AutoNation's pilot subprime unit rescues deals in South Florida
Maroone: “It's starting to go pretty good.”
AutoNation Inc. will expand a pilot program that is rescuing about 13 percent of the retailer's rejected subprime deals in South Florida.
Since its launch in mid-2010, F&I Central has shored up AutoNation's subprime business by moving turned-down applications from credit-challenged customers to a centralized department. Two full-time employees in that department continue to shop those applicants to subprime lenders.
"It's starting to go pretty good," AutoNation COO Michael Maroone said. "These are deals that are dead before they ever get there."
The number of applications going to F&I Central is increasing monthly for the nation's largest retailer, as is the closing ratio. The unit gets about 830 applications a month from 26 stores in South Florida, according to AutoNation. It is winning loan approvals on 40 percent of the applications and closing purchases on 33 percent of the approvals. That equates to an additional 109 sales a month.
"We are saving deals," says Dave Koehler, AutoNation's senior vice president of sales.
With that success, AutoNation plans to expand the pilot during the fourth quarter to all 57 of the company's stores in Florida.
The retailer will add a yet-undetermined number of employees to F&I Central to handle the additional flow of applications. For the stores in the program, applications are automatically routed electronically and queued up for F&I Central personnel. That's an improvement from when the program began, Koehler said. At that time, the individual stores had to send the applications that were turned down.
The F&I Central approach looks promising beyond AutoNation's Florida stores.
Says Koehler: "As we get down the road and expand our capabilities digitally, we believe that this could be a bigger part of our tools."
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