February 2013, Auto Dealer Today - WebXclusive
A chilly breeze rustles autumn-colored leaves shed by the umbrella of maples and oaks lining Main Street and gently whips American flags draped from buildings and utility poles. Throngs of bundled spectators are gathered around the courthouse square as children poke their heads from the crowds, waving miniature stars and stripes. They are there to greet the fresh-faced soldiers, sailors and airmen making their way through downtown alongside grizzled veterans in their signature gold-piping-trimmed VFW and American Legion hats. It’s a picturesque Veterans Day scene, as American as baseball, hot dogs, apple pie and the automobile.
An unofficial sponsor of Veterans Day in towns across the land, the nation’s auto industry is even older than the official holiday commemorating those who have served in uniform. And whether sponsoring military-based events or providing the polished trucks carrying aged warriors along parade routes, dealerships are often an integral part of America’s celebration of its veterans each Nov. 11 (or Nov. 12, as observed this year). “We should be doing something for that person for what they’re doing for our country,” said Tony Rimas, director of operations at Red McComb’s Automotive Team in San Antonio, Texas, a city with half a dozen defense outposts nearby and home to one of America’s most concentrated populations of current and former military personnel.
This is a nation that proudly celebrates its veterans. But scenes like the one described in the opening, though sincere, are fleeting, as most Americans return the next day to a routine of work, play and appointments. To their own detriment, dealers too can be accused of overlooking our nation’s heroes. It’s largely unintentional and rarely malicious, says one former soldier, current auto dealer and published author. For those retailers who fail to recognize the potential impact of the military on their bottom line, their oversight is someone else’s gain.
Numbers don’t lie
With roughly three million active-duty and reserve personnel currently on the Department of Defense payroll and another 22 million veterans, the United States military offers retailers an unprecedented opportunity to reach one of the largest and loyal customer demographics from across a rainbow of socio-economic factors. “It just makes sense, if there are that many out there,” explains Kevin L. Thomas Sr., a retired Army specialist, owner of Auto Super Center in Hinesville, Ga., and author of “How to Make Extreme Profits in Your Used Car Operation.”
Annual spending in the automotive industry by soldiers in the Army—the largest and most widely-dispersed branch of the military—is estimated at $653.9 million, according to Thomas. That’s too big of a slice of that apple pie for dealers to merely ignore. Being in the armed forces transcends race, age, sex or social class, so tailoring a portion of your store to serving the military niche is simply good business practice, he added.
Thomas should know. The Detroit native joined the Army as a teenager shortly after the Gulf War in 1991, and after returning stateside from a deployment to Germany in the mid-1990s, he wanted to buy his first car from a dealership in the Motor City area. With little to no credit history, he found it difficult to get financing. “It literally took a dealer a whole week to get me approved for a car loan,” the 39-year-old said. With financing finally in hand, he took to the road in his first set of wheels, a 1988 Saab 900s.
No one in Detroit, a city far removed from any major military installation, seemed to understand or see the benefits of financing a credit-challenged soldier in his early 20s. But two decades later, as owner of Auto Super Center just outside Fort Stewart, Ga.—home to the Army’s 3rd Infantry Division and almost 25,000 soldiers—Thomas says the problem with many dealerships is a lack of preparation for military traffic because of their relative distance from a defense outpost. But according to the U.S. Department of Veterans Affairs, in 2010 there was an active-duty, reserve or veteran population in each of the nation’s 3,141 counties or county equivalents (parishes, boroughs, etc.).
After Thomas retired from the Army in 1996, he immediately went to work for a dealership. Four short years later, he opened his own store in Hinesville, intent on making military auto financing easier than it had been for him as a young enlisted man. It worked. “We really created a system so they can buy cars and not be turned away,” Thomas said. “We can have them busting bugs in 90 minutes.” As a pre-owned store, Auto Super Center focuses on serving young, credit-challenged troops.
Special services for the service
For those in the armed forces, there are scads of military-only financing options, discounts, factory incentives, rebates and rewards available for new and used cars. Thomas attributes a large part of his lot’s success to “having relationships with lenders who understand the military and have designed programs just for them.”
