High-powered, hurry-up offense features broad-spectrum lending play

The fourth quarter has arrived, and you’re still in the game.

But great teams finish strong.

With the holidays still ahead, your team has a big fourth-quarter opportunity to win in 2018 with an offensive strategy that will keep you on target.

Santander Consumer USA (SC), as an important part of your team, will bring every option to the game, including a hurry-up offense featuring broad-spectrum lending and aimed at achieving your sales goals before the final whistle blows.

100418 IL High-powered, hurry-up offense features broad-spectrum lending play_750x236

Although best-known as a subprime lender, SC has incorporated near prime into its offensive playbook. That should help put points on the scoreboard with more financing options for your customers.

“Santander has definitely widened its customer base in the past few months,” said Carlos Pedre of AutoNation Chevrolet Doral in Florida. “Definitely a much larger credit spectrum lender now. Long gone are the days when we looked at Santander only for the subprime customers.”

You call the plays, but it’s up to us to be key players in making it happen.

Here are the X’s and O’s for the hurry-up:

  • More financing options increasing your chances of scoring.
  • A pricing strategy calibrated to a dealer-favorable call.
  • Lower price and discount fee and a fresh approach to credit underwriting.
  • Flexibility on financing terms and increased dealer participation.
  • Most application responses received within seconds of submission reducing wait times.

“We are pleased to see great interest rates and exceptional customer service offered by SC to our customers with an A-plus credit rating, fast approval and funding process,” added Birol Karan, dealer principal at South Miami Mitsubishi. “We are lucky to have a business partner that accommodates not only the sub-prime but also the prime lending as well.”

Of course, luck is what happens when preparation meets opportunity.

“Santander is in it for the long haul,” said Elizabeth Guichardo, SC Dealer Relationship Manager in Miami, FL. “We are here as a full-spectrum lender to help our dealer partners finance all of their customers’ needs. By giving us an opportunity on every click, my dealers are seeing that numbers don’t lie and are sending us prime deals as well.”

“Our job is to help our dealers get their deals funded,” said one SC regional sales manager recently. “Putting more cars on the road is what we’re there for.”

“We simply offer an option to our dealers that they may be missing out on if they didn’t submit their apps to us,” said another SC player. “We’re providing another opportunity to make more deals happen.”

Even if you don’t choose SC for a particular play, at least you have that choice.

Leaving us on the sideline is not a good call.

U.S. vehicle sales mostly keep on truckin’ in 2018 despite lower expectations

The much-anticipated 2018 vehicle sales slump hasn’t happened yet. Now the question may be whether it will happen at all this year.

Despite predictions by many auto industry analysts that this would be a down year compared to 2017, U.S. vehicle sales keep on truckin’ in 2018 – thanks mostly to pickup and SUV sales.

Sales in five out of eight months through August exceeded same-month results in 2017.

Photo credit: Ford Motor Co. via NewsPress USA Ford F-Series and other pickups and SUVs are towing U.S. sales higher than expected.

Photo credit: Ford Motor Co. via NewsPress USA
Ford F-Series and other pickups and SUVs are towing U.S. sales higher than expected.


If sales continue at just over last year’s level for the last four months of the year, they actually would eke out a margin of around 170,000 vehicles over 2017 sales. That would be a 1 percent gain and put the year nearly on par with record-setting 2016 and 2015.

That also would not be a result anyone saw coming at the beginning of the year, with most analysts predicting a dip under 17 million and as low as 16.7 million.

For example, Cox Automotive recently raised its forecast to 17.1 million from 16.7 million in sales, matching forecasts of General Motors and LMC Automotive.

Here’s how the numbers could look for the rest of this year, based on data from the U.S. Department of Commerce’s Bureau of Economic Analysis:

  • If sales for the remainder of 2018 match the last four months of last year, vehicle sales could exceed 17.7 million, although those results included a record September.
  • Results will come close to 2015 and 2016 if sales this year match the end of those years.
  • If the last four months of 2018 match sales during the same period of 2014, this year still would top 17 million for the fourth time since then.
  • It would take the worst results since 2013 to come in as low as 16.8 million.

Although car sales have declined to less than 30 percent of total sales for the first time in history, trucks and SUVs are more than making up the difference so far in 2018.

