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What's YOUR Willingness to be a Top Performer?

P R O F E S S I O N A L   I M A G E

Imagine that you have a very important appointment with your banker. Maybe you are buying a new home, you want to renovate and improve your existing home or you are looking to grow your business. In any of these cases and for many other reasons than these, you will need to visit your personal banker to borrow money. How impressed would you be if your banker had messy hair, their tie was sloppy and crooked, shirt wrinkled, pants too short, fingernail polish chipped, acrylic nails missing, shoes dusty or dirty or both, buttons missing, still wearing their jacket (are they just coming or just leaving, in either case it doesn't look like they are staying)...I'm sure there are several other signals that would send a message of uncertainty about how capable this personal banker would be to take care of your financial matters...after all, they can barely put themselves together properly!

The point here is, IMAGE is paramount in the eyes of your customer/client. Take the extra time needed to present a clean, crisp image! This makes an impression on your internal customers too (the people you work with!). To be taken seriously like a banker, you must take yourself seriously. As a Business Manager/F & I Manager in the automotive and RV industry, you have a very important job and you are seen as the “finance expert” by everyone you come into contact with, you collect the money for every vehicle sold and you process finance applications!

Be impressive! Create an Image of an Expert! You are who you Believe you are...present yourself as the highest paid Business Manager/F&I Manager in your entire town, city, province! When you start to act like the person you want to be, you put into motion the actions of growing into that person. Your practice of this DAILY will create the results you seek. Dare to be all that you can be!

An article published in our Profit Drivers website early this year referred to a            $12 Billion Fund called the Canadian Secured Credit Facility, to be backed by loans and leases on vehicles and equipment, offered in the Canadian Budget announced on Tuesday, January 27, 2009.  The hope was that this $12 Billion Fund would ease-up recently tightened lending practices by offering more money accessible to auto finance and lease lenders.  Have you been wondering where the heck that money is?  After all, have you noticed any increase to credit approvals?

So, here's the update, an excerpt taken from an article by Nicolas Van Praet, reporting for the National Post/Financial Post, Saturday March 21, 2009:

"...Stephen Harper's government is working out a plan that will see the government purchase up to $12-billion in asset-backed paper backed by loans and leases on vehicles and equipment.  By getting into securitization, Ottawa hopes to make financing and leasing more available for consumers while freeing up commercial credit for dealers.

Some, like Richard Gauthier, president of the Canadian Automotive Dealers Association, are optimistic a deal can be hammered out that will see money start to flow to the industry by may.  Some 125 industry representatives met at the King Edward Hotel in Toronto in mid-March to discuss how to implement the securitization plan, he said.

"There is absolutely no doubt that this money is going to get out there," Mr. Gauthier said.  There's a profit to be made fro the government that could even see Ottawa eventually expand its purchase of securities, he said.

Others, like Stephen Beatty, managing director of Toyota Canada Inc., caution that $12-billion might not be enough even to cover the needs of the automakers' financing arms, let alone other Independent lenders.  And they warn that to kick-start sales, the money has to be available now.  If it isn't, governments have to consider other immediate approaches to get more people into dealerships...."

Finance   or Cash?

These days it seems to be harder and harder to convert cash buyers to finance their automotive purchase.  It would seem logical that when interest rates are low to borrow money, people would be standing in line to gobble up the opportunity.  The challenge this presents is that when rates are low for borrowing, they are also low for investment yields.  Many people feel that it is wasteful to keep their cash in investments when their gains on the investment are at an all-time low.  As Business Managers/Financial Service Managers, we don't want to imply to our customers that we are investment advisors because that's a whole career in itself but we can give some solid, sound advice.  Typically, people are reacting to fear that they hear and read about in the media.  It's our responsibility to remind the cash customer of a few valuable facts, ultimately they will make their own decision but these points are important refreshers:

• Personal Line of Credit  A customer using their line of credit to purchase a vehicle is not a true cash customer.  It's your job to find out whether they have the cash sitting in a bank account, if it's funds invested that are being collapsed OR if it's a personal line of credit.  There are many reasons a customer should not purchase a vehicle with this resource.  Consider these:

• A personal line of credit is secured by a customer's tremendous banking track record thereby their signature is all the bank needs to be confident that the debt will be repaid OR, as with most lines of credit these days, they are secured by the customer's home.  It's better security for the bank. The value of real estate is dropping.  If a line of credit is secured by real estate and the bank believes that the value of the home now jeopardizes the amount they have extended against it in credit, they can call that line of credit as DUE and PAYABLE any time.  If the borrower doesn't have the cash accessible to payout the debt in full, the amount owing on the personal line of credit will be rolled into a monthly repayment term at a personal loan interest rate as deemed by the bank. 
  
• These financial instruments were originally designed by the banks to keep their clients committed to them for their future financial needs; to have funds readily accessible for sudden events that are time-sensitive and may otherwise be challenging to get a loan for, like emergency home repairs (the roof is leaking!), an unexpected family emergency (maybe for an illness or aging parents), or for an amazing investment or business opportunity that has suddenly presented itself.  Customers should keep their personal line of credit intact and available should they need the funds for any of these reasons.  If a customer qualifies for a collateral based loan (the bank has an asset as security - like an automobile - so they have something they can take ownership of for resell should the client not fulfill their repayment obligations), they should take advantage of that finance opportunity and preserve their line of credit for non-collateral purchases like those mentioned.
  