Naturally, for new vehicles, the Detroit Three have the most attractive offers for Americans in uniform, but all major foreign automakers also offer their own incentives.
In Dunn, N.C., about an hour northeast of Fort Bragg — the largest American military base and home to U.S. Army special and airborne forces, including the 82nd Airborne — Bleecker Chevy offers deep discounts on the popular General Motors line. Jose Andrade, Internet sales manager, said the dealership generally starts pricing for military personnel at wholesale. “Usually what we try to do is sell them at invoice price, what it would cost the dealer to get the vehicle here,” he said. Add to that built-in breaks for military customers from both Chevrolet and Bleecker, as well as further financing discounts for members of groups like USAA (United Services Automobile Association), and a soldier can end up getting a $26,000 car for only $20,000, Andrade illustrated. Bleecker Automotive, a group of stores in the heart of the Tar Heel State, offers similar discounts on its Chrysler, Dodge, Jeep, Buick and GMC truck models.Young military buyers, typically aged 18 to 22, don’t necessarily have to settle on pre-owned vehicles. Andrade said the Chevrolet Sonic is a popular new model for many of the newly-enlisted Fort Bragg soldiers making as little as $1,500 a month. The base model is $14,000, but it comes nicely-equipped at $16,000 or $17,000, the Internet sales manager said. Many military lenders work within such parameters
For those on the lower end of the military pay grade, there are still lots of options. The most notable of the specialized buyers of both new and used military loans, according to Thomas, are Coastal Credit, USAA, Security National Automotive Acceptance Co. (SNAAC) and Military Installment Loan and Education Services (MILES). Thomas said typical advantages of these and other military auto loan providers—such as local and federal credit unions—are low rates, a willingness to work with first-time buyers, low or no money down, easy structure and high trade-in allowances. “There are more programs today than there were 20 years ago,” he said, recalling his first auto loan.
Young military buyers, typically aged 18 to 22, don’t necessarily have to settle on pre-owned vehicles. Andrade said the Chevrolet Sonic is a popular new model for many of the newly-enlisted Fort Bragg soldiers making as little as $1,500 a month. The base model is $14,000, but it comes nicely-equipped at $16,000 or $17,000, the Internet sales manager said. Many military lenders work within such parameters.
Retailers’ special treatment of the military can reach further than just those who wear the uniform full time. Andrade said Bleecker’s red-carpet treatment applies to “any and all military members.” That means retirees and reservists, too. “We have lots of retired [military] that stick around.” In fact, there are about 70,000 former military living in the four counties straddled by Fort Bragg.
Market, market, market
But all the military deals and special treatment in the world mean nothing if the targeted buyer is left unaware of what a dealership can do for them, Thomas argues. If done correctly, marketing to the military has rich rewards. Thomas said about 75 to 85 percent of his dealership’s business is from soldiers, while Andrade estimated anywhere from 35 to 45 percent of Bleecker Chevy’s sales are to current and former military personnel. “Dealers who aggressively market to this group and treat them right when they come to their stores benefit,” Thomas said, making note of a handful of predatory dealers near bases who sometimes give the industry a black eye. “The military is a special niche group. They are buying cars away from home from dealers they have never heard about, so it is essential that dealers market themselves as being military-friendly.”
Andrade said his dealership regularly advertises in nearby Fayetteville newspapers, offering special promotions for military buyers. Thomas said marketing on urban radio in southeast Georgia has worked well for his store. And in any ZIP code, pushing special military deals can be especially popular around Veterans Day, as can sponsoring military-related events.
“Part of my success is focusing on strong referral incentives,” Thomas added. “Because their fellow service members are like their extended families, it is easy for them to encourage a friend to purchase a car from us.” Veterans also comprise a large part of his sales staff, offering a built-in connection to soldiers.