The top-five selling models so far this year, for example, all are trucks or SUVs – Ford F-Series, Ram Pickup, Toyota RAV4, Nissan Rogue and Honda CR-V, with four of five selling more than last year. Pickups and SUVs also dominate the top 20 vehicles with 13, most of which also have more sales. The only passenger cars among the top-10-selling vehicles – Toyota Camry, Honda Civic, Toyota Corolla family and Honda Accord – have lower sales compared to last year.

There is potential turbulence ahead, such as tariffs, trade talks, gas-price uncertainty, vehicle-price increases, higher interest rates and lower consumer confidence.

“Despite generally good conditions, automakers are in for a rough finish to 2018,” Forbes magazine suggested based on an interview with a senior economist from Cox Automotive.

But that prediction has a tone similar to expert forecasts at the beginning of the year.

And we see how those have worked out.

12 of the best ways to boost your dealership’s used-car results

How does your used-car operation measure up?

A dozen key performance indicators (KPI) here should begin to give you an idea of where your dealership stands compared to thousands of others, including high performers.

Cox Automotive addressed KPIs in “Metrics That Matter for Best Dealership Performance” in its 2018 Used Car Market Report & Outlook, compiling a list of 12 KPI and best-in-class benchmarks from “vast amounts of data” it collected for the annual report.

110717 IL Personal touch important, even though car shoppers want digital options

“Used retail unit volume equaling or surpassing new retail volume is a foundational correlation of highly successful used-vehicle departments, assuming the dealership is meeting new-vehicle volume goals.”

A great result is 1.25 used vehicle sales to every one new-vehicle sale.

Inventory turn rate

“The highest performers turn inventory every 20 days … Fast inventory turns maximize high-gross opportunities associated with fresh inventory and drive profits in other dealership departments.”

Price to market/market days’ supply

“Top performers embrace the balance between a vehicle’s desirability and its price. They use data to dictate when it is appropriate to ‘go for the gross’ and when the window for profit is short … The data is also a foundational element in inventory acquisition and appraisal processes.”

Mechanical and cosmetic reconditioning time

“Top performers solve reconditioning delays … Speed is paramount.”

Reduced reconditioning markup for older vehicles

“Retail reconditioning hinders vehicle acquisition, especially on older vehicles that tend to be some of the most desirable but also have the highest reconditioning costs.”


“High performers understand the drag that packs place on their used car operations. They slow down acquisition, including reducing new car appraisals.” The Internet has changed this dynamic.

Immediate wholesale volume

The best used-car departments “separate the measurements of immediate wholesale, that is, a vehicle never offered for retail from aged wholesale. They look for ways to keep trades … [and] typically have discounted recon rates for older vehicles and few to no packs.” This should be “under 33 percent.”

Immediate wholesale profit/loss per vehicle

“The goal is a small profit/loss per vehicle [about $150], an indication that appraisers are accurately assessing valuations and assumes no inventory adjustments or pack adjustments.”

Aged wholesale loss per vehicle

“Vehicles that were reconditioned and offered for retail but did not sell are likely to lose money.” Top performers separate these “from the ones that were wholesaled immediately and set a KPI for the average wholesale loss on these units. A benchmark of 5 percent wholesale loss allowance is common.”

Appraisal-to-trade ratio

“[This] is the ratio of all vehicles appraised to how many were traded … It is a key indicator of the support the used-car department provides to the new-car department.” It should exceed 50 percent.

Gross return on investment

“GROI is the product of the gross as percentage of the sale multiplied by turn rate. … For a vehicle to make financial sense, the goal is a minimum GROI of 120.” This can be applied to an entire inventory.

Cost to market

“The highest achievers monitor cost to market, which compares the retail value of a vehicle to the total investment in a vehicle, including acquisition cost, reconditioning, transportation, pack, etc. … Minimize costs to enable aggressive acquisition of inventory and deliver maximum ROI.”

For more details, download the 2018 report.

Habla Español: Are Hispanics the future of the U.S. auto industry?

081418 IL Habla Español Are Hispanics the future of the U.S. auto industry


Yes and no.

While the majority of vehicle purchasers will continue to be non-Hispanic consumers, Hispanics are expected to drive growth for the next 30 years or so.

