Cooper spoke recently with Automotive News Special Correspondent Jim Henry.
You do mostly lease business?
About 75 percent [of new-vehicle business]. We sell about 230 new and 70 used vehicles a month.
What do those customers buy?
Our product mix is predominantly prepaid maintenance from Mercedes-Benz Financial. After that is tire-and-wheel and also dent protection. We don't do a lot of retail. We're mostly a lease store. It's probably 12 to 15 percent penetration on service contracts, and about the same with GAP.
M-B Financial's tire-and-wheel plan replaces wheels instead of trying to repair them?
Yes, they replace rather than repair. Replacement is unlimited for the term of the contract. If it's bent, they replace the wheel. There's a secondary product that includes cosmetic treatment, too. If you scratch up the wheel, they'll resurface it and make it look like a new one. That's an upgrade. We actually sell that one the most.
Do you use iPads for product presentations?
Yes. When Mercedes brought up the idea of a pilot program in March 2011, we immediately put our hands up.
What do you like about it?
It did have an impact on customer engagement. It's good to see someone enjoying that particular part of the process, the F&I process. What the system does is it asks some interview questions.
We can leave the customer with the iPad and they can get a product tour -- the Mercedes-Benz credit card or a presentation on prepaid maintenance or if they want to see a video. Any time they click on something, we get data on what they looked at and how long they looked at it.
The other reason why we like it is Mercedes is aware of Gen Y customers that are coming into our marketplace. Mercedes research shows that those customers like to do more texting and more of their own research as opposed to face-to-face.
Do customers see retail pricing when they're looking at an iPad presentation?
No. The only time they get to see pricing is when they are with the F&I manager, later in the process.
How's business since you started using iPads?
Our PVR -- F&I revenue per-vehicle retailed -- went up by about 16 to 20 percent in the first full month we used it, which was June. And we are right on the edge of two products per contract, which is one of our goals for this year. Another goal for the year was to exceed $2,000 per contract. Last month, we finished at $2,029, so we made that goal. And we had something like 1.98 products per contract; so you can see, we're just about there, too.
Some F&I managers worry they'll eventually lose their jobs to iPads and videos.
I can't see that happening. My manager is still crucial in so many different facets. It's not like 20 years ago. There are so many more lending alternatives and lender requirements, and the regulations are so much tougher. F&I managers are still essential.
For instance when the economic crisis happened, all of a sudden you had to take into account all these people who were good customers but that had problems with what was going in real estate. Particularly related to mortgages in Florida, a lot of people got involved buying properties as investments. The customers needed somebody to tell their stories to the lenders.