DEALERS CAN TURN F&I INTO PROFIT CENTER

Finance & insurance (F&I) are a critical source of revenue in auto and other industries. Brett Davis, president of the construction and agriculture division with Trnsact, thinks it should be a significant revenue stream for commercial trucking and equipment dealers too.

In the second part of its Q&A series, Trnsact dives further into the F&I opportunity with Davis, who has a lengthy career working with equipment dealers and helping them grow and increase profitability.

During his 25-year tenure at CNH Industrial, Davis served as a president and chairman of CNH Industrial Capital, president of CNH Latin America Financial Services, vice president of New Holland North America and president of Banco CNH Industrial Capital in Brazil.

In his time there, he was often struck by the commitment of equipment dealers to their customers. However, he also was struck by the missed opportunity to maximize revenue streams through a more formal F&I department that adds points to financing and taking advantage of selling insurance, gap insurance, extended warranties, and other valuable aftermarket products.

In part 1 of the conversation, Davis discussed how the opportunity can drive revenue for dealers. In part 2, he explores how a dealership can adjust its mindset to take advantage of this new revenue stream.

Moderator: So obviously we see finance and insurance in other industries, but describe the state of F&I within equipment and commercial trucking.

Davis: So in terms of the products — the straight financing from the lenders and the insurance providers, the warranty providers, etc. — they’re out there. They exist.

There are several big companies that have really been very dominant in the space, while there’s quite a few lenders, and there are some captive lenders. Also, there are some whitelabel lenders where an OEM will engage with several funding sources and offer them as a preferred funding source to their dealers and their customers. So there’s a bunch of different options [in the marketplace].

There are also companies offering the full gamut of physical damage insurance out there. That’s pretty well evolved [in the marketplace]. In the maintenance and the warranty plans, [it is] a little less … but still pretty well developed.

What I have seen [in the equipment industry] compared to other industries is that — what they call in insurance “the attachment rate” — is actually pretty low. This means that for some reason, compared to other industries, the percentage of deals that either have an extended warranty or maintenance plan, or physical damage insurance is very low. [This] obviously means we have a large amount of untapped revenue and opportunity for dealers.

So we are trying to explore that: Why is that attachment rate low when we know everything is financed has to be or 90 percent of all equipment is going to be financed in some form? Why aren’t the other products being readily attached as part of the sales process? I think fundamentally what we’ve had is probably a loose configuration of systems and providers, which are not well organized to be able to provide something that simple and easy [for dealers] to use at the point of sale.

Unlike some other similar businesses, [equipment dealers] don’t have a true F&I department. The salesperson often is responsible for not only securing the sale of the whole good but the financing insurance and everything else and I think after the financing is done it typically stops there and the work is done by the salesperson and completed and really doesn’t follow through on the physical damage insurance or any of the other potential products could add value to the customer and to the dealership.

I think that’s the unique challenge a lot of it is probably based on just the inability to get [execute F&I] all done in one place. They have to toggle to multiple systems to enter more information multiple times. It’s a burdensome process, and we often have the salesperson [selling products but] not they don’t appreciate those products. They have not seen the added value in their time to go ahead and make those things part of the sales process and they just close it after the financing [is finalized]. Moderator: Just getting a deal closed is often a priority for every sales rep, as well as for there for their equipment dealer and for their truck dealership. So can you discuss maybe how [the sales process] would change? Financing itself could be back and forth, so maybe we could cover [what it means to also sell additional products].

Davis: It’s a challenge depending on the industry you’re in and the type of equipment you are selling. There are certainly going to be challenged.

I mean, there are funding resources readily available fortunately for the industry, but it’s not always easy. It’s just using one lender sometimes. Other times you have a portfolio where you’ll have a primary lender, then a couple of sublenders that have a specialty or a niche that they can fill when your primary lender can’t. So a lot of times you have to work with multiple lenders.

I’d say on average most dealerships regularly work with three to five lenders and one or two primary lenders. That all depends on what their major lines are as well. But that’s just a general comment from my research that tells me three to five lenders is sort of The Sweet Spot for most lenders out there to that most dealers today.

And then, you know again the ability to earn from the finance and sources is clearly an opportunity for the dealership and then also the whole array of the other products and it comes in two-fold, you make direct commissions from the product itself, whether that’s physical damage extended warranty maintenance plans, but beyond that is often though. There is definitely a tie back to absorption meaning how much more parts and service revenue.

Can you generate if you have your customers buying new or used equipment and driving them back to the dealership making sure that they’re getting all the services at your dealership is definitely going to help drive your absorption up? Unfortunately, I’ve seen in many cases, you know, people are dealers are satisfied with absorption in the 70-percent range, plus or minus. I think a lot of the averages that I had seen over the years. INDIANA MACALLISTER MACHINERY

Heavy Equipment Rental Locations

www.macallister.com Indianapolis HQ 317-545-2151 Fort Wayne 260-483-6469 Lafayette 765-449-8191 Terre Haute 812-478-3155 South Bend 574-288-6622 Washington 812-254-1712

IOWA ZIEGLER CAT

www.ZieglerCAT.com Altoona 800-342-7002 Atlantic 877-547-3819 Sioux City 712-252-4401 Fort Dodge 800-342-1848 Mason City 800-342-1849 Postville 800-526-0889 KENTUCKY OHIO CAT

www.OhioCAT.com

Richwood 888-446-4658

MINNESOTA ZIEGLER CAT

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Kansas Army Veteran Receives Kubota Equipment Through ‘Geared to Give’

VETERANS from page 16 Medal with a “V” device for valor. Bartleson and his wife, Kristie, own and operate BucknHam Farms, a 21-acre non-GMO organic regenerative farm in Crestview, Fla., where they raise laying hens, goats and pigs.