“The future of the auto industry is largely in Hispanic hands,” Parker Morse, The Marketing Insider columnist, wrote in Why Hispanics Are the Future of the Auto Industry.

While that may sound like an overstatement – Hispanics are buying only about two million vehicles a year out of total sales of 17 million – there is no denying they are the fastest-growing U.S. demographic. Hispanics will drive about 50 percent of the country’s population growth over the next five years, according to Dealer Marketing Magazine in How Dealers Can Reach the Underserved Hispanic Market.

“It’s estimated that new car sales to Hispanics will grow by 8 percent over the next five years, compared to a 2 percent decline amongst the total market,” according to Dealer Marketing.

Industry growth engine?

“In fact, Hispanic consumers could well be the auto industry’s leading growth engine for the next 20 to 30 years, many industry executives and marketing experts believe,” Automotive News reported. “And it’s happening not just in those states where Hispanic demographics have always been strong, such as California, Texas and Florida, but increasingly in the Midwest and everywhere else.”

Capturing a fraction of this market “can mean huge gains for local dealerships.” said Dealer Marketing.

“But knowing that Hispanics are more likely to buy cars than other audiences and actually selling cars to Hispanics are two different things,” suggests The Marketing Insider.

Reflecting Hispanic culture

“Research shows that a vast majority – 79 percent – of Hispanics are more receptive to auto ads when those ads are reflective of their culture in some way. This includes ads or initiatives that involve Spanish-language content, as well as those that speak to the deeper values of the Hispanic community.”

The Insider cited a Ford social media video ad campaign that featured “everyday heroes in Hispanic communities” drawing nearly two million views and 6.6 million social impressions in nine weeks, as well as a Honda campaign “aligning with certain values and behaviors of Hispanic consumers.”

What this means, according to Dealer Marketing, is “creating authentic, culturally relevant online experiences for Hispanics … [while also] deploying a Spanish version of a dealership’s website and ensuring it remains in sync with the content and inventory found on the dealer’s English website.”

Speak the language

“Years ago, this represented a technically complex, costly endeavor,” reported Dealer Marketing. “These days, affordable solutions exist that can deploy secure translated sites in weeks.”

The dealer magazine also recommends:

  • Customizing text, graphics or promotional elements on translated websites.
  • Making content available on mobile phones – “mission critical” – because Hispanics use their smartphones “far more than the non-Hispanic average.”
  • Don’t leave out social media, where up to 50 percent of Hispanic respondents discuss brands.
  • Make sure your team can accommodate Spanish-speaking consumers when they visit.

“There’s no better way to build trust with this audience than to show that you truly understand not only the language that they speak, but also the values they uphold,” wrote columnist Morse.

Where have we heard that before?

Optimism among dealerships slides – Cox Automotive survey

Auto dealers are far less optimistic now than they were about last quarter.

Probably with good reasons.

“While dealers were more positive than negative in describing the current market, expectations for the future deteriorated substantially,” said Cox Automotive in a report on its latest Dealer Sentiment Index, which is gathered through a quarterly online survey of franchise and independent dealerships.




“Higher costs, inventory concerns and rising [consumer] interest rates are likely driving dealers to believe the best times in this cycle may soon be in the rearview mirror.”

Another contributor to the change was declining expectations of tax cuts, Cox said.

“Dealers shifted from a majority expecting a positive impact to their business from tax reform to a majority now indicating they have experienced no impact,” according to Cox.

The lower optimism among dealers appeared justified as new-vehicle sales for most automakers declined in July – although Fiat Chrysler, Subaru and Volkswagen bucked the trend – largely because of the continuing decline of passenger car sales in favor of SUVs and trucks.

Cox Automotive found that one of the most significant drops in optimism involved the new-car sales environment, which slipped about 10 percent to 59/100 from 65/100, although optimism for used-vehicle sales rose three points to 72/100 among franchise dealers. Independent dealers were split about 50/50 on whether the current used-vehicle sales environment is “good” or “poor.”

The expectation of a positive impact from tax cuts on profitability plunged to 61/100 from 77/100.

Despite the lower level of optimism, most industry analysts expect 2018 new-car sales around 17 million because of stronger-than-expected results in the first half of the year.

