Deal Pack Blog
Buy Here Pay Here: Keys for Continued Success
Whether you’ve measured unit sales, revenue, operating efficiency, or profit; whether focused on retail or wholesale; whether interested in new or used, it was another good year for the automotive industry. According to recent reports, new unit sales in 2015 were up 68 percent from 2009’s total, auto loans outstanding grew from $700 billion in mid-2011 to over $1.1 trillion today and member auction sales rose 6 percent to 9.3 million units in 2015.
Growth in this market has increased the number of dealers interested in finding out more about the Buy Here Pay Here business. An increasing number of those dealers are franchise dealers looking to add a BHPH operation to their existing business but the list of interested dealers also includes independent retail dealerships looking to expand the financing options they offer their customers as well.
A few things to keep in mind to continue success in the business can be summarized in a few basic areas:
Commitment, is a key component as we know BHPH is not the car business is the finance business. Commit time and resources to learning more about the business and expand your opportunities to grow.
Capital and Cash Flow is a constant worry for BHPH business; make sure there is a plan in place and have your accounting up today, therefore there are no surprises.
The Staff and members of the team are the door that would open the possibilities, make sure they are well train in the use of your DMS software and they have the ability to establish a friendly relationship with the clients. Commit to learning all you can, training your employees on proper operations and best practices and hire the right people to help you.
Customers, there are plenty out there. The BHPH market is comprised of prospects who are ready and willing to buy, but do not necessarily qualify for traditional financing, have been turned down for conventional financing or have been rejected by other dealerships without submitting a complete application. The market research must determine whether that market is large enough to sustain your operation. Be sure to take into consideration how easy it is for those potential customers to get to the dealership.
Inventory. It’s important to determine the focus of your business first, is it to provide basic transportation so customers can go to work and back and do other errands on weekends or is there another type of client to target? Always consider the risk when getting into more expensive vehicles which means longer payment terms and the dealership’s money at risk for a longer period of time. Whichever price point makes more sense, make sure to determine how and where to find a steady stream of those vehicles.
In conclusion, it is important to consider all factors when opening and operating a Buy Here Pay Here dealership. If the research and the legwork have been done correctly, there is no reason to not succeed.
If you’re interested in hearing more about Deal Pack Pro and how you can centralize your Sales and Lending processes, please reach out toll-free at 1-800-526-5832.