Credit for repairs turns denials into dollars

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.

Herron said several competitors offered credit cards but rarely pushed them.

To gauge customers' interest in financing options, Eaton began meeting with any customer who rejected suggested service work. She found that many of the customers wanted to have the work done but lacked ready cash. So the dealership enlisted GE Capital to offer credit cards and CrossCheck to provide interest-free financing for customers able to make weekly payments from their checking accounts.

In three months, Garber customers were approved for 30 credit cards so they could pay for additional repairs, Herron said. Over the same period, six people used the CrossCheck plan for total repairs of $6,000, she said.

Margerine Bates, a Garber Buick customer since the 1950s, said she opened a credit card account in December to pay for repairs of more than $500 to her 2006 Chevrolet TrailBlazer.

Bates said she took the SUV in for repairs after the check engine light came on while she was driving. She said she was convinced the repairs were necessary after a service technician showed her what was needed while her vehicle was up on a hoist.

But her bank balance would not have allowed her to do all the repairs at once. "I'd have had to go get a loan," she said.

Bates said she trusted Garber Buick's recommendations because she has done business with the dealership for decades, including when her husband was alive. "They are good about trying to help you," she said.

Garber Buick sells about 65 new and 100 used vehicles per month.

Herron said the store decided to have Eaton, rather than service advisers, pitch service customers on the financing options because she could sit them down in a comfortable office and have a conversation. Eaton gets a commission on all repairs done that were initially rejected.

Joe Jennings, sales consultant and rental manager, works with Eaton to provide service customers with trade-in information if they want to trade their vehicles or buy other products, such as extended warranties, Herron said.

Jennings, like Eaton, gets a commission only for incremental sales, so costs are incurred only if new business is generated, Herron said.

Herron estimates that the trade-in pitch, which includes a store-produced brochure for each customer, resulted in eight additional new-vehicle sales in each of the past three months.

Herron said of Eaton and Jennings: "We keep them busy."