The Dealer Sentiment Index results are based on a survey of 1,053 franchise and independent dealer respondents April 30 to May 14, with responses weighted by dealership type (franchise or independent) and volume of sales to reflect the national dealer population.

Why your dealership should finance more vehicles with SC

Don’t take our word for it.

You would expect us to tell you why your dealership should finance more vehicles with Santander Consumer USA (SC) as we have in our series The Road Ahead.

Because we’re a lender that is:

  • Committed to helping your dealership succeed.
  • Confident that our updated program will enable you to make more money.
  • Compelled to do what is best for our dealer relationships.

But the reasons your dealership should finance more deals through SC really stand out – i.e., become more than the typical sales chatter – when other dealerships say it.

Being commended by dealerships that work with us is the best measure of our success.

Road Ahead V1

Jim Lopez, general manager of Del Toyota in Thorndale, PA, which sells about 3,100 vehicles a year, gave four reasons the dealership has been working with SC for more than 10 years:

  • Fast response time on applications. Knowing we have a quick approval helps us make deals with our customers faster, and we don’t have to keep them waiting.
  • The Dealer Extranet – We are big fans of the rehash tool. It gives us flexibility to rehash multiple vehicles in minutes without having to pick up the phone.
  • Funding experience. We have had great experiences with the funding department. It is fast and painless, which keeps us wanting to work with Santander.
  • Our relationship with our Santander rep adds the perfect personal touch. In a time where instantaneous accessibility is vital, she is always a phone call away.

Howard Forman, finance director at Sands Chevrolet in Surprise, AZ, with about 4,000 in annual sales, also cites the Dealer Extranet, calling it “a phenomenal tool that not only allows you the ability to rehash deals but also speeds up the funding process by utilizing the [document] upload feature.”

“Our [Dealer Relationship Manager] is a great asset, as well, because he has the ability to help us solve some of the more complicated issues that arise – helps to problem-solve … for a quick resolution.”

Here are a few other comments:

  • “SC has been a valued partner, helping Teddy Nissan grow into one of the most successful Nissan dealerships in the country” – Julio Batista, general manager, at the Bronx, NY, store.
  • “We like the ability to do loans for the full credit spectrum” – Kyle Bacon, general sales manager of Sport Chevrolet in Silver Spring, MD, which sells about 2,200 vehicles a year.
  • “Because of the flexible program [at Santander], we are able to sell more new and used cars” – Tony Avedisian, used car director, Car Pros Kia, Carson, CA., which sells some 9,000 units a year.
  • “We are a store that does 740 cars a month. Our experience with Santander is a positive one with Santander being one of our most-used lenders” – Chafik Amrani, general sales manager, AutoNation Toyota of Winter Park, FL.
  • “Santander gives us the opportunity for almost any customer that walks through the door. They are a full-spectrum lender, and every year it seems their footprint grows within the dealership” – Tony Pesce, finance manager, Greenwood Hubbard Chevrolet, Hubbard, OH.

And then there’s Darryl Morgan, general sales manager at The Sharpest Rides, a dealership in Englewood, CO, which sells 6,000 units annually as one of the largest independents in the country.

“I love Santander for a couple simple reasons,” said Morgan. “One, they are one of my only lenders that understands what we need from them – approvals. They make this happen more than others on the largest set of customers … Secondly, they’re a value bank, meaning they bring value to the relationship. My [Dealer Relationship Manager] is a partner at our dealership.”

And that you can believe.

East Coast Toyota

85 State RT 17,
Wood Ridge, NJ

Dealer principal:  John Ripoli

General manager: Jeff Brown

Brand represented: Toyota

How long in business: 25+ years

Number of employees: 120

Annual unit volume (approximate): 4,800+

What makes your dealership special:

The culture of our store makes it special. Our employees, in particular, contribute to the success of our dealership month in and month out. We take pride in providing excellent service to every customer that walks into our showroom. This creates a great customer experience and returns positive results.

SpotOnGIF_600px (1)

DRM Joe Carpentieri’s comment on what makes dealership special:

This is a fantastic store to be the rep for. They have a solid group of team players that know how to structure their deals and send in clean funding packages. They make my job as a DRM easy. The employees rarely leave, specifically the finance team, which has been in place for a few years now. That says a lot to me when I see the finance team at a store stay together for a long stretch of time with little to no turnover. The guys are very welcoming every time I come in and are always very positive.

