| | | WEEKLY REPORT | October 10, 2012 |
| | | | | | | California fine-print case could shake up dealers, auto lenders
If the California Supreme Court lets a ruling on arbitration stand against an auto dealership in Santa Clarita, dealerships and lenders in the state could be more vulnerable to litigation, including class-action lawsuits, the American Financial Services Association says. ...  story
| Q&A
F&I winner prefers paper and pen to iPad
Dina Wilson is director of finance for the Cumberland, Md., dealerships of Timbrook Automotive, with Buick-GMC, Kia and Nissan new-car stores, plus a used-car store, Timbrook Auto Outlet. In a panel discussion at an F&I conference last month, Wilson said she prefers a relatively traditional approach to F&I. She won an award at the conference based on a persuasive but low-tech product presentation ... story
| U.S. Fidelis co-founders get prison terms for service-contract fraud
 The two brothers who founded U.S. Fidelis Inc. received prison terms and were ordered to pay more than $4 million apiece in restitution stemming from their defunct company's aggressive marketing of bogus extended-service contracts directly to consumers. ... story
| Q&A
Honda Finance's next big job: Take dealers digital
 Consistency has helped American Honda Finance Corp. become a powerhouse in leasing. David Paul, vice president, American Honda Finance, has spent 27 years at the company. He took the helm July 1. Paul says a major initiative now is bringing in new technology and digital tools to improve and streamline the loan origination process at dealerships, make it easier for dealers to sell insurance and ... story
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F&I BY THE NUMBERS
VW Credit volume rises
As U.S. sales have increased for VW and Audi, VW Credit has benefited from a rise in retail loan volume. Figures combine new- and used-car loans. Dollars in billions. | | | | | | Retail loans outstanding | Yr.-ago change | | 1st half 2012 | $9.06 | 14.5% | | | | | | Year-end | | | | 2011 | $8.28 | 9.9% | | 2010 | $7.53 | 8.1% | | 2009 | $6.96 | -3.3% | | 2008 | $7.20 | 5.9% | | | | | | Source: VW Credit |
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JIM HENRY
Losing your car key is no small matter
| |  | Jim Henry is a special correspondent for Automotive News | |
It’s shocking that replacing a smart car key -- one with an embedded computer chip -- is so expensive, running as much as $400, consumer advocates and dealership F&I managers say.
Given that, it’s also surprising that most dealerships don’t offer key-replacement insurance. In an informal online survey of dealerships this year, 29 percent of respondents told Automotive News they offer it -- which suggests that 71 percent don’t.
That probably varies by brand. Some brands, including luxury imports, rely on smart keys more than others. But some high-volume models from Nissan and Toyota offer smart keys and push-button starters, too.
Some dealerships don’t offer key-replacement insurance to save time. They’re trimming their menus, and extended-service contracts and GAP trump key replacement.
But more and more consumers are learning the hard way that a replacement key costs an arm and a leg. It’s easy to find angry comments online.
This isn’t a new controversy. Clarence Ditlow, executive director for the Center for Auto Safety, said by phone this week that the consumer-advocate group complained to the Federal Trade Commission six years ago that car companies charged too much for replacing smart keys and that the automakers allegedly refused to share data so independent shops could make cheaper replacement keys.
Just two weeks ago, California Gov. Jerry Brown vetoed a bill that according to the Automotive Aftermarket Industry Association would have had the effect of allowing automakers to withhold electronic key code data from independent locksmiths.
The auto industry, the aftermarket and consumer advocates don’t agree on much. But it’s about time they agree that the high cost of key replacement is a problem.
JAMIE LaREAU
Think you’re good? Try selling F&I to Justin Bieber
| |  | Jamie LaReau covers auto dealers for Automotive News | |
Imagine your favorite Hollywood actor sitting across from you as you pitch the benefits of an extended-service contract.
Or picture batting around the benefits of paint and fabric protection to the prince of darkness, Ozzy Osbourne.
It’s all in a day’s work at one dealership near Los Angeles.
Celebrity clientele is so common, the store’s finance team is far from star-struck, says the finance manager, who didn’t want to be named to protect the dealership’s customers.
In fact, dealing with the rich and famous is preferred, the manager says. Not just because stars have money to spend, but they are easier to work with and more polite than some customers who think they’re rich and famous, the manager says, adding, “Those are the ones who can be rude.”
The finance manager recalls selling an extended-service contract to movie star Denzel Washington about a year ago.
“He was super nice,” the manager says. “It was for his daughter.”
The manager kept the pitch professional, treating him like any other customer. Often, there isn’t room for swooning, the manager says.
“Sharon and Ozzy Osbourne came in the other day,” the manager says. “They were with all their people, so you didn’t really get to talk to them much.”
The clientele at the luxury-brand dealership extends from singer Nick Lachey to teen heartthrob Justin Bieber, the manager says.
Most celebrities politely listen to the finance and insurance pitch and often make a purchase, the manager says.
And that alone is reason for any finance manager to swoon.
How tech pitches boost service plans
 "You're driving a spaceship." That's what Megan Jacoby tells customers when she pitches an extended-service contract to them. And when Jacoby, the finance director at Bob Smith BMW in Calabasas, Calif., shows customers a cutaway drawing listing the computerized parts in their car and the costs to replace those components, an extended-service contract sale is likely. ... story
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F&I PRESS RELEASES
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DEALER JOB LISTINGS
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F&I BY THE NUMBERS
Loan defaults remain below recent highs
Defaults on auto loans showed a slight uptick from July to August. Seasonally that's not unusual. July defaults were the lowest since the recession and overall default rates remain below recent highs. Index measures percentage of current balances that went into default during a particular month. | | | | | | 2012 | 2011 | | Aug. | 1.09% | 1.31% | | July | 1.01% | 1.27% | | June | 1.04% | 1.29% | | May | 1.03% | 1.34% | | Apr. | 1.07% | 1.45% | | Mar. | 1.11% | 1.47% | | Feb | 1.22% | 1.58% | | Jan. | 1.27% | 1.58% | | | | | | Avg. | 1.11% | 1.41% | | | Source: Standard & Poor's/Experian Consumer Credit Default Indices |
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