Sub-prime market big; so are its profits

Are you financing and capturing the maximum number of customer applications on a timely basis? Usually this involves offering non-prime or sub-prime finance alternatives.

Only 30%-33% of dealers utilize sub-prime finance sources for more than 10 deals per month. That's only one out of every three dealers.

Between 35%-50% of potential automobile buyers are sub-prime or non-prime customers. That's a lot of car buyers and a lot of gross profit.

For just about any dealer, the offering of sub-prime finance alternatives will generate at least an additional 15 or more units per month.

Are you getting your share of this market? If not, investigate sub-prime finance alternatives. Profits will follow.

Keep an eye on work in process

What is work in process, and why should it be reconciled each month?

It represents the amount of money that has been paid to technicians for hours flagged on open repair orders.

Each time a repair order is closed, the work-in-process account is reduced by the amount of labor paid to the technician for that repair order. This effectively “zeroes out” the work in process associated with that repair order.

Why is it necessary to reconcile work in process each month? The balance in your work-in-process account can become distorted in a number of ways. Some of the most common are:

  • Discrepancies between the payroll flag rate and the repair order flag rate.

  • Charging work in process for technicians in training, technicians not paid per flag hour and guarantees paid to technicians who produce less than the guarantee.

One easy way to monitor the work-in-process account is to schedule this account. By doing this you can easily see all the activity in this account on a per repair order basis and detect any errors as they occur.

“Survivor” — the dealership game

Objective: To survive the nine-week challenge and collect the prizes.

Prizes: Grand Prize — seven days and six nights in Hawaii plus $500 spending money. Second Prize — three days and two nights in Las Vegas plus $300 spending money.

How to play: Each week is a new challenge. The top weekly sales people move to the next level. The salesperson with the lowest sales volume is banished from the contest. In ties for the week, the tribal council of “surviving” salespeople votes.

Immunity: There's an immunity challenge each week. If you win that week's challenge you cannot be banished from the contest that week regardless of sales performance or vote. Week 9 will have no immunity challenge.

Banishment: One person will be banished from the contest each week for the first six weeks. Two people will be banished per week for the last three weeks, leaving one “survivor” to collect the grand prize. The second prize is available to any other participant, regardless of when they were banished, who had the top sales volume during the contest.


Money-making minutes is provided by NCM Associates in conjunction with the Automotive Satellite Television Network (ASTN).