How long working with Santander Consumer USA: 10+ years

What you like about doing business with Santander Consumer USA:  

It’s easy to do business with Santander. The speed of the callbacks coupled with the user-friendly Extranet allow us to work our deals in real time and get the best deal possible for our dealership and the customer. Funding is always a smooth process from start to finish, and we continue to send more business because of that. The credit buyers are always helpful and our DRM is available whenever we need him.

One best practice that contributes to your dealership’s success:

Working together as a team brings about positive results.

Describe your experience with Santander Consumer USA:

Overall our experience with Santander has been very positive and VERY profitable. The ease of doing business with Santander allows us to consistently send more business their way and put more and more cars on the road! The call backs are always solid, and we typically have a way to go!

– Juan Higuita, Finance Director

Billions of $$$ at risk on electric, autonomous vehicles – consulting firm

It could be a “pile-up of epic proportions.”

That is what a global consulting firm imagines could happen as vast sums of money pour into electric- and autonomous-vehicle technology without a clear road to a return on that investment.

“A pile-up of epic proportions awaits this industry as hundreds of players are spending hundreds of billions of dollars on electric and autonomous technologies as they rush to stake a claim on the biggest change to hit this industry in a hundred years,” said John Hoffecker of AlixPartners consulting firm.

071018 IL Billions of $$$ at risk on electric, autonomous vehicles – consulting firm

“The winners in this free-for-all will be those who have the right strategies and, equally important, execute on those strategies to their fullest potential – as billions will be lost by many.”

A press release about the study says:

“The automotive industry faces the possibility of a monumental capital drain in the near term as hundreds of players, including non-traditional ones, are pouring unprecedented sums into electric and autonomous vehicles years before those technologies are fully cost-competitive in the market, when consumers are questioning the cost and safety of some of the [autonomous-vehicle] technologies, and just as the market itself is set to continue a cyclical downturn.”

“In truth, this industry has been operating ‘above the clouds’ in terms of industry volumes for a number of years now,” said Mark Wakefield of AlixPartners’ automotive practice. “But those volumes are likely to edge down further, just as spending for things like electrification and autonomy need to ramp up.”

The study finds that a “whopping $255 billion” in research and development and in capital expenditures will be spent globally on electric vehicles by 2023 bringing some 207 models to the market, “many destined to be unprofitable due to currently high systems costs, low volumes and intense competition.”

Meanwhile, the consulting firm says, another $61 billion is just “the opening ante” on the autonomous-vehicle front, “even though consumers say they are willing to pay just $2,300 extra for autonomy – compared with current industry costs of around $22,900.”

“Industry players are sort of caught between a rock and a hard place,” said Shiv Shivaraman, also from the consulting firm’s automotive practice. “If they don’t participate in some way in the ‘new-mobility’ revolution that’s coming, they stand to lose out on what might be the biggest thing ever in this industry. If they do participate, as so many are, they have the chance of benefitting from first-mover advantages, but they also face the possibility of going broke in the process.”

The study predicts that “full battery-electric vehicles will reach about 20 percent of the U.S. market by 2030,” while a second survey by the consulting group found that almost a quarter of Americans – about 22.5 percent – say they are likely to purchase a plug-in electric vehicle as their next car.

Autonomous vehicles will account for three million in sales in the U.S. by 2030, the consulting firm said.

Automakers doing a ‘great job’ producing high-quality vehicles

The 2018 Kia Rio was named highest-quality small car by J.D. Power

The 2018 Kia Rio was named highest-quality small car by J.D. Power

New-vehicle quality is better than ever.

That’s the judgment of J.D. Power’s 2018 U.S. Initial Quality Study (IQS) as problems experienced by buyers declined for the fourth consecutive year overall.

“There’s no question that most automakers are doing a great job of listening to consumers and are producing vehicle quality of the highest caliber,” said Dave Sargent of J.D. Power.

At the top of the J.D. Power rankings is Hyundai Motor Group.

With new-vehicle owners reporting the fewest problems per 100 vehicles sold (PP100), the automaker’s Genesis (68 PP100), Kia (72) and Hyundai (74) brands swept the top three positions and were rated significantly better than the industry average of 93 PP100.