Kubota is awarding Bartleson an MX Series utility tractor with loader and a Land Pride box blade and forks, which he has already put to use unloading 15,000 lbs. of feed, moving over 20 tons of dirt along with 40 tons of crushed limestone for animal heavy-use areas.

Bartleson is supported by his local Kubota dealer, Coastal Machinery of Crestview Inc., and he was honored in a special ceremony with TV personality and outdoorsman Willie Robertson at the Duck Commander Warehouse in West Monroe, La.

Western Division

Brian Gorman served more than nine years in the U.S. Army which included a deployment to Afghanistan where he was awarded the Bronze Star Medal. Gorman and his wife, Karla, own and operate Blarney Heights Farm, a 200-acre grass-fed, grass-finished Dexter cattle operation in Trego, Montana.

Kubota is awarding Gorman a oneyear lease on an M7 Series ag tractor with loader which he will use to feed his cattle and horses, move equipment and supplies, and conduct ranch improvements.

Gorman, who is supported by Kubota dealer Johnson Distributing in Great Falls, Mont., was honored in a special ceremony during Kubota’s annual dealer meeting in October in Grapevine, Texas.

Central Division

Joy Hughes served four years in the U.S. Army as a logistics specialist and deployed to Iraq in support of Operation Iraqi Freedom. Hughes and her husband, J.D., own and operate Beggs Pasture Raised Chickens and Eggs, a 40-acre pastured poultry operation in Beggs, Oklahoma.

Kubota is awarding Hughes an L02 Series compact tractor with loader and a Land Pride brush hog and grapple, which she has put to use to transport feed, clear thick brush on her property, and move her mobile poultry coop onto fresh pasture each day.

Hughes is supported by her local Kubota dealer, Stewart Martin Equipment in Okmulgee, Okla., and was honored in a special ceremony at the Farmer Veteran Stakeholders Conference in Oklahoma City.

Lieutenant Colonel John Lord (R) received the keys to his new M60 Series tractor from his local dealer, McConnell Machinery Co., of Lawrence, Kan.

Midwest Division

Lieutenant Colonel John Lord has been serving in the U.S. Army since 1999 and is currently the Director of Simulation Education at the Army University in Fort Leavenworth, Kansas. During his time in service, Lord deployed twice in support of Operation Iraqi Freedom and once in support of Operation Enduring Freedom.

Lord owns and operates Eco-Cattle LLC, an 80-acre grass-fed and finished beef operation, in Oskaloosa, Kan.

Kubota is awarding Lord an M60 Series utility tractor with loader that he will put to use on his ranch to mow and clean pastures and forested areas, as well as move and unroll hay bales for winter cattle feeding. Lord is supported by his local Kubota dealer, McConnell Machinery Co. in Lawrence, Kansas, and he will be honored in a special ceremony at the K River Campground in Moyers, Okla., with Kubota partner and YouTube creator Adam Sandoval.

Northern Division

Larry Daugherty served a combined 18 years in the Pennsylvania and West Virginia Army National Guard, which included a deployment in support of Operation Iraqi Freedom, before being medically retired due to injuries sustained in Iraq.

Daugherty and his wife, Anita, own and operate Heritage Farms, a 40-acre farm where he specializes in raising heritage breeds of cattle and hogs, in McClellandtown, Pa.

Kubota is awarding Daugherty an RTV-XG850 Sidekick utility vehicle that allows him to overcome his mobility issues to navigate his property and tackle daily chores on the farm.

Daugherty is supported by his local Kubota dealer, Murphy Family Inc., in Smock, Pa., and he will be honored in a special ceremony at the property of Kubota partner and YouTube creator Outdoors with the Morgans.

“The Geared to Give program is one of my favorite times of the year when we get to call each of these veterans on the phone and hear their reaction when they find out they’re being awarded new Kubota equipment,” said Jeanette Lombardo, executive director of FVC.

“These veterans have given so much for our country and the Geared to Give program truly impacts their lives by giving them much needed equipment and a well-deserved boost to their farming operations.”

Each year, farmer veterans can apply to the FVC Fellowship Fund to be considered for donated Kubota equipment through the “Geared to Give” program.

