Fixed Ops Journal - May 2016 - (Page 46)

" FIXED OPS JOURNAL "It is a great tool for our advisers to be able to offer this service as an alternative payment plan." TRAVIS WALKER, Sansone Auto Network FINANCING SERVICE ■ Targeted credit cards and loans can help capture work JIM HENRY B y offering financing for service work, dealerships can capture work that otherwise might go elsewhere. But it's not always easy to get service departments to offer financing or to get customers to accept it, dealers and others agreed. "It is a great tool for our advisers to be able to offer this service as an alternative payment plan," said Travis Walker, director of fixed operations for Sansone Auto Network, of Avenel, N.J., a fan of service financing. He said service advisers for the six-dealership group are getting about 14 percent more work per customer since the group started offering service financing this year, using a program offered by Confident Financial Solutions, of Boulder, Colo. "This is work that we may have lost or never seen," Walker wrote Fixed Ops Journal in an email. He said most of the customers who took advantage of service financing had subprime credit, but not all. According to CFS, the Sansone dealerships generated more than $20,000 in loans for service work in just over two months. The company says its financing produces an average 32 additional repair orders per month per retailer and a $46,000 average monthly revenue increase for the service centers it supports, including both dealerships and aftermarket businesses. Potential Analysts expect new-car sales to flatten out after this year, so demand for service financing could increase, as customers keep their cars longer and dealerships compete harder for service work, said dealership trainer and consultant John Fairchild of Fairchild Automotive Solutions, of Bishop, Ga. "I think it's an awesome tool to close a service deal," he told Fixed Ops Journal. "Every dealer I come in contact with, I make sure they've got that going. It makes it easier to present a high-dollar-value repair for a customer." Fairchild believes one reason service financing isn't more popular is that service writers are inexperienced at selling and re- PAGE 46 MAY 2016 Weighing worth Financing for service work has its fans, but many dealers are lukewarm about it. Here are some pros and cons. ▲ PROS Service retention "This is work that we may have lost or never seen." - Travis Walker, director of fixed operations, Sansone Auto Network, Avenel, N.J. Special deals "We can offer 'six months same as cash' for $299 or more. When folks hear 'same as cash' and they're paying a high rate on their personal credit cards, it can be very attractive." - Lawrence Dimmitt IV, owner, Dimmitt Chevrolet, Clearwater, Fla. Loyalty for future work "With the card in their wallet, customers are more likely to come back with that dealership." - Stephen Roe, general manager, automotive, Synchrony Bank ▲ CONS Customer resistance "We offered it, but it never really caught on. People needed to apply for a new card, and most of our clientele didn't want to do so - instead choosing to use existing credit cards they had." - Tony Pordon, executive vice president for investor relations and corporate development, Penske Automotive Group Dealership inertia "There's a detailed application they have to submit from the business office, there are processing fees, etc. They just don't want to hassle with it." - Dealership consultant John Fairchild, Fairchild Automotive Solutions, Bishop, Ga. luctant to pitch anything other than the service work itself. In several interviews, dealers and fixed-ops managers also said most customers already have credit cards, and they are reluctant to sign up for another credit card. Still, financing for service already is available from a variety of lenders, and it is becoming even more widely available. Relative newcomers include CFS, which was launched in September 2013, and LoanHero, a loan origination platform in La Jolla, Calif., which was launched in 2014. LoanHero CEO Steve Connolly said the company plans to offer service financing at franchised dealerships, but for now, its automotive retailers are exclusively aftermarket ones. He said LoanConnolly: Hero started as a pilot AAMCO now, program in five states, but dealerships next a recent deal to provide financing at AAMCO Transmission Inc. locations would give it a nationwide footprint. Tony Orlando, CFS vice president of partner development, said his company has signed up about 1,000 retailers in 36 states, including 410 franchised new-car dealers. Heavyweight Dealers said the biggest established player in the service-financing space is Synchrony Bank, the former GE Capital Retail Bank, which offers service financing under the CarCareONE brand at franchised dealerships and in the aftermarket. Synchrony said it is signed up with more than 25,000 retail locations, including both franchised dealers and aftermarket. The company wouldn't say how many of each. "It's amazing more people don't realize how long financing for automotive work has been around," said Stephen Roe, Synchrony's general manager, automotive. "It's a growth segment for our business," which dates to 1987, he said. "Dealership is a segment where we see a great fit," Roe said in a phone interview. SEE FINANCE, PAGE 47

Table of Contents for the Digital Edition of Fixed Ops Journal - May 2016

Fixed Ops Journal - May 2016
Editor’s Letter
Service Counter
Legal Lane
Profit Builder
‘Grease monkey’?
Photo story
Richard Truett
High light
Service satisfaction
90-second oil change
Financing fixes
Supreme Court
Tech trends
Top 50
5 Minutes With
Shop Talk
Fixed in Time

Fixed Ops Journal - May 2016