Article

Planet Ford: The Mother Ship of the World Class Automotive Organization

December 2010, Auto Dealer Today - WebXclusive

by Kimberly Long - Also by this author

Organization



About 20 percent of sales at Planet Ford are special finance. The store is equipped to handle subprime customers all the way down to a 450 Beacon score.

Over the last year or so, many dealerships have dialed back their special finance operations or given up on them altogether, but not Planet Ford, a World Class Automotive Organization (WCAO) dealership in Spring, Texas. General Manager Shawn Burns said special finance there is moving at full speed ahead. Burns, who started working for the organization 12 years ago, has been the general manager at Planet Ford since October of 2005.

The dealership is the largest of the WCAO stores, a family of dealerships owned by diesel mechanic-turned-dealer Randall Reed. Reed’s organization has stores in Spring, Humble, Huntsville, Dallas, Garland and Mesquite, and encompasses Ford Lincoln Mercury, Dodge and Hyundai franchises as well as a couple of pre-owned super centers. Planet Ford has been the number-one selling Ford dealership in the Houston metro area for several years now. “We call it the Mother Ship,” Burns joked. It is also the group’s leader in special finance sales volume.

Approximately 20 percent of total dealership sales are special finance, around 70 units per month. Being a high-volume store and an easily recognized local name certainly tips the odds in the store’s favor. “We’ve branded our name well enough to be a household name and know that we can make things happen through the volume that we do,” said Burns. However, sitting back and waiting for walk-in traffic doesn’t maintain the dealership’s 70 SF sales per month, so the team at Planet Ford keeps pushing ahead and aggressively pursuing the SF market.

“If you’re going to be any type of successful dealership,” said Burns, “you’d better have your hand in special finance because of the way the credit industry is and the type of customers that are coming in.” Despite tougher times in the economy and cost-cutting within the dealership, Burns said they have not let up on SF advertising or stopped purchasing third-party subprime leads. “We have cut the ad budget but stayed consistent with what we have always spent in special [finance] ... The special finance customer still responds well to advertising,” he explained.
Burns said they try to incorporate the “we-can-get-you-financed type of advertising” into everything they do, including the dealership’s Web site and some Spanish-language infomercials. While they don’t do a great deal of advertising through broadcast media, they have on occasion used television and radio to run independent campaigns targeting special finance cus tomers. About 25 percent of the dealership’s current ad budget goes toward special finance.

Special finance has been a part of the mix since the store opened in 1997. The department was not really a department at that time, but instead consisted of a single special finance manager who was simply on hand to field any deals that couldn’t be done through their regular funding source. As the dealership’s subprime needs increased, the department grew to require two managers who did nothing but special finance; eventually, they added an assistant to the department as well. “They’re dedicated to nothing but knowing special finance banks, knowing their programs [and] knowing what type of car to land [customers] on,” said Burns.


Planet Ford is the largest of the World Class Automotive Organization's dealerships and has been the number-one-selling Ford dealership in the Houston area for several years.

In addition to the two special finance managers and assistant, there’s another arm of the special finance operation at Planet Ford which Burns referred to as the special finance lead department. Even though the dealership has its own business development center, he designated a team of three used-car salespeople, all of whom are very proficient in special finance, to handle all purchased special finance leads.

When the store started buying more third-party leads about two years ago, he found that many times the subprime leads were going to salespeople who didn’t really understand special finance. “So, I developed that department with professionals that know special finance,” he stated. These salespeople contact the customer, set the appointment, work with the customer once they arrive at the dealership and eventually turn the deal over to one of the special finance managers. A separate Internet department with a dedicated sales staff of 10 handles all the dealership’s organic leads, but any organic special finance leads are given to two salespeople in that department who are well-versed in special finance.

The special finance lead department is responsible for making certain they reach their closing percentage goal each month. “We have twice-a-week meetings to review all the leads that came in and what happened,” said Burns. “Our goal is to be at a 10 percent close rate after it’s all said and done. If we get 400 leads, we need to have 40 cars sold out of that department.”

Response time is extremely important. If none of the three salespeople in the special finance lead department are able to respond to a lead within 20 minutes of its arrival, the BDC gets involved and tries to set the appointment, after which they will flip it back to one of the three salespeople. “Some of the leads we buy from third parties are shared,” said Burns, “so it’s imperative that you get to them fast, be the first one … because they’re probably going to be contacted by somebody else.”

