Over the last year and a half we have heard allot of car dealers say that their sub prime sales are declining.  Dealers are halting special finance advertising programs because they can no longer get tough deals bought, or they don't have vehicles available to fit lender calls.  In addition, big finance companies like Triad and Household have gotten out of the auto finance business while at the same time captive finance companies have tightened their belts.

So how is it that a small percentage of auto dealerships are able to produce consistent special finance car sales volumes year in and year out, regardless of the economic climate?  In fact, many stores subprime sales volumes, right now, are better than ever.  What does it take to produce consistent results in sub prime sales year in, and year out?  What are the critical success factors?

First, there are lenders.  Does your store have the right lenders in place to capture a wide array of subprime customers?  Or are you just picking the low hanging fruit, doing just the easy special finance car deals with finance companies like Americredit and Capital One.

Next, there is inventory.  If you have limited space for used cars, are units bought specifically for subprime auto sales or is it full of the random cars you took in on trade?

Marketing and Advertising is another critical component.  Are you taking advantage of simple to use techniques that cost next to nothing and drive car sales to your store every single month?  With advertising, do you merely look at the cost per sale, or do you have metrics that identify choke points within your process upon which you can improve?

Assume you're able to get the lenders, inventory, marketing and advertising in place.  It's easy enough to sign up a few lenders, buy the right mix of cars for your market, and let people know your value proposition with marketing and advertising. Each of these items is important.  That why we've labeled them CRITICAL SUCCESS FACTORS.  But without the people and process in place you're likely to fail, or have short term success with sub prime.

Notice I said people, not person.  Sure you could hire a local sub prime guru to get you up and running, or pick up where the last guru left off.  But you know as well as I, that your success with this strategy is likely to last a handful of months, if you're lucky a year.  Or, on the other hand, your special finance manager is no guru at all; just some guy that leaves a trail of unfunded contracts or is content with a handful of sub prime deals each month.

Either way, without people, you're no closer to building the foundation needed for long term success in sub prime.  People that understand their role in the subprime selling process.  From front end sales, managers, and F & I, to the back office, every person in the store has responsibility and each has to be in alignment with your stores special finance sales goals.

How does your store line up?  Is each department moving in directions that do not align with your sub prime sales goals?  If so, how will you change the culture?  How can you align everybody to move in the direction of achieving consistent subprime sales volumes year after year?

And finally; process.  How long does it take you to put together and close a sub prime deal?  Does it take longer that a traditional sale?  It shouldn't.  The fact is, with the right process, the time span from initial contact to sale should be much quicker on a special finance car deal.  Once the sale is complete how long does it take to receive funds from the finance company?  With the proper controls in place your average funding time should be less than 3 days.

The Critical Success Factors for long term success in sub prime are: Lenders, Inventory, Marketing, Advertising, People, and Process.

If I handed 100 auto dealers a Money Bag labeled “Instant Success in Subprime, Just Add Lenders, Inventory, Marketing, Advertising, and People”, and inside that bag was a documented, time tested, process for long term success in subprime car sales, less than a handful would achieve long term success.

Why?  Because they would still have to implement the process; to implement the process takes hard work, and discipline.  It's hard work ensuring that each person understands their role and can execute their responsibilities, and it takes discipline to stick to the process whether you have one customer on the show room floor, or 100.  With hard work and discipline the culture will change, personnel and departments will become aligned with your sub prime sales goal.