• Cash Is KING!  Ask your customer if they know who was successful following the Great Depression of 1929 and why?  It's a simple principal, as consumer spending dropped, company values declined too, real estate values fell, the stock market had already plummeted, and so on.  Those who had cash were KING!  When the price of everything was in the gutter, the cash holders bought everything at a massive discount and waited for the economy to recover, increasing their asset values multiple times the purchase price.  So how does this relate to your cash customer?  Well we never want to insult anyone's intelligence and you may just come across someone who is a professor about the Great Depression.  Indeed some will know more about this topic than you and I together.  For the average Canadian though, they will agree with you that the purchase of products and services at a massive discount and selling them at retail is a fundamental business practice.  None of us have a crystal ball.  So, to be conservative, consumers are wise to keep their cash,take advantage of the low-interest rate times, and if they are ever in a need to remove themselves from the monthly obligation, their cash is still intact.  If on the other hand they are propositioned with an amazing opportunity, the cash is available for that purpose.

• Make More Money  This is a simple principal and worth mentioning although many of you and your customers already apply it.  For those who are newer to the Business Manager/Financial Services Manager position, this is a fundamental you need to know.  The manufacturers are still offering some dynamite interest rates on new vehicle purchases.  If your cash customer takes that financing offer and stashes their cash into a secure deposit, GIC or other instrument, they can earn more interest on the money they have tucked away than what they are paying on the automobile loan.  In a real world scenario, lets say that your manufacturer is offering 1.9% financing on the customers vehicle model of choice.  The cash customer can take the sum of that total vehicle purchase, the amount they would otherwise write you a cheque for, and invest it into a GIC.  A 5-year term will get them about 4%, maybe more if they shop around.  Do some research on your own to compare your store manufacturer interest rates and the investment rates offered in the marketplace.  Make some phone calls to banks and ask the questions.  Knowledge is powerful.

I came across this article and had to share it with you.  It is hard to believe that blatantly fraudulent business office practices such as these still occur.  The following is a segment of an article published in the Automotive News Weekly Newsletter, digital edition for February 2, 2009:

With Your Family

In Your LIFE!

• Back to Basics.  Start from square one, build rapport, go through your sales presentations product by product,  overcome objections, and close.  Sounds simple huh?  When a customer comes to the business manager with a payment quote from the sales floor, we assume that it will be a challenge to upsell.  Start with the mindset as you would with a customer that comes into your office without any payment quote, and be thorough.  ASSUME they are interested in every product you have to offer.  There may be more work to overcome their objections and it may take more time to close the sale but first and foremost, you must program your own beliefs and stay firm with those.  BE CONSISTENT!
• Mini-Menu Selling System.  Create a master 3-column menu on a 8-1/2" x 11" piece of paper that you will photocopy.   Leave enough space at the top for a heading and your dealership's information.  Leave enough margin in the left side of the sheet to input details about the car purchase (ie: price, taxes, fees, accessories, etc).  Starting on the left side of the page, create "packages" in each column.  Label these something like the Bronze, Silver and Gold packages, or whatever you prefer.  In each column, add products that will affect the payment such as (you can adjust these packages any way you like):  1st Column, Life Protection and Warranty; 2nd Column, Life Protection, Warranty and 2-Part Protection package; 3rd Column, Life Protection, Warranty, 4-Part Protection package and Disability Insurance.  You will manually enter the new payment amount in each column, increasing as products are added.  Also, at the bottom of each column, below the menu box, manually enter the amount of each product offered in that package.  If this works well, you may consider to use a reputable menu selling software that will facilitate this process on your computer screen.
• Assume the Sale.  Begin your sales presentation by explaining to your customer that you always include (for example), an extended warranty with their payment, to ensure future repairs are built into their monthly payment budget, and life insurance to ensure that their vehicle will go to their estate free and clear title, should something unexpected happen.  Relieve your customer's fears, let them know that they are not committing to purchase these products, they are considerations, and everything will be fully disclosed to them, they always have the final decision whether they wish to take advantage of the products.  The objective here is to introduce the idea that you are including other products in your discussions, you are defusing their fears that they are committed to purchase these and, giving them the control of the final decision.  You may need to go into further features and benefits of these initial products, it will depend on your customer.  In some cases, there will be no further discussion and the sale of those products will be complete.  Following this, you can proceed with presenting your other products.  You will need to start with a blank piece of paper to write the changes in the monthly payment each step of the way, and (perhaps at the bottom of that sheet), mark the total cost of each product.
• Present Payments Like Their Bank Would.  Start your presentation with payments like their bank would offer them.  If a consumer applies to their favoured financial institution for a loan, their personal banking officer will offer payments with both, life insurance and disability coverage.  Banks have been lending money much longer than auto dealerships have been offering financial services to facilitate purchasing a vehicle, they are the masters at this process.  So, with that blank sheet of paper in hand, start at the top of the page, mark their monthly payment with life protection only, then disability protection only, then their payment with both coverages.  Always disclose the total amount of each premium at the bottom or side of the page, to ensure you follow full disclosure regulations.
  

That doesn't mean you have to highlight the information or create a major display of it, you simply need to disclose it.  Work within the perimeters of the laws governing our industry and you will be relieved of potential repercussions initiated by the consumer!

Other suggestions?  Share them with the rest of us!  
                          

HAPPY NEW YEAR!                                             May 2009 be filled with much Laughter and Prosperity!

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