Categories
Recruiting

Is Generation Y Worth Hiring?

Contributing Author:
Amber Hash
Recruiting Manager
EFG Companies

Disloyal, arrogant, selfish, overindulgent, high-maintenance, frivolous, image-driven, impatient, over-confident and spoiled – Generation Y has heard it all.  And, now the generation that everyone thought would never grow up is starting to make up the bulk of the workforce. But, will they be successful in retail automotive? Are they worth hiring?

Honestly, retail automotive can’t afford NOT to hire this challenging generation. The consumer purchase model is rapidly changing – driven in large part by the digital proclivity of Generation Y. Who better to engage with these new customers than people who speak their language – online and via text?

Raised in the era of digital technology, members of Generation Y can quickly prove their worth in the retail automotive workplace.  But, some adjustments must be made to reach an equitable compromise with this generation. Here are some recommendations for dealerships seeking to successfully employ Generation Y.

They work to live

The members of Generation Y are committed to achieving work–life balance. While their career is highly important to them, they believe that working hard does not equate to working long hours. This can be a hard pill to swallow for automotive managers who live by the “sun-up to sun-down” model.

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Categories
Compliance

Say Goodbye to Disparate Impact Theory

Dave Gibbs Training Manager EFG Companies
Contributing Author:
Dave Gibbs
Training Manager
EFG Companies

On Monday, President Donald J. Trump signed into law the Congressional S.J. 57 resolution repealing the Consumer Financial Protection Bureau’s (CFPB) guidance on dealer markup. Originally issued in March, 2013, the auto lending guidance quickly received negative feedback. In fact, the ruling caused several finance sources to either switch to a flat-fee compensation model or enforce lower caps on dealer markups. The ruling also prompted the CFPB to impose consent orders with several institutions resulting in millions of dollars in fines.

The retail automotive industry is cheering this move, which began five months ago when the Government Accountability Office said Congress had the power under the Congressional Review Act (CRA) to overturn the CFPB guidance. But, before you start thinking the good old days are back, consider what started the industry on this path.

The CFPB’s original guidance was designed to inform lenders that it would begin enforcing the fair lending requirements of the Equal Credit Opportunity Act (ECOA) using a theory on disparate impact. This theory refers to practices that adversely affect protected classes of individuals, even though employer rules and practices are meant to be neutral. The CFPB used this theory to make the argument that dealer markup practices could result in unintentional discrimination during the credit process, and must therefore be reined in.

While the CFPB can no longer use disparate impact theory to force lenders to reduce dealer markup, the ECOA and its fair lending requirements remain in full effect. Other federal, state and local compliance regulations also remain, which prompts me to remind our clients that remaining in compliance is still in the dealership’s best interest. And, it’s highly unlikely that lenders who invested millions of dollars into comprehensive compliance platforms will suddenly reverse all those process changes.

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Categories
Dealership Training

Meeting “Look-to-Book” Expectations

Eric Fifield Chief Sales Officer EFG Companies
Contributing Author: Eric Fifield Chief Revenue Officer, EFG Companies

When I’m in a dealership talking about conversion rates, the team members often focus on the process of transitioning a potential customer to a confirmed sale. I hear about engagement rates and digital touch points. But often, the biggest struggle isn’t with closing a sale, but rather with effectively managing lender look-to-book metrics. This critical component can often make or break a sale. What are your lenders’ look-to-book requirements and how can F&I departments optimize their conversion rates?

Some F&I managers still feel tempted to use the “free-for-all” approach – offering all deals to every lender on their list. This approach relies heavily on automated approvals, but fails to factor in specific lender criteria. This often results in several denials, especially if a percentage of your business happens to fall in the subprime space. In the prime space, this approach can jeopardize lender relationships if your team sends several lenders applications that they all approve. Your team can only select one lender, which alienates the rest.

A more prudent approach is adopting a preferred lender process, wherein your F&I managers select a group of lenders to send the majority of your contracts. This requires that your team has good working knowledge of each lenders’ requirements to ensure that every deal submitted is approved. Dealers should approach preferred lender candidates based on the needs of their operations, as well as the types of lenders available including those who offer wholesale financing, retail financing, automated vs. manual credit decisions, etc.

Making the Cut

These days, lenders set volume targets and keep a close eye on losses. A lender using a look-to-book ratio considers it an indicator of efficiency, as well as the percentage of approved deals that are booked as loans. Lenders are also segmented into the type of loans they approve – ranging from super-prime to non-prime. It makes no sense to offer an application with a FICO score below 640 to a lender that is only interested in super-prime credit.

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