"With the right staff, subprime buyers can provide healthy incremental sales volume," said Don Campbell, president of lead provider Detroit Trading Co.
LaLonde said finance leads have become an important part of monthly sales at his two Detroit-area dealerships: Summit Place Kia-Waterford and Summit Place Kia-Mount Clemens.
In July, 38 of 100 new and used vehicles sold at the two stores combined were to subprime customers, LaLonde, 54, said.
"Some dealers want subprime customers to come through the back door," LaLonde said. "Our approach is different. People with subprime credit want to buy a car, and we want to sell them one."
In the second quarter one in four car loans was subprime, according to Experian Automotive. The prime category starts at a credit score of 680 on the company's Scorex-Plus scale.
Experian Automotive's study showed that loans to subprime car buyers rose 14 percent in the second quarter over the same period of 2011.
LaLonde said about 1,000 dealerships of the nearly 18,000 nationally buy finance leads from Auto Credit Express. His Kia dealerships number among the 1,000.
LaLonde estimates that only a fraction of all dealerships nationwide, perhaps 2,500, emphasize selling to buyers with less than prime credit. It takes a store specialist and relationships with subprime lenders to make it work, LaLonde said. But it's well worth the time.
"We know 32 percent [of finance-lead prospects] will buy a car within 60 days after the lead date," he said.
At his two stores, vehicle sales to subprime buyers generate a gross profit per vehicle of about $3,000 vs. $2,200 on prime buyers, he said.