Unconventional Car Dealer Does It His Way

Brian McCafferty runs a pair of unconventional dealerships.

He doesn’t dole out spiffs to salespeople. They handle finance-and-insurance business up front rather than turn it over to designated F&I managers.

He pays flat fees, not commissions on gross profits. Showroom staffers get the same compensation whether they sell a high-end Toyota or an entry-level Scion.

Customers aren’t drawn into price negotiations because “a tremendous part of the market doesn’t enjoy haggling,” says McCafferty, who advocates “giving the best price right off the bat.”

His system might not go over at every dealership, but it seems to work at Avalondale Toyota in Phoenix and One Toyota of Oakland in Oakland, CA.

“Our salespeople make three times and produce three times the national average,” McCafferty says.

He explains why he does things differently. “When I got into this business, it seemed unnecessarily hard on employees and customers. I thought, ‘There’s got to be a better way.’”

Paying salespeople flat fees rather than percentages on gross encourages them to act as consultants who serve a customer’s best needs, not go for self-serving home-run deals.

The same applies to salespeople selling F&I products such as extended warranties, McCafferty says during a session entitled “Consumer-Driven Innovation at the Dealership” at the American Financial Services Assn.’s 2015 Vehicle Finance Conference.

“We pay flat fees no matter what type of warranty is sold,” he says. “That way, you are selling volume,” rather than pitching the most expensive product.

His average salesperson delivers 18 to 20 vehicles a month. Some staffers are hired from outside the industry. Ironically, they typically adjust quicker to doing the double duty of vehicle sales and F&I.

“People from outside the industry learn financing in about 45 days,” McCafferty says. “Salespeople within the industry take about 90.”

In a 20-group comparison, his F&I penetration is 15% below other stores.

“But we’re 75% to 100% higher on front-end gross,” he says. “The gross is higher up front. It should be. We sell a great product, sell it well and we should make a profit.”

He describes 1-price as “more linear” and faster, with some customers getting in and out in 30 to 45 minutes. About half of his customers represent repeat business.

Early on, McCafferty sold cars for seven years. “It bothered me that I made so much less than the F&I guy. They told me I wasn’t smart enough to do that.”

He’s committed to the untraditional way he runs his dealerships. “I’ll go out of business before I change my model.”

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