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September 7, 2009
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CHANGING IMAGES Buy-Here, Pay-Here Needs Makeover to Attract New Buyers By David Piestrzynski
The buy-here, pay-here industry needs a new image to attract buyers entering the market after recent economic troubles. Buying a car used to be a positive experience for the customer with a 640 credit score, said Ken Shilson, founder of the National Alliance of Buy-Here, Pay-Here Dealers. But as many of these customers are sliding down into buy-here, pay-here, Shilson said, it’s crucial for dealers to brighten the image of the industry to attract these new customers. He said a conventional buyhere, pay-here customer is probably accustomed to more questions from the salesperson, but this treatment could turn away some of the former subprime consumers. “A customer with a 640 beacon score doesn’t want to be treated the same as a customer with a 490,” Shilson said. He said some operators have been changing the buyer experience, their inventory and sometimes the name identifying their financing methods. He said many dealers are leav-
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ing wording such as buy-here, pay-here and tote-the-note out of the dealership to create a more positive atmosphere. Fran Cavenaugh, operations manager for Cavenaugh Auto Group in Walnut Ridge, Ark., has done a full makeover of the group’s buy-here, pay-here operation to attract customers with higher credit scores. “We give them an experience that’s very typical to a conventional lot,” she said. “It’s more of a mentality change. We upgraded our facilities and added a showroom. This has helped us identify with these customers better.” The store looks like a franchise operation. The words “buy-here, pay-here’ are nowhere to found. Instead, Cavenaugh calls its financing Car Today. Cavenaugh said the term “buy-here, pay-here” can make a higher credit score customer feel like they’ve downgraded. “We do everything we can to create the feel of a typical thirdparty transaction,” she said. Cavenaugh also added more expensive inventory to offer these customers the type of choice to which they’re accustomed. Frank Mercer, a San Diegobased consultant, has been working with franchise dealers to set up bu y-here, pay-here operations. Mercer, who spent much of his career purchasing portfolios from dealers’ in-house finance sales, said many of his clients have been staying away from the buy-here, pay-here label, opting for “dealer financing.” Some of the more prominent buy-here, pay-here operators feel a name change is hardly the answer to upgrading the industry’s image. Ray Fidel, CEO of DriveTime, the Phoenix-based buy-here,
A BRAND NEW DAY: Fran Cavenaugh stands in front of the sign for herArkansas dealership. Although the store offers in-house financing, the words buy-here, pay-here are nowhere to be found.
pay-here chain which has 79 locations nationwide, said a new tagline won’t change what buy-here, pay-here is. “The dealer is still the bank,
no matter what you call it,” he said. “If you change the name, you’re not really doing anything.” Fidel said his chain still lets
the customer know exactly what DriveTime does. “We are who we are, and we tell the customers just that,” he said.
IN THIS ISSUE • Picking the best consulting match requires communication. – Page 3
• Dealer aims for higher sales with gun giveaway. – Page 7
• Florida drives up license fees by more than 100 percent. – Page 6
• Independents found ways to ride Cash for Clunkers hype. – Page 8
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