Funding Panel Addresses Credit Crunch

Given the state of the credit markets, the funding panel that kicked off Bobit Business Media’s first PowerSports F&I Conference garnered plenty of attention. Dealers learned the importance of proper deal structure, finding secondary lending sources and lender relations.

Moderated by the McGraw Group’s Josh Clark, the panel included Larry Cuzzi of HelpMeRide Finance, Bob Byrne of Sheffield Financial, Peter Jones of Peter Jones and Associates, and John Marlin of Xpress Credit. The biggest issue addressed was how to handle today’s credit-challenged customers.

“Sixty-five percent of customers in powersports have credit issues,” said Cuzzi. “You need to have a structure in place to qualify customers.”

Marlin reminded dealers that creating a structure to get deals bought requires tenacity. Instead of rushing to close deals, dealers should slow down and gather all the pertinent information from their customers, he said.

“We’re complacent with revolving loans,” he said. “There’s work involved for installment loans, and people are walking out the door that could otherwise be approved.”

Marlin also reminded dealers of the effort required when it comes to lender relations. “Dealers need to know lender parameters,” he warned. “The days of instant approval are over.”

Panelists also encouraged dealers to find secondary lending sources, help their salespeople recognize profit-making opportunities, and educate customers on how to improve their credit.

Sit down and explain to customers how to improve their credit,” said Jones. “Do an interview with your customer and figure out what went wrong … Work with your customers on getting a down payment.”

Implementing Best Practices

Todd Baldwin, former general sales manager for Chaparral Motorsports in San Bernardino, Calif., delivered his keynote address on the second day of the PowerSports F&I Conference. He discussed how and why dealers should implement effective sales systems in their stores.

“Within the current market we have, it’s imperative you have a sell system in place that allows you to capitalize off of every sell opportunity that walks through your door, or contacts your sales, or service and parts operation,” Baldwin said.

He also encouraged dealers to educate their staff on product knowledge, on how to approach customers about providing sufficient down payments, and how to sustain strong lender relationships.

“It’s imperative that you maintain relations with your finance company … If you just shotgun your applications, it’ll bring down your scores with the company, and it will affect the way they look at the business submitted to them,” he said.

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Where Opportunities Lie

Gart Sutton, F&I editor for Powersports Business magazine, discusses “Where Opportunity Lies” in a dealership and how dealers can capture F&I profits in their stores through his three-touch process.

The first step involves an introduction between the F&I manager and the customer early in the sales process. In the second step, the salesperson briefs the F&I manager on the customer’s motives and any information useful to closing the deal. Meanwhile, the customer is introduced to the parts and accessories, apparel and service departments of the dealership.

The final step features a menu presentation to the customer by the F&I manager. In this stage, F&I managers should focus on converting cash deals into financed deals if the customer qualifies. Sutton reminded attendees that making the three-touch process a success for any dealership requires dedicated and educated employees. “Opportunity lies in well-trained, professional people,” he said.

Increasing Profits Through Product Sales

Industry experts gathered for the “Increasing Profits Through Product Sales” panel to discuss how dealers can increase revenue with aftermarket sales. The panel was moderated by Rebecca Chernek of Chernek Consulting, and included Jeff Jagoe of IAS, Lance Kane of LoJack Corporation, Mark Trahan of Simoniz USA, Bob Hymen of Service Payment Plan, and Patrick DeMarco of Ristken Software Services.

All the panelists acknowledged that menu selling and training are two ingredients dealerships need to achieve F&I profits. The menu also keeps dealerships compliant with federal regulations and produces high scores on the customer satisfaction index, panelists said.

“Dealers need to be prepared and understand how to sell products,” said DeMarco.

Fellow panelist Jagoe agreed and advocated equal opportunity selling to customers. “Make sure you offer all products to a customer. This has to happen. Don’t profile the customer because you don’t know what the customer needs,” he said.

The panelists agreed that F&I managers will need to be diligent about menu selling, as dealerships increasingly rely on the F&I department as a source of steady profits.