| | | WEEKLY REPORT | March 28, 2012 |
| | | | | | | Captive lenders foster dealer, brand loyalty
 Customers who get financing from a captive finance company are more likely to be loyal to a brand and to a particular dealer, Experian Automotive says. “One of the most profitable things you can do is to get people to come back and buy another [car], instead of spending the dollars to attract somebody new,” said Scott Waldron, president of Experian Automotive, during a presentation ...  story
| Bundling, dealer reserve may draw whistles on regulatory gridiron
Some items related to auto lending could come under scrutiny by government regulators, speakers at the Consumer Bankers Association convention in Texas said last week. And that could be cause for worry, they said. ... story
| How to win over F&I managers: Bankers weigh in
Dealers and bankers can be cynical about their relationships -- dealers gripe that banks bail out of auto lending when the going gets tough; banks complain dealers casually switch lenders to pursue cheap rates and easy approvals. ... story
| U.S. suggests Ally breakup, wants GM to buy captive finance unit
 The United States Treasury, which put $17.2 billion into a bailout of Ally Financial, has indicated it would prefer a breakup and sale of the lender -- including selling the company's captive finance auto business back to GM, its original owner. ... story
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F&I BY THE NUMBERS
BMW, Mercedes tops in captive 'lift'
Among automakers with the highest dealership loyalty rates -- the percent of customers who return to the same dealer to buy another vehicle -- BMW Financial Services and Mercedes-Benz Financial provide the biggest lift over noncaptive financing. Figures based on customers who bought or leased a vehicle in 2005 through 2010, then acquired another vehicle in 2011. | | | | | | | | Brand | Captive
dealer
loyalty | Noncaptive
dealer
loyalty | Captive
'lift' | | BMW | 37% | 22% | 68% | | Mercedes-Benz | 45% | 28% | 61% | | Chrysler | 34% | 22% | 55% | | Lexus | 42% | 31% | 35% | | Honda | 44% | 33% | 33% | | Nissan | 41% | 31% | 32% | | Ford | 42% | 34% | 24% | | Chevrolet | 37% | 33% | 12% | | Hyundai | 40% | 36% | 11% | | Toyota | 43% | 39% | 10% | | | | | |
| | Source: Experian Automotive | | | |
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JAMIE LaREAU
The F&I door dilemma
| |  | Jamie LaReau covers auto dealers for Automotive News | |
Close the office door, or leave it open?
It sounds like an inconsequential question. And it sure seems nitpicky in the scheme of things.
But to good dealers, the devil is in the details. And it should be.
Many finance and insurance managers face the door dilemma each time they get a customer in their office. I know this because I often read a Facebook page where some F&I professionals chat about various topics. The door question was the topic du jour recently.
And reading the several serious responses, I realized it is a legitimate question of etiquette.
Most of the F&I pros who weighed in said they prefer to close the door to block out sound distractions, preserve the integrity of the finance process, and provide privacy to the customer.
As one F&I pro wrote: "I give [the customer] the option to agree with me: 'Mr. Jones, would you like me to close the door to protect your privacy?' They say, 'Yes,' 100 percent of the time."
Here's another detail F&I pros put serious thought into: customer attention span.
These Facebookers wrestled over the issue of how many F&I products should be on a typical menu that is presented to a customer. While the responses varied from three or four to as many as eight, the general consensus was anything over five runs the risk of curing a customer of insomnia. One finance manager suggested creative bundling of products to keep it short and simple for the customer.
It's this seemingly small stuff that should be a big deal to good dealers.
After all, every detail of a deal plays into the lasting impression a customer carries from the dealership.
And that impression determines whether the customer returns.
JIM HENRY
Chief consumer watchdog takes stage, stays mum on auto lending
| |  | Jim Henry is a special correspondent for Automotive News | |
It's too bad that the head of the Consumer Financial Protection Bureau, which prides itself on enforcing transparency in the finance industry, is opaque about its plans for the auto-lending segment.
Apparently, auto lenders and the franchised, new-car dealers they do business with are just going to have to wait and see, even though that's not the answer anybody wants.
At last week's Consumer Bankers Association convention in Texas, Richard Cordray, CFPB director, stuck to his prepared remarks. He didn't even mention the word "auto," although he did mention mortgages, credit cards, student loans and checking accounts.
The Consumer Financial Protection Bureau hasn't gotten around yet to any specific public statements on auto lending. That has done nothing to calm high anxiety among auto lenders and dealers about whether the bureau or other government regulators, such as the Federal Trade Commission, will review the common practice of dealer reserve on indirect auto loans.That's where dealers in effect mark up the customer's interest rate and share in the profits.
As Cordray headed for the exit at the convention, I asked him whether he could talk about the auto sector in general or specifically about dealer reserve. "I respect your right to ask," he said, "but I don't have any news to make on that today."
To be fair, the bureau is still new, and Cordray is newer still, having been appointed in January. Moreover, when the bureau was created in 2010, dealerships were specifically carved out of its jurisdiction. That potentially complicates any rules the bureau might contemplate regarding dealer reserve. Technically, any rules would be for lenders, not dealers.
Still, it was a disappointing appearance for anybody hoping for more details.
Why you shouldn't backdate a sales contract
 When a California appeals court handed down a July 2010 ruling that held San Diego dealership Pearson Ford liable for backdating sales contracts, it grabbed the attention of many dealers. Backdating occurs when the date on a document is earlier than the one on which the document was prepared. ... story
| Want to make a bundle? Try bundling
 Providers of aftermarket products increasingly are bundling their offerings -- especially for second-tier products such as tire-and-wheel and paintless dent repair -- in customizable 3-in-1 and 4-in-1 programs. ... story
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F&I PRESS RELEASES
» CarHop Comes to Wisconsin!
DEALER JOB LISTINGS
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F&I BY THE NUMBERS
GM gains subprime share
Of the seven biggest-selling automakers in the U.S. market, GM posted the largest increase in subprime share of new-vehicle auto loans originated in the fourth quarter of 2011. Nissan had the biggest subprime share overall. Hyundai, which has been moving upscale, posted the only decline. Data include all brands. | | | | | | | Manufacturer | Subprime penetration,
Q4 2011 | Year ago change | | GM | 23% | 36% | | Chrysler | 27% | 17% | | Nissan | 32% | 14% | | Toyota | 20% | 6.0% | | Honda | 16% | 5.5% | | Ford | 21% | 3% | | Hyundai | 29% | -1.6% | | | | |
| | Source: Experian Automotive | | | |
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