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Attorney Erik Johnson and Allen Denson of Hudson Cook discuss regulatory issues at the recent National Alliance of Buy-Here, Pay-Here Dealers conference.


NABD Honors CFO Featured

The National Alliance of Buy-Here, Pay-Here Dealers has inducted several high-profile operators into its

Hall of Fame.

But this year the NABD took the opportunity to honor somebody who played a crucial role in the


Mark Sauder has worked as chief financial officer for DriveTime and its related companies since 1997.

“He’s a guy who likes to move the needle,” said Ingram Walter, owner of iCars in North Carolina, as he

made the induction.

“He’s constantly made a commitment to continuous improvement. Our industry is better because

people like him have been in it for so many years.”

Sauder is a Certified Public

Accountant with a degree from Ball State University. He joined Drive-Time’s family of businesses when he

became the chief financial officer for Cygnet Dealer Finance Inc.

He moved to DriveTime when

elements of that company were folded into the main operation. He served as chief financial officer until

2012 and remains the company’s executive vice president.

Prior to joining DriveTime, Sauder held various senior management positions with auto finance, real

estate development and financial services companies.

Sauder also serves as chief executive officer of BlueShore Insurance Co. and Silver Rock.

Sauder accepted the honor not just for himself, but also for all the finance executives in the buy-here, pay-

here business.

“Without a strong finance executive, no buy-here, pay-here operation can succeed very long,” he said.

“There is no such thing as individual success in this industry.”

Sauder especially thanked

Ernie Garcia, DriveTime’s founder, and Ray Fidel, the company’s

current CEO.

Sauder reflected on the differences at DriveTime since it started in 1992 as Ugly Duckling and today.

The chain began as traditional buy-here, pay-here operation of the time, with commissioned salespeople

selling as-is cars to any

customer who came on the lot. There were no prices on the cars because everything was negotiable.

Today, the salespeople at the more than 100 stores are all salaried and all prices are no-haggle.

DriveTime has provided more than $13 billion in financing. The company will sell its 1 millionth

vehicle later this year.

Last modified on Friday, 22 July 2016 20:31

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    Used-car chain Carvana is seeing strong growth thanks in part to its unique marketing, but also because of an old-fashioned basic of the business – financing.

    The Phoenix-based company is most famous for its so-called vending machines, vertical structures that house cars and use an automated system to bring them down to buyers.

    The first vending machine debuted in Nashville in 2015. Carvan now operates four total and plans on adding more as it moves into new markets.

    CEO Ernie Garcia said the vending machines are a great investment.

    “I think some of the brand assets, such as the vending machines, are a very important part of telling that story as well as establishing credibility because when you drive (and see) the big car vending machine, it gives you the sense that there is a real company underneath it,” Garcia said.

    However, the facilities also represent a fairly large investment.

    “It is the most operationally and capital-intensive thing that we do,” Garcia said.

    “It means acquiring a vending machine site, going out and finding a location, negotiating a deal with the land owner, going through entitlements with the city, and getting approved, and then physically building the space itself.”

    As Carvana grows, Garcia said word of its unique process is spreading. In addition to the unusual delivery method in some markets, Carvana conducts almost all of its transactions online.

    Garcia said new markets that are in close proximity to existing markets ramp up faster than totally new markets.

    National advertising on cable networks will play a large part in creating   awareness of what the company does to make these fresh markets grow faster, Garcia said.

    He said cable advertising makes sense as the company grows larger and that broadcast advertising will follow as it expands even more.

    In the end, financing matters more to most car buyers more than a cool delivery gimmick like the vending machines or ads on TV.

    Carvana is doing very well in this area, financing approximately 70 percent of its customers.

    Mark Jenkins, Carvana’s chief financial officer, said technology helps there, as well.

    “I think (that is) a number that’s enabled by the technology that we’ve built to provide a very seamless experience to customers who could very easily fill out a credit application form on their phone or desktop, and select from a wide variety of financing options that we make available in a very transparent way,” Jenkins said.



  • It Ain't Me Babe


    At the recent NABD conference, attorney Tom Hudson said he is often criticized for sharing bad news that might draw the attention of regulators. I hear the same complaints from time to time. The reality is the regulators are not paying that much attention to us.

    What they are paying attention to are stories like this one from WPIX in New York that bears the headline: "Single mom says used car dealer swindled her out of 2 years’ worth of savings." And another reminder that the story that drew the attention of the CFPB to Herbies, the Colorado buy-here, pay-here dealer, was a positive one.

  • To Report or Not to Report Remains Question for Dealers

    There was a time when buy-here, pay-here dealers wanted to report to the consumer credit agencies and they couldn’t because their volumes were too low.

