Record July Boosts Spirits; Team Attends Second Twenty Group Meeting

At nearly the close of seven full months as the Dealer Business Journal $100,000 Challenge dealership was short-staffed. Only two key players, co-owner Bob Ertle and his step-son Wes Plank were at work at the Sterling, Colo., store. The rest of the team, Ron and Alexes Ertle and their son Alex, was basking in the eastern Caribbean on the Island of Nevis. Perhaps “basking” isn’t the right word, since three key players on the Ertle Brothers Discount Auto team were attending their second Leedom and Associates Twenty Group meeting on the tiny St. Kitts Island.

Wes Plank has taken a lead role as the F&I person at the dealership and spent a few minutes of his free time during what was a very busy month in the rural Colorado operation to provide an update on the status of the dealership.

“We have been just swamped,” Plank said. “As of the 19th of July we had sold 24 cars, including one five-unit day. I have three deals we can close today, and a few more in the hopper. We have a realistic shot at selling 40 units this month.”

Plank said that already in terms of sales and gross revenue Ertle Brothers has achieved a milestone. The dealership has beat all of its records in its seven-year history.

With a field drawer full of deals in the offing, he can’t wait for the rest of the team to return back from the Twenty Group meeting.

“When they return they always bring back good ideas, but we’re going to have to spend some time getting caught up before we try to implement a whole lot,” Plank said. “We need new inventory, Alexes has to make a trip to the DMV and we need to keep up our advertising.”

Plank said that newly implemented marketing, advertising and networking is resulting in a significant increase in the number of ups the store is seeing.

“We had a new bright orange logo created and we’re putting it on the rear plate of all the vehicles we sell,” Plank said. “We’re getting customers in who said they’ve been seeing our logo on many sharp-looking cars in town and they want to stop in to see what we have.”

In addition the dealership has been flying huge six-foot balloons over the store that can be seen clear across town.

“In addition to our balloons and logos,” Plank said, “we’ve been running full-page ads in the local newspapers. I spent an hour on a local radio station discussing financing and financing options for consumers. I think it’s the combination of all these activities that is driving customers to the store.”

Plank said the dealership has now fully embraced the Finance Express desking system, and while he’s been learning the system he now feels he is up to speed and can work on improving his efficiency with the system. He said there have been some small problems, but that the company has worked with him closely to alleviate any problems.

Finance Express President David Huber said in the next two weeks, his firm would add CapOne, Citi Auto, HSBC and Franklin Capital to its growing list of lenders available on the system.

“As of mid-July we also went live with our new insured dealer program,” Huber said. “Basically, this insurance covers the lenders in the event of any errors, omissions or misfeasance on the part of the dealers, making for a much more secure environment for lenders and independent dealers.”

Plank said gross profit at the store has continued to rise, thanks to increased emphasis on properly desking deals and using a menu system for offering back-end warranties and gap insurance.

“We’ve cleared out most of the aged inventory and we only lost money on one deal this month,” Plank said. “Getting out from under those aged vehicles really helps with the average gross profit.”

Plank said he is feeling really good about the goal of a $100,000 improvement in net profit by the end of 2007. Everything is starting to click and once the rest of the team returns, the dealership will be able to build on what it’s doing and what its learned, to increase profitability still further.

As to his portfolio of lenders, Plank said he’s very comfortable with what he has now and looks forward to welcoming those lenders Finance Express will introduce shortly.

“We have also had very good success with Westlake Financial,” Plank said. “I really like their Web-based system. It makes hanging paper just a little easier. We are also going to have the representative from Car Financial Services come out next week.”

He said subprime deals have gotten a little tougher in the summer than they were earlier in the year.

“Back during income tax season consumers had much more money for down payments and that has shrunk considerably,” he said. “The key is to keep working the deal with different lenders until you find the right sweet deal for both you and the customer.”

He said if money is tight for a consumer, he always pitches a warranty.

“It makes sense,” he said. “When you are aware that a customer is cash-strapped, it just makes sense to offer them a warranty that will cover major repairs for just a $1 a day. “They realize they need protection and you’re really doing them a favor.”

He said another thing he has learned with the help of Leedom and Associates is pricing the vehicles right up front.

“You never get more than you are asking for is absolutely true,” he said. “The other thing is that sometimes the hardest part of the job is getting a customer off the car they want into a car that they can afford and that is more practical for them.”

Plank said with the growth at the store, Ertle Brothers is actively recruiting a new sales person, but they have yet to find the right one.

“We’ve been doing some networking and have made some contacts,” he said. “But we’re still looking.”