Other brands finishing above the industry average, along with their PP100 scores, according to J.D. Power, are Porsche (79), Ford (81), Chevrolet (82), Lincoln (83), Lexus and Ram (84), Nissan (85), BMW (87), Cadillac and MINI (90), and Infiniti and Mercedes-Benz (92).

Ford Motor Company received the most model-level awards (five) for its Ford and Lincoln brands; followed by Hyundai Motor Group (four) for its Kia, Hyundai and Genesis brands; and General Motors for its Buick and Chevrolet brands, along with Nissan and BMW (three each). Honda/Acura, Dodge, Mercedes-Benz and Toyota captured one category award each.

This year’s IQS awards identify 22 vehicle models in 20 categories as top picks based on results of a 233-question survey of 75,712 new-car owners and lessees. Another 33 models also were rated highly in the 20 categories, which ranged from small car to heavy-duty pickup.

The 233 survey questions covered potential vehicle problems in eight areas: exterior; seats; driving experience; engine/transmission; features/controls/displays; interior; heating, ventilation and air conditioning, and audio/communication/entertainment/navigation systems.

“The Initial Quality Study serves as the industry benchmark for new-vehicle quality measured at 90 days of ownership and has proven to be an excellent predictor of long-term reliability, which may significantly impact new-vehicle purchase decisions,” said J.D. Power.

For more details on the IQS awards, including brand-level results, see New-vehicle initial quality improves again, J.D. Power finds or the infographic Spotlight: J.D. Power 2018 Initial Quality Study.

Vehicle financing ‘easy,’ consumers say, but change may happen anyway

So here’s what your customers think about the vehicle financing process.

Based on a survey of 2,200 consumers by FICO Decisions, the practice of most shoppers obtaining financing through the dealership is headed for a change – perhaps rapid change.

Is your dealership ready for such a change in consumer behavior?

“There is a substantial disconnect between the current channel mix and consumer preference,” said FICO Decision’s report on a key finding. Consumer behavior may be reaching a “tipping point where the shift to digital happens rapidly given consumer demand and availability of new technology.”


While 73 percent of respondents said they obtained their last financing through a dealership, only 38 percent said they would inquire there for their next vehicle purchase, according to FICO Decision’s 2018 Consumer Survey of Automotive Finance Perceptions.

The shift among those consumers went toward applying online and visiting a bank or other institution, representing a significant change from current behavior in which only 20 percent of shoppers total obtained financing through lending institutions and online. The survey showed that more than twice as many consumers (32 percent) would seek financing through a bank or other lending institution and five times as many (29 percent) would apply via a laptop, tablet or other device.

Other findings of the survey are:

  • Interest rate/APR (94 percent) and monthly payment amount (92 percent) are the most important factors when shoppers are seeking financing, more so than length of loan term in months (88 percent) and down payment (82 percent), which “implies that financing proposals that are optimized to maximize for these aspects will be most impactful with consumers.”
  • Only about 21 percent of consumers learn the amount of financing for which they qualify before vehicle shopping, providing an opportunity for “risk-aware marketing” that results in prime and subprime customers getting “the best offers and options for their personal financial situation.”
  • More than half (52 percent) of consumers consider only one financing offer, which provides the opportunity to “present multiple loan offers with differing terms … to optimize the consumer’s preferred terms and avoid the customer leaving to shop elsewhere.”
  • More than six in 10 consumers (62 percent) must wait more than 30 minutes to complete their transaction with 13.6 percent waiting “a few hours” and nearly 10 percent overnight or longer. That means backend systems “still have some ways to go in terms of speed and efficiency.”
  • Only about 31 percent of vehicle shoppers were offered insurance and just 23 percent were offered add-ons such as floor mats, roof racks, etc., ancillary products and services on which dealerships often make additional margin.

Still, according to FICO Decisions, “Most consumers report that the financing experience was easy and low-effort for them … consistent with [an] earlier finding that customers feel in control of the process, understand the terms and feel they got a good deal.”

In fact, 62 percent of survey respondents rated their financing experience “easy,” while only 8 percent rated it “difficult,” with the rest falling somewhere in between.

The survey covered nine countries, but most results were broken out by country.