    Now they can, but many are growing unsure if they should.

    Regulations created in the past few years aim to allow smaller creditors, such as dealers, to provide information on their customers.

    This seemed like a great new opportunity at first, but many buy-here, pay-here dealers are finding it comes with risks for both them and their customers.

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    Giamalvo said the Consumer Finance Protection Bureau has published several guidelines on how to properly report consumer credit.

    One easy way to get in trouble is by offering more than you can deliver.

    “If you promise to repair your customers’ credit, you are inviting in the CFPB,” said Ken Shilson, founder of the National Alliance of Buy-Here, Pay-Here Dealers.

    One risk for dealers is that some dealer management systems automatically forward information to the bureaus, increasing the chance of wrong information winding up in a report.

    Dave Brotherton, a Twenty Group moderator with the National Independent Automobile Dealers Association, warned there is also a chance subprime finance companies will use the data supplied to the credit bureaus to poach buy-here, pay-here customers.

    Nick Markosian, owner of Markosian Auto Sales in Taylorsville, Utah, said he reports to the bureaus. But he does this because he also offers outside credit and moves customers off his own books when their scores improve.


  • NABD Founder Prepares to Step Back

    Attendees at this year’s National Alliance of Buy-Here, Pay-Here Dealers heard about all kinds of ways the industry faces changes.

    The event itself is about to undergo its biggest change in almost 20 years.

    NABD founder Ken Shilson has announced his intention to sell the rights to the event he has been running for 19 years.

    Shilson turned 68 in January. He said it was time to step back from the pressures of putting on the conference.

    “I can’t do it forever,” he said. “The day-to-day management is getting to be more than a 68-year-old can handle.”

    Shilson plans on turning the NABD over to an experienced event management firm. His main condition is that NABD be maintained as a unique event.

    Shilson said he would seek input from attendees on how the NABD should move for- ward under new management.

    Shilson is stepping back at a time of tremendous challenge and change for the industry.

    Benchmarks for the buy-here, pay-here business are the worst in two decades, and could get even worse, Shilson said.

    Buy-here, pay-here dealers today face an array of challenges, including increased regulations, changes in accounting practices, higher inventory costs and increased com- petition.

    “You just need to be a better operator these days,” Shilson said.

    The NABD benchmarks show that gross profit has declined to 29 percent of vehicle sales from 31 percent last year.

    Bad debts as a percentage of sales have grown to 27 percent from 25 percent last year.

    Shilson said the answer isn’t to try growing out of the situation.

    Too many dealers have already taken on extra debt, with total debt growing to 62 percent of total as- sets from 56 percent last year. he said.

    The better solution is to make operations more efficient.

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    Bill Neylan, president of TRS Tax Services, said they warned dealers last year that changes to federal law would squeeze tax season into two weeks.

    Instead, it wound up being two days – Feb. 21 and 22.

    Neylan said one of the stores he works with printed $1 million worth of refund checks in one day.

    “It’s impossible to capture two months of sales in two days,” Neylan said.

    He said one of his local dealers had 100 cars on his lot in January. By April, the store was closed.

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  • Payment Devices’ Status Safe Despite Proposed Laws

    Payment assurance technology providers are preparing to fight back a new wave of legislation aimed to curb the industry following yet another negative press report.

    This time the bad press comes from CBS News, which aired a story that featured a couple whose car was shut off while at a dialysis treatment.

    The piece ran on several network affiliates.

    Corinne Kirkendall, vice president of compliance and public relations at PassTime, said she expects the same pattern as when the New York Times ran a negative article about the devices.

    “About every two years we get an uproar,” Kirkendall said. “We go back and we re-educate everybody.”

    This past year that effort included helping to shape a bill in New Jersey that started as much more harmful to the industry, its clients and their customers.

    “We’re all for responsible legislation, but we’re not all for legislation that takes away the consumer’s ability to get into a car,” Kirkendall said.

    The good news is legislators are moving toward making sure the industry uses best practices rather than banning the devices outright, said Nicole Munro, an attorney with the law firm Hudson Cook.

    “The legal status of the (payment-assurance) industry isn’t in jeopardy,” Munro said.

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    “If there were a regulator that says, ‘This is how to use them,’ they can better assess the risk,” Munro said.

    The future is not guaranteed.


Vending Machines Prove Good Investment for Carvana

Vending Machines Prove Good Investment for Carvana

Used-car chain Carvana is seeing strong growth thanks in part to its unique marketing, but also because of an old-fashioned basic of the business – financing. The Phoenix-based company is...



The National Alliance of Buy-Here, Pay-Here Dealers has inducted several high-profile operators into its Hall of Fame. But this year the NABD took the opportunity to honor somebody who played...

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