Perfecting the Pitch for a Troubled Time

by Marcie Belles

For years, dealerships sought “outgoing and friendly individuals, with excellent communication skills and thorough knowledge of various cars and car options” to sell vehicles. These days, with vehicle sales on the skids, dealership sales and finance managers need the know-how of a credit counselor, and the creativity of a consultant, combined with a dash of realism.

Hourlong decisions about moonroofs or premium wheels are largely gone; now car buyers focus on new versus used — or whether to buy a car at all. So F&I managers are spending more time explaining down-payment requirements and the inner workings of credit scores. They have to find alternatives to leases and extended-terms. Some have even stopped selling certain insurance products.

“Most people are used to buying cars with no money down,” said DJ Dancer, finance manager at Jack Diamond Lincoln Mercury, in Longview, Texas. “Those days are over. Without $1,500 to $2,000, a deal is hard to get done.” Some lenders might require down payments as high as $4,000 or $5,000, he added. Credit scores and interest rates are another sticking point for finance managers. That’s where the credit counseling comes into play. “We have to explain the banking system more than before, especially credit scores,” said Jimmy Guerra, finance manager at Fiesta Auto Center. “We tell [customers], ‘If it’s low, you’re going to have a higher interest rate until you refinance. After six [on-time] payments, you can get a better interest rate.’”

In some cases, a new car at a 0 percent interest rate costs less than a one- or two-year-old used car. But, still, finance managers are tasked with convincing customers to take that step — one that some find too daunting. “With the standard rate on used, the monthly payment could be $40 less on new,” said Jon Lind, vice president and general manager at Burlington Ford Lincoln Mercury Inc. “But we have lots of guys who don’t want to step into a new one, so they continue driving their [current] car.” That’s a dynamic that has been addressed somewhat by the federal government’s Cash for Clunkers program.

Another obstacle for dealership F&I managers are lenders’ more restrictive financing options. For Tim Dunlap, finance manager at Hare Chevrolet, in one of the most difficult changes to the sales pitch has been the near-elimination of leasing as a financing option. “We’ve lost our captive for leasing,” he said. “You used to be able to get a new Tahoe for $350 or $400 a month. Half our new cars were leased.” Now the Noblesville, Ind., dealership relies solely on US Bank for leasing.

Harbor Chrysler Jeep Dodge, meanwhile, has stopped selling credit life and disability insurance. “It takes care of the confrontation,” said Finance Manager Dave Dutcher. “We tell customers, ‘Go to your insurance company.’” The Michigan City dealership limits its insurance offerings to GAP and warranty coverage. Harbor Chrysler, too, has instructed dealership personnel to quote loan terms only as high as 72 months, because some lenders have shied away from longer terms like 84 months. “We don’t let our salesman go there,” Dutcher said. “We try to work them into a shorter term. In some cases, though, the customer says, ‘I’ll buy this car for $300 a month — I don’t care how many lifetimes it takes.’ In that case, the sales manager has to get involved and say, ‘You’re looking at the wrong car.’”

In recent months, Mike Anderson Auto Group General Sales Manager Terry Osborn has also had to bring offer customers doses of reality. “We try to give the customer what they want” in terms of vehicle selection, he said. “On occasion, we have to show them other options. Sometimes it involves dragging them to a vehicle and saying, ‘Here’s what you can have.’”

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