Jerry Heimlicher is president of Fairlane Credit LLC in Colorado Springs, Colo., the subprime subsidiary of Ford Motor Credit Co.
Fairlane started making loans in the summer of 1997. It is still rolling out slowly, state by state, but Heimlicher said he expects to be represented nationwide by year end.
He said one aspect of the Fairlane rollout has changed: Fairlane decided it is more efficient to use the existing Ford Credit sales force to initiate relations with dealers, instead of a dedicated Fairlane sales force.
Heimlicher downplays Fairlane's potential category-killer status, despite the obvious problems many of his competitors are suffering. 'Competition is still out there. Even though we're Ford, we have to win business with our purchase policies, and rates and programs, just like everybody else does,' he said.
The Fairlane Web site is less modest. It includes a cartoon of a little fish eyeing a big fish, with captions that read: 'What happens when one of the biggest names in business enters one of the hottest industries around? For one, the competition gets nervous.'
Heimlicher, 57, began his career at Ford Credit in 1964, as a field representative in Memphis, Tenn. He worked his way up through North American Financing Operations, in the southeastern region and the western region. He was vice president of Insurance Operations from 1990-92. Before his present assignment, he was director of Insurance and Dealer Support Services.
New York-based Staff Reporter Jim Henry interviewed Heimlicher recently. Edited excerpts follow.
How many states are you in? Your Web site says 14.
What's important is how many regional offices we have opened. As they open, that opens up all the surrounding states. We are not in New England yet, but we are in Florida, and we are now in North and South Carolina. We are moving into the Detroit area, and from Northern California we are moving into Oregon and Washington. There will be eight regional offices. We are in Los Angeles, San Francisco, Chicago, Dallas, Atlanta, Colorado Springs and Orlando. We are not up yet in New Jersey, which will cover the Northeast.
Are you growing according to plan, or is it taking longer than you expected?
With our capital, and with our national network, we could have grown a lot faster than we have. It's not a question of putting on the brakes, so to speak; it's more like we never really released the brakes. We are making sure we can take advantage of every opportunity. But we don't take every opportunity. ... We want to grow at the right pace. There is enough risk in this business as it is.
When are you done rolling out?
We expect to reach all Ford dealers by the end of 1999. ... We have accelerated our expansion by using the Ford Credit branch network. We still do everything in terms of purchasing and policies, but we have Ford Credit help us sign dealers up. We use Ford Credit salespeople to get the documentation, to set up a new dealer. Once we identify dealers who have said they want to get more involved in subprime, Fairlane helps the dealer set up a subprime department. What we determined was it made no sense for our sales force to be calling on dealers in addition to the Ford Credit sales force.
Where do you get your business? Do you automatically get Ford Credit turndowns?
If Ford Credit opts not to do a deal, we can pull it up only after it was rejected - and that includes what we call 'rehashing,' like where the customer is asked to come up with an additional down payment or an additional signer. Once an application is completely rejected by Ford Credit, then we can call it up.
Is that your only source of business?
No. With the annual percentage rate and rebates, a customer who was rejected by Ford Credit may have been looking at a 1.9 percent APR deal, conditioned on the normal stipulations for a customer who qualifies for a loan like that. Dealers know what kind of a deal Ford Credit will or won't buy (so they wouldn't bother to submit most subprime customers to Ford Credit first). We expect a majority of our business to come direct to us, rather than via Ford Credit.
How many dealers do you have? Do you have dealers who are not Ford Credit dealers?
We have more than 2,500 dealers signed up. By the end of the year, that should be more than 6,000. All are Ford Credit dealers. ... The volume is very satisfactory from our perspective. We may have thousands of dealers. Some have one contract a month, some may have hundreds.
What are some of your advantages, as a big company with a big parent?
We are still staffing ahead of the rush of contracts. The smaller companies don't put people on ahead of time, and that's one of the things that has gotten a lot of them in trouble. They are under a lot of pressure to produce bigger volume, but they can't afford the people until they get it.
Your competitors can't be too happy, seeing you enter the subprime business.
We have people here from more than 26 of the subprime companies. We don't approach the business by saying, 'We're Ford Credit, we know how to buy contracts, therefore we know how to buy subprime.' ... We know companies are going to come after us. We know of one competitor in Southern California who has told dealers, 'If you have a Fairlane approval, we'll give you $200 (to sell it to us instead).' At $200 apiece, we are not too concerned about them being in competition too long.
Are you exclusively into used cars?
About 80 percent of our business is used. Ford Credit Red Carpet Lease turn-in cars are our target. They are excellent cars; they still have some warranty left.