a used car. However, in some cases it may be more advantageous due to low- or no-annual-percentage-rate plans or extended repayment terms to keep the customer in a new vehicle, but one with far fewer options or a rung or two down the model ladder. In either case, it is imperative the sales staff be fully knowledgeable of present and past vehicle lines, as well as the dealership’s available used-vehicle inventory.

For example, it’s easier to switch a customer to a used vehicle if it’s the same body style as the `09 model. Also, regardless of its size on the outside, a vehicle’s interior dimensions remain within a certain range. This is an important factor when downsizing the customer to a smaller (less expensive) model that, as an added benefit, delivers much better fuel economy than a larger version of the same marquee.

“The outmoded two-step salesperson who simply finds out what the customer wants to buy, then grinds the customer and the house to get it for the lowest possible price, will become yet another causality of the recession-sparked reordering of the U.S. car industry,” said Bob Harkins, nationally recognized sales trainer.

Carter Abel, financial service director for Penske Automotive Group in Arizona, added: “What’s changed dramatically in today’s market is the process we need to go through prior to negotiating a purchase or trade-difference price. While the salesperson’s product knowledge and selling skills remain extremely important, the F&I professional should be involved in the initial stages of the negotiation to properly assess what the customer can afford.”

The ability to determine at the outset what the customer can afford not only dramatically increases the odds of landing on a car that will find a willing lender, but it will generate a reasonable gross and provide the F&I professional with the latitude to provide the customer with the owner-protection products that best meet his or her needs.

“Finance manager involvement with the customer early in the sales process is the most important thing any of us could have in place,” said Alan Brown, general manager at Don David Toyota Scion. “Looking back, how much money did finance departments give up sitting in their office waiting on the next car deal from a salesperson? When volume comes back, I know we’ll be sitting very nicely.”

David Robertson is the executive director of the Association of Finance and Insurance Professionals. He can be reached at david.robertson@bobit.com.