Gross Profit, Gross Margin, and the Lenders to Know! Shawn Foster Executive Trainer DealerStrong 2016 Copyright Used Car University, LLC all rights reserved

Introduction Sales Process Data Lenders Vehicles 2016 Copyright Used Car University, LLC all rights reserved

1. Meet & Greet 2. Investigate Needs 3. Vehicle Selection 4. Walk Around 5. Demo Drive 6. Trial Close 7. The Write Up 8. Silent Appraisal 9. The Write Up 10. Closing Good CreditBad Credit Credit Application & Bureau 55% - Wrong Vehicle Delivery No Deal or Restricted Deal Traditional Road to Sale Modify the Process for Special Finance

2015 Copyright Used Car University, LLC all rights reserved Balloons

Qualifying Questions 2015 Copyright Used Car University, LLC all rights reserved “Are you here for the Big Sale? Great! “Are you here to take advantage of our special financing programs to help you establish or re-establish credit?” “Are you here to take advantage of our special 0% APR financing programs for our customers with preferred credit?”

Qualifying Questions 2015 Copyright Used Car University, LLC all rights reserved “Who are you currently making your payments to?” “On a scale of 1-5 with 5 being the best, how would you rate your credit?

2015 Copyright Used Car University, LLC all rights reserved 1. Meet & Greet 3. Investigate Needs 4. Vehicle Selection 5. Walk Around 6. Demo Drive 7. Trial Close 8. The Write Up 9. Silent Appraisal 10. The Write Up 11. Closing Red/Green Balloon Sales Process 2. Qualifying Question Delivery Suggestions now based on Credit The best way to lead a customer through the special finance sales process.

Do you know who you are? 2016 Copyright Used Car University, LLC all rights reserved

Sample Dealer Demographics Score# Bureaus% of Bureaus # Delivered % of Burs. in range delivered Zero Score 456%49% 1 – %117% %34% %1914% %1720% Military 344%515% Open Chap 7 274%00% Prime (661+) 24933%5924% Total %11816% 2016 Copyright Used Car University, LLC all rights reserved

Opportunities Stand Out Score# Bureaus% of Bureaus# Delivered % of Burs. in range delivered Zero Score 456%49% 1 – %117% %34% %1914% %1720% Military* 344%515% Open Chap 7* 274%00% Prime (661+) 24933%5924% Total %11816% 2016 Copyright Used Car University, LLC all rights reserved

Opportunities Stand Out Score# Bureaus% of Bureaus# Delivered Available Inventory (units) Zero Score 459%4 3 1 – % % % %17 38 Military 344%5 3* Open Chap 7 274%0 6* Prime (661+) 24933%59 91 Total % Copyright Used Car University, LLC all rights reserved

Special Finance 2015 Copyright Used Car University, LLC all rights reserved

2016 Copyright Used Car University, LLC all rights reserved

Opportunity Conversion Walk‐InsBe‐Backs/ UST Repeat/ Referral #% of Total# # Total Leads % % % Appointments Sold2828.0% % % 2016 Copyright Used Car University, LLC all rights reserved

Finance Company Gross Profits

New vehicle gross profits exclude $730 in dealer incentives. SF Tier 2: 575 – 521 Traditional subprime buyer. Stable employment & income. Higher loan-to-value ratio. Worse P-T-I ratio. Decent car credit. Stable in area & at job. Fees: $95 - $400 Req. Cash Down: $0 - $500 New*Used % of Category5.6%13.1% Score Sales Price$24,230$15,425 Miles19457,152 Amount Financed$24,427$16,142 Total Down Pmnt$2,681$1,292 Payment$476$383 Term6866 Veh. Gross Profit$937$2,355 Total F&I Gross$1,799$1,211 Total Gross Profit$2,735$3,566 New vehicle gross profits exclude $730 in dealer incentives.

