Mike Koeller, general manager of University Chevrolet in Big Rapids, Mich., signed with autoXsell Inc. because he figured he had nothing to lose.
Here's the deal: AutoXsell, a sales and marketing company in Farmington Hills, Mich., would conduct a three-day used-vehicle sale for the dealership, pay for advertising up front, and sell about the same number of used vehicles during the event as the store normally sells in a month. Koeller would pay a commission based on the revenues generated during the sale.
Koeller figured that if autoXsell delivered, it would be a win-win for both companies; if it didn't - well hey, it was not the dealership's money at stake.
Koeller said the Sept. 16-18 event generated the best response he has seen during his 16 years in the retail auto industry. He delivered 38 used cars and trucks in three days. He usually sells 30 to 40 a month.
'They brought in people to help route traffic; they helped my finance manager and brought in three of their own salespeople,' Koeller said. 'They were very organized; they worked hard and they were very focused.
'At the beginning, my salespeople were skeptical. But my best sales guy pocketed $6,500; the guy who did worst pocketed $3,000. It was quadruple what I expected.'
AutoXsell was founded in August by 33-year-old Bud LaCombe, a former finance and insurance manager and former general sales manager at Great Lakes Toyota in Holland, Mich. Most recently he was a senior vice president with Rock Financial, a mortgage company in Bingham Farms, Mich.
LaCombe said he got the idea for charging dealers at the end of an event instead of before from a friend in the retail auto industry. The company does require a small, negotiable deposit. 'Sometimes it's as little as $1,000; the most we've ever charged was $5,000,' said Gary Hall, the company's national sales manager. The deposit goes toward the company's pay.
The company's commission averages about 32 percent of total gross revenue generated by the sale, plus a per-vehicle marketing reimbursement fee.
LaCombe said dealers take him up on his offer because they perceive it as no-risk. He is willing to take the risk because he has a staff of ex-dealership managers who is confident it can make the event profitable.
'We go out and make it a `can't say no' offer' for dealers, he said. LaCombe typically targets single-line, domestic dealerships on the outskirts of major metropolitan areas. The dealerships typically sell fewer than 100 used vehicles a month.
AutoXsell spends about $10,000 to $12,000 on advertising for each event. The newspaper and radio ads target about 200,000 potential customers within 45 miles of the store.
If the dealership is relatively small, LaCombe will bring in members of his company who have management experience in finance and insurance, used cars and sales to help run the event. AutoXsell contracts with salespeople who will work if necessary.
AutoXsell pays for transportation, food and lodging for the people it brings in, LaCombe said. The dealership pays the outside salespeople based on the dealership's pay plan.
As of mid-November, LaCombe had completed 15 sales for dealers in Michigan, Ohio and Indiana; sales are scheduled for Tucson, Ariz., and the Chicago area.
He said most have been profitable; a couple have broken even.
Aaron Zeigler, general sales manager at Harold Zeigler Auto Group in Kalamazoo, Mich., had autoXsell conduct a sale at its Mattawan, Mich., used-car store. Zeigler combined his used-car inventory from Harold Zeigler Kalamazoo (Lincoln-Mercury-BMW-Suzuki-Mitsubishi) with the inventory at the Mattawan location.
During the four-day sale in October, Zeigler sold 50 to 60 used cars and trucks - about one-third of the 170 used vehicles he sold at the two stores that month. He typically sells 50 to 60 used units a month at the Mattawan location.
'I was pretty happy with what they did; they were able to come in during a slow month and drive sales,' said Zeigler, whose auto group also includes Ford, Chrysler, Plymouth, Dodge and Jeep. 'The nice thing is that if the sale is a failure, he's not going to get paid. He has a lot of incentive to make it a success. We're going to give them a shot at our other locations in December.'