Service orders and profit have jumped at Garber Buick in Saginaw, Mich., since the store started offering credit-card applications and interest-free credit to cash-strapped customers.
When a service customer declines suggested repairs or maintenance beyond the reason for the visit, a store representative sits down with the customer to explain financing options, said Bobbie Herron, director of digital sales and marketing for Garber Automotive Group's four Michigan stores.
If affordability is the problem, and often it is, the dealership offers to help the customer fill out a GE Capital credit card application. The financial services company often accepts or rejects the application within minutes, Herron said.
If the application is rejected, Garber Buick has arranged with CrossCheck Inc., a provider of check approval and guarantee services, to guarantee as much as $4,000 in repairs interest-free so long as the customer can pay the balance by check in a month, Herron said. The plan requires 25 percent of the bill to be paid upfront and the remainder paid within 30 days.
"It's work that would have been denied because our customers didn't have the funds," she said.
Herron credits the financing initiative, launched three months ago, for a big boost in service work. Over the past two months, monthly repair orders have risen from 125 yielding net profit of $8,900 to 175 generating $19,750, she said.
Herron said the initiative grew out of a strategy session five months ago during which she met with Garber Buick's general manager, Rich Perdue, and other employees to devise a way to increase customer-pay service work in the face of declining warranty volume.
How to boost customer-pay work also was a hot topic among dealers and vendors in January at the National Automobile Dealers Association convention in New Orleans.
Herron said she assigned service specialist Kay Eaton to determine whether nearby dealers offered financing for service work as a way to turn rejections into orders. Eaton visited 10 stores and called 30 others.