For more information on FVC’s 2023 application process, visit Farmvetco.org. For more information on the “Geared to Give” program, visit www.kubotausa.com/kubota-cares.  BRANDEIS MACHINERY & SUPPLY COMPANY

www.brandeismachinery.com 1801 Watterson Tr. Louisville, KY 40299 502/491-4000 Evansville, IN 812/425-4491 Corbin, KY 606/528-3700 Lexington, KY 859/259-3456 Stanville, KY 606/478-9201 Paducah, KY 270/444-8390 Indianapolis, IN 317/872-8410 Ft.Wayne, IN 260/489-4551

ROAD BUILDERS MACHINERY & SUPPLY CO., INC.

www.roadbuildersmachinery.com 1001 S. 7th St. Kansas City, KS 66105 913/371-3822 Omaha, NE 402/331-9200 Lincoln, NE 402/325-0447 Grand Island, NE 308/384-2620 Norfolk, NE 402/316-2606

ROAD MACHINERY & SUPPLIES CO.

www.rmsequipment.com 5633 W Hwy 13 Savage MN 55378 952/895-9595 • 800/888-9515 Duluth, MN 218/727-8611 • 800/888-9535 Virginia MN 218/741-9011 • 800/752-4304 Des Moines IA 515/282-0404 • 800/555-1445 Sioux City IA 712/252-0538 • 800/633-9104 Cedar Rapids IA 319/363-9655 • 800/616-6615 East Moline, IL 309-755-7203 • 800-633-9114

By Chuck MacDonald

CEG CORRESPONDENT

I-94 is a northern route connecting two of America’s largest cities — Chicago and Detroit. This interstate passes near Kalamazoo, a city of about 75,000, and connects with State Road 131, one of the major north-south expressways in the state.

The Michigan Department of Transportation (MDOT) is finishing a two-year project to widen I94 from four to six lanes from Lovers Lane to Sprinkle Road in Kalamazoo. This project connects expansion work completed in previous years along the corridor. The $87 million project also will include rebuilding four bridges. The job will include rebuilding the Portage Road interchange with a single-point urban interchange, while Kilgore Road will be realigned at Portage Road. The majority of work is expected to be completed around June of 2023.

Andy Stamm, construction engineer of Michigan DOT, stated that some of the important work in this area had been first designed in 1997. Only recently had funding been made available for the work to progress.

“This road had poor quality and was at the end of its service life,” he said. “The bridges were desperately in need of work as well.”

The project will require some 81,000 cu. yds. of concrete and 20,000 tons of asphalt.

“The old concrete, asphalt and steel from the bridges will be recycled,” said Stamm. “The old concrete will be crushed on-site and used as aggregate under the new roadway. The bridge beams from the bridges will also be recycled.”

The project also will involve traffic signal upgrades, noise barrier construction, freeway lighting and work on a culvert.

“When the project is completed, it will benefit Michigan motorists with a road that is updated to new safety standards and will have increased traffic capacity,” said Stamm.

Often work teams encounter surprises when replacing worn out pavements. In this case the excavation team discovered a 1950sera concrete roadway buried 25 ft. below the ground. The concrete prevented the replacement of a culvert. Workers repaired the culvert instead of replacing it.

Last year all traffic was moved on the westbound section of I-94 while the eastbound lanes were being rebuilt. This year the newly rebuilt eastbound lanes will carry the brunt of the traffic while the westbound lanes are being constructed. Motorists should see a marked improvement in their driving experience with the additional driving lanes as well as the easier access to I-94 through the new interchange at Portage Road. During construction Kilgore Service Road carried traffic from Kilgore Road. Later the Kilgore Bridge over I-94 was closed then permanently removed. Freeway ramp detours along local surface roads enabled motorists to continue their travels while roadwork was being performed.

Toebe Construction and M & M Excavating in a prime contract partnership, along with subcontractors, replaced four bridges, built noise walls and handled 2.7 mi. of roadway reconstruction. The bridge package included demolition of existing structures, 15,000 ft. of pile driving and 50,000 sq. ft. of sound wall construction. The company and contractors installed both steel beams and concrete beams.

M & M Excavating carried out dirt work, excavating and preparation of the soil for construction. M & M moved 30,000 cu. yds. of earth as part of the project.

Equipment used in the project included the following: ï Excavators: Volvo EC 380E, ECR 355E, ECR 145E, 309, EC480E and EC480; Komatsu PC300 LC and 490; John Deere 85D; Cat 321C, 315F, 235, 325 and 326F ï Dozers: John Deere 450J; Komatsu 51xpi, 71PXI and 51 PXI ï Loaders: Komatsu WA320 and WA 380; Volvo H0ll7; Cat 950M, 938 K and 950M ï Trucks: Superior Broom 310 broom truck; International gas truck, water truck; Cat 725C off road; John Deere 300D off road; Volvo 111 off road; and Volvo A25G off road ï Cranes: Link-Belt LSZ18H11; Terex HC165; and Manitowoc MLC 165-1 ï Lifts: Genie S-60 Trax lift; JLG 860SJ lift ï Other: 3630 John Deere tractor with concrete breaker; Cleveland 754 trench machine; 872 John Deere grader; Takeuchi skid steer; 745 Hammtronic roller; Concrete batch plant.  CEG

MDOT Photography Unit photo Contractors performed 15,000 ft. of pile driving and 50,000 sq. ft. of sound wall construction.