Thursday, Jun. 15, 2006, 08:00 PM UPDATED 11:59 AMBy Nick Zulovich
LAS VEGAS -- The best odds in the house last month at the Las Vegas Hilton were not at the craps or blackjack tables; the best odds for the nearly 1,500 dealers from throughout the country were at the National Buy-Here, Pay-Here Conference. In those rooms where the talk was on the buying and selling and financing of used cars for the subprime marketplace, everyone was a winner.
The eighth annual conference, hosted by the National Alliance of Buy-Here, Pay-Here Dealers, left everyone smiling as they took stock of the changing world of those dealers involved in the sale of vehicles in the expanding subprime market.
It was by far the best conference we have ever had, said Ken Shilson, conference chairperson and NABD founder. Not only did we have the most attendance ever, but the presenters provided valuable, real-life advice on dealing with real problems we are facing every day.
I have talked with many dealers who have attended this conference, and they all agree that this has been outstanding.
The list of presenters read like a list of Whos Who in the subprime automotive world, including not only various industries and businesses, but also fellow automotive dealers who shared personal experiences on how they have dealt with specific problems. The conference also included an inspirational talk from nationally known trainer David Walsh, of MarketWise, who encouraged dealers to become leaders within their dealerships and their industry.
The subprime industry is certainly going through definitive changes, changes noted by a number of speakers. Shilson, who is the managing partner in a Houston-based accounting firm specializing in working with subprime dealers, said that dealers must continue to adapt to the changes demanded by the marketplace.
For the first time, the gross profit (as measured by his survey of selected dealers) is down from the previous year, he told attendees. This is the reality of the marketplace, and how dealers respond is critically important. As a result, more and more dealers are turning to technology to offset these rising costs of doing business.
Citing the more than 500 subprime dealers who responded to his survey, Shilson noted that gross profits fell from 38 percent of gross sales per vehicle to 35 percent. Added to the mix was the increased cost of vehicles, and the result was more pressure being put on dealers to keep the same profitability levels. The need, he said, was to turn to more knowledge and to discover better technology abilities.
We (dealers) cannot continue to do business the same old way, he added, because the marketplace changes are demanding we change. The real successful dealer in our industry is one who is able to not only sell a high volume of cars, but also successfully manage the risks associated with our business. That is why a conference like this is so beneficial.
Shilson was among numerous speakers who cited the increasing cost of vehicles for the BHPH industry, as well as how to adapt to those changes. He noted that the cost of vehicles among dealers in his survey group was up two percentage points in 2005 as compared to 2004, and five percentage points as compared to 2003.
Tom Kontos, vice president of analytical services for ADESA, gave an overview of the entire wholesale market and predicted that dealers would have to adjust to high sales prices for this year, but that there was hope on the horizon.
I suspect that prices will remain firm in 2006. However, as more and more vehicles return to the marketplace next year from off-lease and off-rentals, the supply will pick up, and this should put downward pressure on prices, Kontos said.
More Detailed View
While Kontos and Shilson gave an overview of the market, there was plenty of advice being administered by experts on how to walk the thin line between the successful BHPH dealership and one that can quickly succumb to problems. Advice was shared by those in the financing industry, the legal industry, the marketing industry and much more.
The reason I come to the NABD conference is because it is a working conference, not a play conference, said Ken Loveless of Virginia, who said he has been attending annually. I come here because I can learn something new that will make my dealership more successful in the future.
That sense of sharing was evident from the podium as well, as dealers were quick to share what has worked for them, as well as what has not worked. Especially poignant were stories from dealers from the hurricane-ravaged Gulf Coast who have had to rebuild their dealerships during the past year.
One of the conferences highlights was the keynote presentation by Walsh, vice president of MarketWise. Walsh is recognized for his inspirational talks to industry groups, as well as his unique training methods in the automotive industry. Playing off the conferences theme of Come Grow With Us, Walsh outlined five steps to leadership that can work within every organization, regardless of size. The five lessons on leadership were hiring good people, creating a vision for the company, training employees to do their jobs to the best of their ability, developing a fair and equitable compensation program and establishing a positive back system.
Leadership, Walsh said, is motivating people to achieve a common good. He added, A good performance that is recognized is repeated, and that is good for everyone.
Special Personal Moment
The NABD conference also paid tribute to Jim DeVoe and W. Steele Gudal, calling them pioneers in the subprime automotive industry. DeVoe was founder of J.D. Byrider and Gudal, his son-in-law, was a company executive. Both were killed in the crash of a private plane earlier this year.
Jim was a quiet, gentle man who helped a lot of us in our own businesses, said Ingram Walters, a North Carolina dealer and a key NABD leader. He was a pioneer in our industry, out front establishing the model for many of us before we ever opened our businesses.
But he did not do it alone. He would share his ideas and listen to ours. And, Steele was following in his footsteps and was a friend to all of us. They were supposed to be here with us today, and in some ways, they are.
The NABD conference also featured a trade show, which Shilson said was the largest the organization had ever had.