Daryl Moore is the Special Finance Manager for Dale Baker Motor Mall, an Oldsmobile, Isuzu, Hyundai and Suzuki dealership. Daryl has taken Dale Baker's sub-prime business from 15-20 units per month to over 80.
Q:What is your background?
Daryl:I am the sub-prime director at the dealership. I have been a used car manager, buyer and have been in sub-prime for the last twelve years.
Q:How is your sub-prime department structured?
Daryl:We are set up as an independent department just like finance, used car, etc. We are a separate profit center. We have a dedicated sub-prime sales staff that consists of about six people along with the finance director and desk manager.
Q:How long have you been at this dealership?
Daryl:I have been here since January. Before that, I was with Westway Ford in Dallas. They did 700+ cars last month; they are a pretty big store.
Q:How did you move to this current dealership?
Daryl:Through a mutual friend who knew I wanted to slow down my pace a little bit.
Q:How many units per month did you move at Westway..sub-prime?
Daryl:Well over one hundred.
Q:What level would you like to get to with this dealership?
Daryl:We would like to get up to one hundred.
Q:When you started here six months ago, what were they doing and what are they doing now?
Daryl:In January, they were doing about 15 or 20. In June, we did 80.
Q:What should a dealership look for in a special finance manager?
Daryl:I think a desk manager of some kind who can put people in the right car, along with making the most profit.
Q:What types of advertising and promotions do you use to target sub-prime customers?
Daryl:We do thirty minute and five minute info commercials. The thirty minute commercials usually bring in forty to fifty leads and the five minute commercials usually bring in about ten to fifteen leads. They have been extremely successful. The cost is quite effective.
Q:What is your cost per unit sold for a sub-prime advertising?
Daryl:Our cost last month was $189 a unit for advertising.
Q:What advice would you give a dealership that is in the start-up process with a sub-prime department? What should they do or not do to be successful?
Daryl:The average dealer takes who I call the "hang around" and places him as the sub-prime manager. You don't want to run off this person, but you don't know where to put him either, so you place him in that position. That does not work out well. My recommendation is to take your best assistant desk manager and make him your sub-prime manager if you cannot go out and hire someone experienced for the job.
Q:Where would you find someone experienced for the job?
Daryl:There is not a whole lot of experience out there; the only way I know is to steal it.
Q:From an independent or franchised dealership?
Daryl:I think franchised because many of the best lenders will not deal with independents. A good seasoned guy already has relationships established and understands the programs and the advances, what the vendors do or won't do. Instead of bringing in someone from an independent lot with the limited experience as far as dealing with the best sub-prime lenders, I think you are much better off getting someone from a franchised dealership.
Q:How have you brought the sales up from fifteen units to eighty units in just six months?
Daryl:Attitude of the whole store. You have to have commitment from top to bottom. From the dealer principle to the lowest lot man there has to be absolute commitment to doing sub-prime or it won't work.
Q:How do you get that commitment as well as put out all the fires and animosities between the individual departments within the dealership?
Daryl:I commit the dealer up front. The way you do that is by economics. I get him to guarantee me, personally, so much money per month for a specified time period. If a dealer is paying me "x" number of dollars, he is going to make sure I am earning that money. He is going to make sure everybody else is supporting me and helping me to make sure I get everything done. It is kind of like a new toy, if the dealer is not committed, the newness wears off shortly and it won't work.
Q:Do you or have you had friction and how did you handle that?
Daryl:There is always going to be friction initially. I am the most hated person in the dealership when I first show up. By the time five or six months have gone by, I could sleep with half of their wives. I put money in their pockets.
Q:In today's market, the way the laws are structured, you are not suppose to charge more for an automobile for someone with bad credit than you would for someone with good credit.
Daryl:We don't. It is a win-win situation for everybody involved. As long as everybody agrees to a price, that is all that matters.
Q:Have you ever had the question or issue come up where someone says, "If I had cash in hand, I would only be paying $10,000 for this car", or "how come the MSRP is $12,000 and I am paying $14,000"?
Daryl:It is suggested retail price. Supply and demand.
Q:You are supplying them credit and they want a car?
Daryl:It is a win, win situation.
Q:How many lenders do you use?
Daryl:I have eight or nine at my disposal, but mostly use two.
Q:What do you expect from a lender in turn-around?
Daryl:48 hours.
Q:Do you have any tools you utilize in structuring your sub-prime deals?
Daryl:We have an automated system for matching lender with inventory available in the dealership. I find it to be an excellent tool in that it will give you the most profitable unit in stock when you get the information in it for the deal.
Q:How does it work?
Daryl:It looks at the customer and the lenders that you have programmed and matches their criteria. It books the car for you and gives you your advances. It won't let you go outside of the boxes.
Q:What vehicles would you recommend to a dealership business that would be the most profitable vehicles to stock for sub-prime?
Daryl:Taurus, Escort and anything peculiar that anyone else wouldn't want. I have no problem buying them at auction and they carry a large book. I can put customers in nicer vehicles than they would normally be able to buy.
Q: What about add-on products such as extended warranty?
Daryl:Yes, we do quite a bit. Extended warranty is probably the single most important one. They cannot afford to put a new engine in the car and still make their payment.
Q:What would you recommend to a dealership to build an established sub-prime department after they have found the right person to run it and have stocked the appropriate inventory?
Daryl:Get your whole sales force to back it. You have got to make them understand that it is profitable for them to do so.
Q:How do you do that? Most dealerships give them flats on sub-prime.
Daryl:You have got to pay them on gross the same way you do on a standard deal. The dealer gets paid on gross, the GM gets paid on gross, the used car manager gets paid on gross. The finance manager and your sales people understand getting paid on gross so you have to pay them that way. Number two is control the deal and the customer.
Q:Whose responsibility is that?
Daryl:The desk and the salesman. The desk controls gross in any car deal. The desk has to control the salesman and the salesman in turn controls the customer. Everyone who walks in here wants a Corvette, but they should be in a Chevette. We let them drive the Corvette, fall in love with it and then tell them they are going to have to buy a Chevette. As soon as we identify them as a sub-prime customer, we stop the showing process. We bring them in and take a complete, neat credit application, pull a bureau, bring them to the desk and the desk will guide them to the appropriate vehicle.
Q:I am sure you are aware that one of the biggest problems in sub-prime finance is fraud. What recommendations would you have for a dealer principle or general manager to make sure their special finance manager is not putting them in a compromising position?
Daryl:The person who can tell him that is his comptroller. The comptroller knows when these deals are crap and he knows when they are funded. If there is something going on the comptroller should be able to tell immediately. If you have more than two or three deals lagging out there not getting funded, you have a problem. I have gone into dealerships and have found deals that were old, old, old, because the comptroller was not on top of it. If he is not on top of it, nobody is on top of it.
Q:You said that you did eighty cars, what was your gross on them?
Daryl:$2,397 per car front and back; average.
Q: Not bad.$