trying to figure out if it will benefit us to use a GPS device to locate bhph default accounts vs not putting one on at all. Any thoughts on the cost of putting one on vs. the loses you could have by not getting your vehicle back. Also any ideas who has the best product?
Easy question. Don't short sell the added advantages of having a GPS/Lockout device that doesn't include watching as your car crosses over the boarder into Mexico. That is keeping those payments current and off of your aging. It wasn't always just losing the car that cost money but collecting those monthly or bi weekly payments and all of the manpower that goes into that. Looking at the problem and solution and coming up with the 300k number is way too simplistic a methodology to calculate the real costs and benefits. For starters we extract the additional hard costs from the customer (if we possibly can up front) the device has a hard cost of 175.00 the parts department sells them to our service department for a very attractive price of 295.00 then the service department charges our own 'book time' of 1.5 hours for the 15 minute install. Each profit center gets to share in the bounty and by doing so we keep them happy and their numbers in line not to mention we reduce the commission-able sales gross in the process :) to us it's more about keeping the payments timely than it is recovering the vehicle
You seriously believe that one department within your dealership, being able to mark up a gps and sell it to another department, and then paying yet another of your departments to install it is "sharing the bounty?"
That is the most hilarious thing I have read in a long time, jesus I nearly fell out of my seat. Next, have your parts department set em up with some new rims and TV's in the headrests at at 200% markup and we can share in that bounty too! Think of all the payable gross we will save. Damn, how have I been missing out on all this magical profit! Tell me again what that has to do with finding a skip or collecting a payment?
Anyone but me ever see the underpants gnomes episode of South Park? Hit YouTube and enjoy if you havent.
Ok so enough poking fun (come on admit it, you deserved that one) Your point of reducing aging is valid, but I still contend its a very expensive way to do it. You can buy a whooole lot of $12-$14 an hour collectors and skiptracers for $300k.
I stand wholeheartedly by my conviction (and historical data on a crapload of BHPH units burning gas) that GPS and interrrupt systems are nowhere near as cost effective as proper underwriting and collection practices.
Obviously you don't need me to back you up but I have to agree with you. Thousands of BHPH deals since 1995 for me. No devices. Old school deal setup and collection. The operation I have now is 5 years old in November and haven't lost a car. Our less than 30 days are 92%. I never sell "adds" for profit in BHPH. It's your money your paying to yourself. Keep the ACV down and deal with mechanical issues.
Just saw this ancient response ... didn't want it to be left unchallenged and have people draw the wrong conclusion. In a franchise store with a full service and parts departments that is exactly what you do to spread the gross around and keep all of the departments happy and your comp numbers in line. Even if I were running a rock lot I would charge a retail price of the unit to the deal ... I don't do anything at cost.
Wish you could have been with us at the BHPH Collections Conference the past few days in Houston. Ken Shilson advised me I could quote this: "The future of the BHPH BZ lies with the use of Payment Assurance Devices".
I of course agree. I believe if you are in that credit market, the market itself screams for the complete system with reminders, consequence if not payment (starter interrupt) and ease of use, that is no fooling with codes. Make it easy for the lien holder and the customer alike and it is funny how the $ comes in. Then since the system should have a location feature, then if needed, find them. Life is good.
Ashley, Ken Shilson has alot of experience in accounting for this business. The NABD and Sub Prime Analytics works with over $3 Billion dollars in portfolios. Thier benchmark numbers show that dealer defaults are 26.1% without devices. They show the default experience to be 24.2% with devices. This is not a glowing endorsement for devices. The $3 Billion dollar book of business consists of vehicles that ACV around $4000. I have higher ACV's (avg $7800). We do not buy the "typical" BHPH customer and we have a default rate that is about half that. Since I haven't lost a vehicle in 5 years I just cannot justify the expense.
If the BHPH business is going to be so much worse than what we have experienced the last 16-17 months we might want to look into other business.
I do believe that increased inflation combined with higher taxes will be a problem as long as the current gang is in the white house. We just have to keep this in mind in underwriting.