Again, it’s not just the GIs in uniform who can bolster a dealer’s bottom line. According to the U.S. Census Bureau, veterans generally earn about $10,000 more annually than the average American. “There’s a significant opportunity with veterans,” said Rimas, who recently purchased an innovative marketing tool called TroopID, a creation of TroopSwap that allows retailers of all types to connect their brand to the military niche online. Through its CRM function, TroopID gives Rimas insight into the buying behavior of segments of the military community. Using that data drives loyalty and offers an opportunity to show the dealership’s affinity for the military around San Antonio. “We made the investment for a lot of reasons,” he said. “It’s working pretty well.” In fact, as much as 50 percent of Red McComb’s business is from those in uniform or veterans.
With billions of dollars in buying power out there, Thomas encourages dealers near outposts, where the highest concentrations of current or ex-military reside, to perpetually market themselves to the armed forces community. There are always new potential buyers as service members rotate assignments every two to three years.
Despite the transient nature of the military, it has its advantages. “I like the military people because of their steady income,” said Mike Mitchell, general manager of Last Chance Motors, a BHPH lot in Yuma, Ariz. While he doesn’t do a significant amount of business with the military, he realizes the importance of being recognized as a military-friendly business in a city within a half-day’s drive of Army, Navy, Marine and Air Force installations. “Yuma is a big military town, and a lot [of service members] end up staying the rest of their lives.”
As Thomas implied, a lot of marketing to the military is word of mouth. That’s why Andrade back in North Carolina bends over backward to help the elite soldiers of Fort Bragg. “I deal personally with military,” he said. “If I can go the extra mile to make [them] happy, that’s what I do.” The Chevy dealership offers free pick-up or rentals on oil changes for military personnel who may not have the capability to leave base and travel the 45 miles to Dunn.
As Internet sales manager, Andrade worked one-on-one over the summer with a soldier fighting a war on the other side of the globe. From Afghanistan, the sergeant called Andrade to explain what he was looking for in a new vehicle. Andrade located a truck and got the OK from the soldier to move ahead with the deal after sending photos over the Web. From Afghanistan, the anxious trooper was able to go through the same process to get the add-ons he wanted in order to make the truck uniquely his. In late September, as the last of thousands of troops returned to Fort Bragg from deployment, Andrade had the truck waiting for the man. “When he got here, he was even more tickled.”
Deployments can be a problem for dealers, however. Since opening his store in 2000, just a year before 9/11, Thomas has endured the boom and bust of six Fort Stewart deployments. In that same period, the larger Fort Bragg has been on near-constant war duty, having thousands of soldiers at any given time in either Iraq or Afghanistan—or both. “When they deploy, so do our sales, and it can be a difficult time for them and us when they have to leave,” Thomas said. That’s the bust. The booms come prior to a deployment when married soldiers purchase more reliable transportation for the family they’re leaving behind as well as when young soldiers return from a lengthy deployment with a bank account swollen with combat pay. “When they come back, it’s a heyday,” said Thomas of his Hinesville dealership. “We’re selling cars day and night.”
It’s the inventory, stupid
If you are going to court the military, any overture is useless without keeping one word in mind: inventory. Thomas said most dealers will work hard to satisfy military customers, but many simply don’t carry the inventory that offers soldiers an opportunity to stand out. “They love sporty, sexy cars … even odd colors,” the Georgia dealer said of young troops. “Dealers that don’t carry the inventory mix that works find it challenging,” Thomas said of courting the military.
While a new Chevy Sonic that can be customized is popular with many young soldiers at Bleecker’s, Andrade said the store tries to keep a wide inventory of used cars to appeal to the varying tastes of soldiers from all walks of life.
In Yuma, tucked away in the southwestern corner of Arizona near the border with California, inventory is also king. “I’m of the philosophy, they wear the same clothes, they’re in the same housing [and] their car is the only thing that differentiates them from one another,” said Mitchell. “Their car defines who they are. I’ve believed in that philosophy for many years.”
“The only thing that makes us distinctive is what we drive,” Thomas, the former Army specialist, agreed.
The military life can be arduous, placing fresh privates, airman basics and seaman recruits thousands of miles away from family for the first time. In addition to the emotional toll, not having access to a co-signer can make finding credit for a car loan difficult. But the truly military-friendly dealers can give those young men and women a little something extra worth fighting for: the uniquely American freedom of the open road in their own car.