Article

Sales Skyrocket With Hispanic Market Focus: R&R Auto Sales Thrives In Orland, Calif.

January 2008, Auto Dealer Today - WebXclusive

by John Carroll - Also by this author

Like most of the families in the Sacramento Valley, Gary Campbell’s family relied on farming to survive and thrive over the years. But a bad drought in the late ‘70s temporarily dried-up their lifestyle, persuading Campbell’s father and grandfather, with bone-chilling certainty, they needed something more than good land to survive.

A few years later, the family opened a tiny, 10-car lot in Orland, Calif. In addition to the Anglo farmers and townspeople who came their way, a growing number of the Hispanic workers who picked crops and provided other hard labor in town began to drop by as well. Many were building new lives for themselves in the United States and needed reliable transportation. However, both the car dealer and car buyer struggled to reach each other, across a deep linguistic divide.

In the first few years, the Campbells and their Anglo employees relied on the sons and daughters of their Spanish-speaking clients to translate for them. But in 1990, soon after Gary joined the business with his father, the family hired their first bilingual salesperson.

It was an eye-opening experience.

“As soon as we hired a bilingual salesperson, we saw sales climb 10 cars a month, immediately,” said Gary Campbell, a third-generation dealer who now runs R&R Auto Sales. “When customers come onto the lot, you’re able to close them a lot easier than when their kids translated. That turned the light switch on. We quickly started looking for more bilingual salespeople.”

Today, six members of his eight-rep staff are fluent in Spanish. Campbell found his new ratio of bilingual sales personnel fueled a steady growth of business. His operation mushroomed to the size of a city block, with around 155 vehicles lined up for sale. Usually, he’ll rack-up about 70 sales a month, and there’s no question that Hispanics in his market powered his success in the business.

Just a few years after adding a second language to the lot, Hispanic buyers swelled to make up 40 percent of his customer-base. Soon, Campbell became more aggressive, directly targeting the Hispanic audience in his region with a Spanish-language marketing campaign. Today, six of every 10 customers are Hispanic. Campbell leveraged this success into a new campaign, helping to accelerate the numbers inside his service department.

When local Hispanics found they could obtain financing at a fair rate, and buy a quality unit, R&R quickly became the local leader in the car and truck business. “We do three things that stand out above everybody else,” said Campbell. “We provide a three-month, 3,000 mile power-train warranty on all vehicles. At the competition, two miles down the road, cars are marked ‘as is’, and that creates an impression that something could be wrong with it. We provide a Carfax in the glove box with every vehicle. Then we put all the service records of the work done on it right in the glove box. Our salespeople can sell that vehicle right from the glove box. And then, something that we just implemented lately that’s really closing the sale – tires for life. Basically it’s an insurance contract. If a customer comes to the dealership for service, get their tire rotations and the other work that needs to be done to their car, we will replace the tires, free of charge, for life.”

The tires for life policy is keeping his business development unit cooking as well, reaching out to customers about every three months after their purchase, to keep them coming back.

Their strategy is a hit. Until the tires for life policy took effect, one in every 15 customers brought their vehicle to one of his six bays and technicians. His goal is to raise the ratio to one-in-eight, and he’s already reached one of every nine customers.

Catering to first-time buyers
Here’s another important statistic: Roughly, two out of every three Hispanic customers are first-time buyers, but Campbell is fully aware that many come in from Mexico, to find jobs working for local farmers. Catering to first-time buyers with no credit history presented a big challenge with lenders, though. The key to really firing-up sales to the Hispanic market came when Campbell struck a financing deal with the local credit union.

“For those first-time customers we go with a two- or three-payment recourse,” said the dealer. “Basically, if a customer fails to make a payment in three months, the dealership has to purchase the vehicle back.”

Every time Campbell sells a vehicle to a customer who falls into this high-risk category, he puts $300 of his own money into a special account. If the buyer fails to perform, he buys the vehicle back from the credit union from this account. The vehicle is repossessed and it’s either brought back to the dealership or shipped straight out to the auction. In an average month, the dealership buys back one or two cars, “but that’s just pennies compared to what we earn.”