SF Tier 4: 475 – 100 BIG difference New vs Used New: huge payments Used: BHPH “on steroids” High D-T-I and P-T-I ratios. Short job time, gaps & hard to prove income. Many exceptions (DL, stubs, repos) Fees: $1,500 - $3,000 Req. Cash Down: $1,500 - $3,000 New*Used % of Category.5%2.7% Score501 Sales Price$22,854$13,604 Miles6768,783 Amount Financed$22,404$13,938 Total Down Pmnt$2,317$934 Payment$459$367 Term7061 Veh. Gross Profit$876$2,222 Total F&I Gross$1,760$724 Total Gross Profit$2,637$2,945 New vehicle gross profits exclude $730 in dealer incentives.

SF Tier 2 Finance Companies Finance Company % of Tier CB Avg. Cash Down. Sale Price. FE Pft. F&I GP Total Pft Avg MilesTerm.Paym. Capital One9.7%552$1,653$16,371$1,136$1,544$2,680 36,40470$397 GMF/Americredit7.3%553$1,483$21,808$634$1,253$1,887 14,22369$420 Ally Financial5.8%552$1,323$17,485$1,527$1,625$3,152 35,04770$384 Regional Acc5.7%547$717$16,208$1,440$1,137$2,577 30,38070$425 Santander5.5%548$1,452$14,229$387$1,237$1,624 36,79970$370 Credit Union5.3%550$1,311$14,832$1,857$1,062$2,919 56,57364$332 Credit Accept.5.3%548$1,646$13,568$1,272$448$1,721 62,94162$400 CPS 4.3%548$1,086$16,204$1,586$859$2,445 37,15169$412 Wells Fargo Dealer Services3.5%552$1,636$17,976$1,239$1,350$2,589 45,64470$375

SF Tier 4 Finance Companies Finance Company % of Tier CB Avg. Cash Down. Sale Price. FE Pft. F&I GP Total Pft Avg MilesTerm.Paym. CPS11.7%455$1,472$15,788$2,052$736$2,78842,36968$397 Credit Accept.9.6%453$1,993$12,032$1,228$466$1,69472,99258$363 Santander8.1%447$3,333$16,236$325$1,224$1,54943,70169$396 Regional Accept.7.2%456$703$16,151$964$1,415$2,37932,48968$453 Prestige Finc.6.6%449$1,073$14,981$1,596$744$2,34144,18468$396 Gateway Finc.5.5%454$720$10,378$1,374$118$1,492118,27557$298 Capital One5.1%455$1,073$17,715$884$1,675$2,55839,83069$451 Credit Union4.7%450$1,320$13,395$1,892$781$2,67478,61855$288 Ally Financial4.5%458$1,525$17,658$1,627$1,450$3, $334

Tier 2 – Top 10 Used 2016 Copyright Used Car University, LLC all rights reserved Amt Fin.Cash Down.FE Pft. Avg MilesTerm.Paym.Total Pft Sonata16,2871,3751,674 44, $2,833 Camry17, ,489 53, $2,823 Corolla15,2001,1191,459 48, $2,474 Fusion14,5331,3931,435 54, $2, ,2551,1811,414 38, $2,394 Cruze13,7431,4141,371 46, $2,286 Malibu15,6761,4521,356 48, $2,425 Focus13,2531,0881,251 42, $2,108 Altima16,2841,2911,229 50, $2,199 Sentra14,4041,1861,099 41, $2,312 Average15,3771,2641,386 47, $2,441

Tier 4 – Top 10 Used 2016 Copyright Used Car University, LLC all rights reserved Amt Fin.Cash Down.FE Pft. Avg MilesTerm.Paym.Total Pft Fusion15,0731,2271,990 41, $2,406 Sentra14,8381,0661,909 40, $2,863 Malibu14,2551,3731,705 59, $2,361 Camry15,2921,3401,574 70, $2,243 Altima15,2241,9401,546 41, $2,127 Corolla14,4991,7731,530 55, $2,110 Focus12,0751,6561,467 58, $2, , ,251 38, $2,240 Cruze13,4521,5791,132 48, $1,849 Sonata14,4291, , $1,658 Average14,5521,4941,471 50, $2,149

Summary Change theSales Process Know Your Data Secure the Right Lenders Stock the Right Vehicles 2016 Copyright Used Car University, LLC all rights reserved

Want More SF Training? 2016 Copyright Used Car University, LLC all rights reserved 8 week -Special Finance Webinar Series Begins Aug 15 th Attend one or all eight Call to enroll now.