A recent blog from GWC Warranty pointed out four steps dealers can take in 2020 to explore new approaches for overlooked profit. If plans for your store include a more successful subprime finance department, each of these steps deserves a closer look.
Additional Subprime Profit
If you have big plans for your subprime department, are you on track? If not, now might be a good time to examine these four areas of additional profit you may be overlooking.
Here are four suggestions for maximizing overlooked profit, according to GWC Warranty, and our take on applying them to subprime sales.
- Prepare before heading to auction – Reflect on the past year, and take note of which vehicles moved most, and which moved quickest. Stocking the right inventory for your subprime department is critical to success. This means not only tracking the vehicles that sell, but following market trends as well as days to turn. This historical record helps, but keep in mind that markets are never static. This means emerging trends are just as important as sales history, with profit margin playing a major role in brand and model mix.
- Get the right inventory – Now that you've done your market sales homework, find a way to get more of the inventory you want. By now you should know that reliable, affordable vehicles you can buy for at least $1,500 behind book are absolute gold. If your local auction offers few units like this, it’s time to get creative and look for other sources. You can start by checking with other dealers in your 20 groups to see where they’ve been most successful.
- Service contracts – Service is a must for your subprime customers. Most are on a tight budget, and major repairs are easily a recipe for disaster with these borrowers. Why should a customer buy a service contract from you? When asked this by a customer, one subprime manager once said: “So that three years from now we’ll still be friends.” If you're already making VSC coverage a priority for your customers, look for chances to provide them with higher levels of coverage. By facilitating sales of increased coverage, you can maximize profit at the time of sale.
- Flexibility and renewals – If your subprime customers can’t afford a service contract that covers the entire loan term, sell them one they can afford, and then contact them just before it expires so they can continue the coverage. If they’ve needed the coverage their current plan covers, this should be an easy sell, and it provides an opportunity for you to reconnect with your customers. Checking up on their coverage needs could lead to a whole new car sale instead of just another VCS renewal.
Get Into the Subprime Game
If you’re ready to step up your game in the subprime space, or you’re thinking of taking the plunge, we’re here to help. At Auto Credit Express, we’ve been providing targeted, quality subprime auto leads to dealers from coast to coast for over 20 years, in addition to specialized, custom bankruptcy mailers.
And now, through our partnership with CarsDirect Connect, we can offer new and used car leads along with a dedicated BDC to thoroughly prepare and follow up on your prospects.
To find out how we can boost your store’s bottom line, give us a call at 888-535-2277. Or, fill out our online contact form and one of our knowledgeable sales professionals get in touch.