While third-party and organic subprime leads are only handled by certain people, the showroom is still a blended sales floor, so all salespeople need to have some knowledge on how to handle a walk-in special finance customer. “[Special finance is] an everyday topic because … everybody needs to know, and not just the professionals that do it day in and day out,” said Burns, adding that these days, lot ups are just as likely to have subprime credit as they are to have prime credit.

Sometimes, the salesperson may not know a customer is special finance until after the deal has been submitted to Ford Motor Credit, which Burns said gets a first look on all deals since it is the dealership’s captive finance source. If the deal won’t go through Ford Motor Credit, the finance director then makes the decision to turn the deal over to one of the special finance managers. The salesperson still stays involved, but the special finance manager will do an interview, work them for more down payment and determine if it’s necessary to switch the customer to another car. If that’s the case, the SF manager will let the salesperson know which vehicles are suitable. “He kind of becomes their liaison to finalizing that deal,” Burns stated.

At every point in the process, Burns said, it’s important to “treat [the customer] with respect, like they’re an 800 Beacon, because there’s a good chance they’ve been somewhere [else] and been treated like a second-class citizen, and that’s the last thing you want to do.” He added, “You have to sell … the dream of getting financed. That has to become almost as important as the type of car.” They do their best to educate the customer and let them know there’s a good chance the dealership can help them raise their credit score while still getting them into a good, reliable source of transportation. “Two years down the road, they come back and they’ve made all their payments on time and we’re able to trade them out and get them to a prime lender,” he stated.


To ensure third-party leads were handled properly, General Manager Shawn Burns (right), pictured with World Class Automotive Organization Owner Randall Reed (left), designated a team of three SF-proficient salespeople to field those leads.

Planet Ford is able to handle subprime customers all the way down to a 450 Beacon score. Burns said the dealership maintains relationships with roughly 25 different finance sources, but only referred to eight of those as “true special finance.” With those sources, he said, “We really work on the relationship to make sure we know the programs, to make sure we know their funding department, to make sure we’re not … submitting a deal that’s just wasting their time or causing them expense.”

He added, “We obviously try to keep as many special finance lenders [as possible], but take care of the ones that are taking care of us.” Keeping an eye on look-to-book is imperative to maintaining a good relationship. If you keep your look-to-book in order, a bank or finance company will work harder for you when you need them. “That lender definitely wants to do more for you than the guy down the street that’s just broadcasting 400 Beacons to them that they’re never going to buy.”

Like so many other dealerships, advance has been the most challenging aspect of special finance at Planet Ford. “We have definitely [seen some changes] in the type of advances that [finance companies] want to give, the terms that they give,” said Burns. “It’s definitely made it a much harder segment to work with when it comes to gross.” Asking for a greater down payment is more important than ever to making a deal work, as is having the right inventory.

Of course, buying the right special finance inventory is also an incredibly challenging task right now. Burns said the store’s buyer is always on the hunt for 2004 to 2006 models with values between $7,000 and $10,000. “You can’t trade for as many of those so our buyer is constantly out looking for them.” Burns said they acquire vehicles “anywhere we can find them,” including online, from a couple of local auctions and from larger auctions like Manheim and ADESA. He added, “We’ve bought some on the side of the road” from private individuals advertising and selling their own vehicles.

Burns noted that staying nimble with inventory is also important to keeping things running smoothly. “The used market has been so up-and-down,” he said. “It’s been a very unpredictable year.” He tries to keep everything on a 45-day turn, but absolutely doesn’t keep anything beyond 60 days. “We live on a hard 60-day turn,” he stated. At the end of the month, if any vehicle has reached the 60-day mark, he stated, “we get rid of it, so you can’t get bit by the industry swings as viciously.”

Even though special finance is somewhat trickier than it used to be and dealerships must steer more carefully and precisely through the course, Burns believed the key to success is never letting up on the gas pedal. “I think you’ve just got to stay the course and keep trying to grow [your SF business]. As the credit times are tough, you’ve got to keep your plan of attack in force, not let up on buying leads and advertising it,” he stated. “Make sure you get your fair share and then some of the special finance business that’s out there because it’s a big chunk of business.”

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