Used Car News

BHPH Academy – Continued from page 1

From the start, Goodman and Elizondo framed that this model is a finance and collections business, with the vehicle being the commodity.

“Also, what kind of relationship are you building with your customers?”

Elizondo said the biggest part of everything we do is all about understanding that BHPH is a relationship business.

“At the end of the day, it’s all about collecting your money,” he said. “People think, ‘I’m selling a car.’ You’re not. You are building a relationship.”

It was a key concept that Elizondo hammered home time and time again – building a relationship business and collecting money.

“At the end of the day, I’ve got this person on my books for two, three or four years,” Elizondo said. “If I’ve got them for that long, but I’m only thinking to get them in and out and sell them a car, they’re not going to pay for it.

“They might spend 60 or 90 or 120 days in that car, but then say, ‘Eh, I’m tired of this car or I’m having issues’ and they’re going to get out of the deal.”

It’s important to talk to the customer up front to explain the program right away. You’re trying to get the customer approved for a vehicle that’s going to get them to work, from Point A to Point B, and be successful, or even building their credit.

The academy offered guidelines on how to staff the operation, the number of people needed to run a BHPH operation.

“We give you the parameters (showing) that if you have this type of operation and you’re doing this amount of volume, then you’re probably going to need people like this,” Elizondo said,

Cash flow is critical though. Another part of BHPH is the pitfall of selling too many cars without doing the proper underwriting and collections.

“You have to make sure you don’t run out of money,” Elizondo said. That means understanding the structure of your business, knowing how you’re going to work a deal from month 1 to month 36. It’s knowing if you sell a certain number of cars, for a certain amount of money and a specific payment and down payment on a certain balance, this is what you should be collecting.

“It’s not always going to be perfect, and you’re going to have to tweak it,” Elizondo said. “But at the end of the day, that’s going to be the model of

what you’re trying to accomplish.”

Underwriting is vital. While people will talk about formulas and complicated schemes, Elizondo simplified the goal.

“Verifying is underwriting and underwriting is verifying,” he said.

“That’s the biggest thing.”

One benefit of the buy-here, payhere model stands out especially in tough economic times like today.

“I would say this is a recessionproof business,” he said.

the buy-here, pay-here market.

“We started thinking about BHPH. A lot of leads are asking if we do inhouse financing,” Khumarov said. “It’s made us understand it’s popular in this market with this price range.

Dealers cannot just gather the stipulations and references – they need to verify them.

“It’s not very hard to gather the information,” Elizondo said. “But when you get these things, do you actually do anything with them?”

Without verifying the customer’s information, it won’t matter if you get a large down payment, the deal will not succeed.

Acquiring inventory will require going to the usual sources like auctions, but BHPH dealers should also look at private sellers, Facebook or other alternative sites.

If possible, find a car that’s affordable and won’t require a ton of recondition to get it on the road.

“You don’t want project cars,” Elizondo said.

Also, if dealers have a service shop where they can do the work themselves, it will save the time and money of subletting it out.

Getting a vehicle that will run the length of the contract is the main thing.

One of the encouraging things that comes out of these types of events are the “Aha!” moments, Elizondo said.

It’s when the attendee realizes the key is to close a customer today, keep them on the books for the length of the installment contract, then get them to buy another car or to bring a family member in to get a car.

“Customers for life,” Elizondo said.

If the dealer can do a good job of underwriting and maintaining and building a customer relationship, then there can be success.

Elizondo said there’s one type of person who benefits most from this type of training.

“The one thing that excites me the most is someone who is a sponge, someone who is ready and willing to understand and learn all about this business,” he said.

The attendee gets a thick book of information that talks about models, processes, policies and procedures that can help open up a dealer’s mind to different ideas and concepts that can help them learn.

One Texas dealer came to the event to explore expanding into BHPH.

Since opening the Mars Dealership in Dallas in 2021, George Khumarov has become increasingly aware of

“We knew nothing about it. We decided to get information from the industry leaders.”

Khumarov, who is new to the model and veteran Rosie Johnson, vice president of R&D Motors, who has been in the business for 28 years, each took away many lessons from the two-day session.

“I got a lot of new ideas to take back,” Johnson said. “I was able to take away something for every department. Specifically with collections, we’ve been collecting monthly and we may switch to pay day.”

Khumarov added: “This was good training. It was good to have people with 30 years of experience teach- ing. It was very personalized. You were able to ask questions.”

The hardest part goes back to helping dealers understand the relationship concept of BHPH that goes past simply closing a car deal.

“This a long play business,” Elizondo said.

The two-day event is similar to a 20 Group in which the attendees had the chance to interact and bounce ideas off each other.

NIADA also provides companies information on sources so attendees can get find some tools and help for their businesses. This was the second time NIADA has held this particular BHPH Academy and it’s going to hold three to four this year.

“Each time, we get individuals who walk away with good information,” Elizondo said.