The arrangement pays off by keeping the credit union aggressive when it comes to approving new loans. Now, he has $6.6 million in business with the credit union, and a loss ratio of around two percent – a figure that would be the envy of just about any dealer who caters to a high-risk crowd of buyers.

But remember, it didn’t happen by chance.

Si se puede
The best way to build Hispanic clientele, said Campbell, is by establishing your reputation in the community, then living up to it every day of the week.

“One happy customer will send you five customers,” said the dealer. “Across the U.S., Hispanics are very secular. Families are very tight knit. They have their quinceañeras (a girl’s fifteenth birthday party), and they bring in local Hispanic bands to play. So referrals are the ultimate. If you make one Hispanic customer happy, you can market to the whole family, the whole community.”

Case in point: One of his sales reps is almost exclusively devoted to handling the referrals coming in from a base of Hispanic buyers.

Like everything else about the business, the Campbells started marketing their lot on a shoestring budget. Word of mouth seemed to work well enough for years. Although Campbell still isn’t a big spender, and has no plans to become one, for the last eight years he’s financed an $800-a-month radio campaign to help keep his lot in the foreground of the Hispanic community. Sometimes, the station sends a crew out for live broadcasts and the dealership offers a spread, complete with ethnic food, to make sure everyone feels welcome.

It’s all part of reaching out, letting the Hispanic community know in a myriad of small and large ways, they’ll be welcome when it comes time to buy a vehicle. “Other dealers don’t understand the market,” said Campbell.

Even the company’s slogan, ‘Yes we can,’ translates to ‘Si se puede.’ Utilizing this phrase, Hispanics can login to their Web site at www.SiSePuedeAuto.com

Financing flexibility is important if you want to market to the range of customers Campbell has. The dealer can handle everything from a buy here/pay here deal on an older Chevy pickup, to arranging a note on a $35,000 SUV for an A-credit customer. Cars are typically priced right at Kelley retail price, allowing an average of about $3,000 gross profit per vehicle.

However, his average client doesn’t have a lot of extra money lying around for emergencies, and Campbell is acutely aware of the fact that he needs to go the extra mile to make sure his clientele get good vehicles that won’t break down a few hundred miles down the road. He also goes out of his way to make sure the cars and trucks on his lot look good when they roll out.

“We want to make our cars look as clean as possible,” Campbell said. “I have some of the highest reconditioning costs in my 20 Group; $800 per unit.” A lot manager inspects each vehicle closely, and a 115-point inspection is completed.

“The Hispanic market will buy in the $7,000 to $14,000 price point. The vehicle is usually something a little older,” he added, “but we try to keep the cars under 100,000 miles.”

In a subtle but important move, Campbell started to fly credit union banners on his lot, signifying he’s an authorized dealer for CUDL, or the CU Direct Corporation, set-up by the state’s credit union industry. “This logo is recognizable,” he said, “and when they see that, the consumer knows they can qualify for a lower interest rate, sometimes around 17.94 percent.” It’s a significant improvement over the 20-plus points most of these buyers would be looking at in most other dealerships. The lower payments help customers buy better cars that can last longer, making them a better risk for covering their monthly payments.

Chevrolet trucks are a hot item with Hispanic males, said Campbell, and more of those customers are opting for the crew cab trucks now on the market. Their wives, he said, are more likely to opt for an imported car, such as a Toyota or Honda.

There’s one other overall trend that Campbell can’t ignore: “Away from high-end vehicles,” he said emphatically. “I’ve been watching my inventory, and $30,000 and up vehicles are stagnant … The economy is a little sluggish in our area.” He added that vehicles under $20,000 are “what’s moving right now.”

As the economy softens, new car dealers are ramping up their used vehicle operations. They’re keeping more of the cars and trucks they once sold to Campbell, forcing him to turn more to the repo market, auto auctions and large wholesalers operating in his part of the country.

It makes it a bit tougher to operate, but after nearly two decades in the business, Campbell knows, as long as Hispanics in his area know they can rely on him for the best deal in the region, he can continue to rely on one of the most loyal groups of car buyers in the country.

Vol 4, Issue 11

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