| | | WEEKLY REPORT | June 20, 2012 |
| | | | | | | Service contracts aren't insurance, Okla. says
The state of Oklahoma has made technical changes to its rules governing extended-service contract providers, making it clearer that extended-service contracts shouldn't be regulated like insurance. ...  story
| Learn how to avoid deceptive practices -- today!
 Dealers and F&I managers will have a chance to hear a government attorney spell out how to stay compliant during an Automotive News online event today. Carole Reynolds, an attorney with the Federal Trade Commission, will lead a session called “Steering Clear of Deceptive Practices.” ... story
| Want to sell service plans? A process helps
 Paragon Honda, Paragon Acura and Aberdeen Chrysler Center have managed to do what many dealerships cannot: consistently sell extended-service contracts to customers whose factory warranties are expiring or have expired. Their success has hinged on finding and reaching out to customers who fit the expired-warranty profile. ... story
| It's June -- time to grab the grads, but how?
It's June again, a time when college graduates anticipate finding a job and buying their first car. To capture those first-time buyers -- and create loyal customers -- many automakers and their captive finance companies offer college students and graduates special incentives. ... story
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F&I BY THE NUMBERS
Long-term loans stage comeback
Long-term loans, as a percentage of overall new-vehicle loans, are rising again. Customers are seeking lower monthly payments, and auto lenders are willing to tolerate more risk, according to Experian Automotive. Change in share vs. Q1 2011. Numbers do not equal 100 because data does not include loans shorter than 25 months or longer than 84 months. | | | | | | New-car loans (mos.) | Share
Q1 2012 | % change
from Q1 2011 | | 25-36 | 6.6% | 0.2% | | 37-48 | 4.8% | -4.0% | | 49-60 | 29.6% | -9.5% | | 61-72 | 42.6% | 2.6% | | 73-84 | 15.1% | 15.4% | | | | | Used-car loans (mos.) | Share
Q1 2012 | % change
from Q1 2011 | | 25-36 | 8.2% | -3.4% | | 37-48 | 14.8% | -0.1% | | 49-60 | 29.9% | -8.8% | | 61-72 | 35.0% | 5.3% | | 73-84 | 9.1% | 21.9% | | | | | | Source: Experian Automotive |
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JAMIE LaREAU
Finance, sales can get along when the price is right
| |  | Jamie LaReau covers auto dealers for Automotive News | |
At times the relationship between salespeople and finance officers can resemble a feud between the Hatfields and the McCoys.
Some finance managers resent how some salespeople structure a deal, arguing the salesperson does not leave enough of the loan for the customer to buy insurance products.
Likewise, some salespeople believe the finance manager ruins the relationship and undoes a deal that took them hours to secure, just to sell an aftermarket product.
But these tensions don't have to exist.
Many finance managers want a spirit of cooperation with sales folks and are willing to share the spoils to do so.
In a recent post on Facebook's Ethical F&I Manager's page, a finance professional asked: "Should sales reps get paid on the backend? I think they should get something, do you agree?"
Of the 43 people who responded, most agreed. Three people clicked "like" to the post.
Many of those who commented believe salespeople should get some money, provided the salesperson sets up a deal that allows sales in the F&I office.
And some dealers say they encourage the salesperson to promote products during the sales process. Also, the salesperson can speed up the entire F&I process by having the customer's paperwork completed, many finance managers suggest.
This last point is so essential, the finance professional on Facebook posted that some dealers tell salespeople: "Paper work not complete, no bonus money on that deal."
With enough financial motivation, salespeople would negotiate deals that leave money for F&I sales, especially knowing they get a piece of the F&I pie.
And finance managers would share that pie, knowing the salesperson is setting them up for success.
JIM HENRY
A case for face-to-face F&I
| |  | Jim Henry is a special correspondent for Automotive News | |
Customers may not always like the F&I experience at dealerships -- the phrase “getting a tooth pulled” tends to come up -- but there’s something to be said for sitting across from an actual person instead of buying complicated financial products online or from a voice over the phone.
The second of two brothers who co-founded U.S. Fidelis in Wentzville, Mo., pleaded guilty last week to fraud for misleading customers who bought extended-service contracts from the company over the phone. U.S. Fidelis solicited customers for extended-service contracts nationwide via millions of annoying “robocalls.” It went bankrupt in 2010.
Last week’s plea was from Cory Atkinson, 42. In April, Darain Atkinson, 47, also entered a plea agreement. Cory Atkinson faces up to four years in prison, according to the state attorney general. A hearing is set for Sept. 28. Darain Atkinson is scheduled for sentencing on July 16. Prosecutors are recommending an eight-year sentence, the attorney general’s office said.
Due to the company’s shady marketing practices, people often bought extended-service contracts from U.S. Fidelis without really understanding what they were buying, what was covered or how to get a refund. Last year, Missouri passed laws to enforce better disclosures and timely refunds.
Dealers know all too well that if customers complain about a service contract, they often go straight to the dealership where they bought the car and the service contract, even though technically the contract is between the customer and the administrator.
Dealerships that want repeat business — and no angry customers on their doorstep — know they need to play it straight.
F&I PRESS RELEASES
» 'Auto Warranty' Telemarketer Pleads Guilty
» Attorney General Koster announces guilty plea by Cory Atkinson
DEALER JOB LISTINGS
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F&I BY THE NUMBERS
Lease terminations climb at World Omni Financial
Scheduled lease terminations are rising at World Omni Financial Corp. as leasing rebounds. But because used-vehicle values are higher, customers and dealers are buying more vehicles at lease end and returning a lower percentage of cars to the lender. Dealers profit from retailing off-lease cars. World Omni primarily serves Toyota dealerships in five states for Southeast Toyota Distributors. World Omni and Southeast Toyota are units of JM Family Enterprises of Deerfield Beach, Fla. | | | | | | | End of | Scheduled
to terminate | Returned to
W. Omni | Percent
returned | | Q1 2012 | 6,899 | 1,597 | 23% | | Q1 2011 | 3,113 | 1,247 | 40% | | | | | | | 2011 | 30,354 | 12,716 | 42% | | 2010 | 22,806 | 10,883 | 48% | | 2009 | 31,730 | 17,484 | 55% | | 2008 | 22,797 | 9,971 | 44% | | 2007 | 19,084 | 4,383 | 23% | | | | | | | Source: World Omni Financial |
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