One-person, one-price strategy aids ethics

As more dealerships adopt a one-person, no-haggle sales strategy and ditch the finance and insurance office, F&I training expands across the store. And the ethics training is also simplified.

The transparency of a one-person, one-price approach lends itself to a more ethical culture, said some dealers who have made the switch.

Mark Rikess, CEO of Rikess Group, has more than 50 dealership clients that practice the one-price sales approach. He said that with such stores, the markup of the dealer's buy rate to the lender is set and grouped by credit tier, meaning customers in an A Level credit range may pay half a percentage point over the buy rate, B Level one point more, etc.F&I products also are sold via a menu at the same prices to each customer.

"It really eliminates the opportunity to take advantage of certain types of customers," he said.

Team leaders and document processors typically handle the paperwork, and compliance and training across the store increases because the dealership has to train sales staff on selling F&I products, Rikess said.

Checkered Flag Motor Car Co. in Virgina Beach, Va., has seven dealerships and 10 franchises in southeast Virginia. It shifted to a one-price strategy four years ago for all used-vehicle sales and for new-vehicle sales at its mass-market brand stores. The sales process for new-vehicle sales at its luxury brand stores, for now, follows the traditional negotiation model.

In January, all of Checkered Flag's stores converted to a single point of contact for sales.

The group learned that without traditional F&I departments, it had a training gap, said Pete Lively, its vice president of variable operations. It sent sales managers who didn't have a financial services background to a one-week training with JM&A Group to learn techniques and become certified in F&I legal and ethical standards, Lively said. It also aims to have its sales staff who carry more responsibility to complete training after they pass a core competency, he said.

Most of the group's sales staff has been hired from outside the auto industry, which coupled with technology has helped with F&I ethics, Lively said. The stores use Darwin Automotive to present F&I items on iPads, which makes the process easy and transparent, he said.

"They've never tasted the dark side. They don't know how to be unethical because it's all managed software and everything is locked in," he said of new employees. "They don't have the ability to go change the price of a vehicle service contract. They don't have the ability to add three points of rate. None of that is within their control."

Dorschel Automotive Group's "clear.simple.different" philosophy started in 2009 when it transitioned to a one-price, single-point-of-contact store. The Rochester, N.Y., dealership group has nine rooftops.

When the group made its switch, Dorschel went from training 15 people in compliance and ethics to training 80 to 90 sales consultants and transaction analysts, said Michele Myers, vice president of financial services of the auto group. A sales support office now handles correspondence with banks and contracts executed by the sales team.

"We were pleasantly surprised with how the transition went," Myers said. "It really is because of the ethics piece. It really is the culture."

At Lexus of Lehigh Valley in Allentown, Pa., Peter Cooper, the store's president, said the way to sell F&I products and more of them is to be completely ethical and transparent. He says his store, which switched from a traditional model to a negotiation-free, one-person sales model about five years ago, offers only the F&I products that staff feel comfortable selling and consumers want to buy.

Cooper said the dealership focuses on offering customers an easy experience. Markups are fair, he said, and employee training is integral in the process. Sales staff receive a flat fee for each F&I product sale, and the culture change has taken the greed out of the car dealership, Cooper said.

"It's our job to give the clearest, most concise, transparent information about whatever product we are selling to a consumer," he said.

Wilsonville Toyota in Oregon also takes a close look at its product menu to ensure it doesn't offer products that have limited value, in the dealership's opinion, such as window etching or credit life disability coverage. The products can be very profitable for a dealership but offer little value to customers, said Jake Hachmeister, general manager of Wilsonville Toyota, which opened 12 years ago as a new point with a one-person, no-haggle sales model.

Instead, the store, which expects to sell 3,500 or more new vehicles this year, offers products employees would buy, which helps eliminate ethical concerns, he said. Being ethical and doing what's right for the customer is ingrained in the store culture, he said.

"If it's something you truly believe in, then you're not forcing people to take it," he said. "You're showing them why they're such a good value."