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

Less Tech, Less Regulation Made Past A Mixed Bag

Less Tech, Less Regulation Made Past A Mixed Bag Featured

For used-car dealers who have been in business for a while, the past was both good and bad.

South Carolina dealer Billy Threadgill, president of the National Independent Auto- mobile Dealers Association, said starting out was much easier when he became a dealer 40 years ago.

Back in the 1970s, a dealer didn’t even need a bond. They could start with a deal- er license, a lot and some insurance.

“That’s probably the extent of it,” he said. “Today you will work harder for less money and most dealerships today start out under-capitalized.”

He said a low-end car lot — without floor-planner backing — would probably re- quire a minimum $100,000 in capital.

Back in the 1970s, Thread- gill’s father started the business with a $15,000 mort- gage.

Acquiring inventory in the past had both advantages and disadvantages.

Jerry Smith, co-owner with his dad of H.L. Smith Automobiles in Hurst, Tex-as, started in 1971.

When Smith started, he could easily get dealer trades by visiting franchise stores late in the evening or first thing in the morning. Smith would ask about any trades and the used-car manager would have several cars in the back and throw him the keys.

“Now, they either take them to the auction or they’d have a wholesale entity handle it,” Smith said. “Back in the 1970s or ‘80s, I could actually test-drive the car and do an appraisal and condition report myself.  Now when you buy and can’t test-drive them, you’re going to get some surprises.”

But for Threadgill, acquiring inventory meant living on the road.

“I stayed on the road continually to buy cars,” he said. “I’d leave my house on Sun- day and head to South Florida. I wouldn’t come home until Thursday night.

“I was also the truck driver. I brought them home. I’d go from Florence to Miami twice a week and be back on Friday to work.”

But life was cheaper then, too. Threadgill said he could take $100 to pay for all his fuel and most of his motel expense.

Once it came to writing up a car deal, there was paperwork – lots of paperwork.

“I used to have to type or handwrite (the deal),” Threadgill said. “Minimum, it was an hour to do it, if you had all the docs available to type up. Today, it may take you five minutes to enter the information and five min- utes to run your docs.”

Most dealers would use handwritten cards to track payments and delinquencies.

Threadgill used account cards set up by due date in a file system. When a customer came in and paid, he’d write it down. If they didn’t, you put them in an unpaid account file. Handwriting was important to make sure the information was clear and correct.

Smith said he used payment cards as long as he could until Texas passed an e-tag law so the dealership had to have a computer to generate it.

“But I still use payment cards,” Smith said. “I write conversations in red and payments in black or blue.”

Before the internet, print was king and was the main source of advertising for 78-year-old Ed Bass. Bass re- tired five years ago from the buy-here, pay-here business, Car Credit Center based in the Chicago area.

“I was in the Chicago Tribune, I was in the Chicago Sun-Times, I was in the Herald-American,” Bass said.

He later moved into radio, television and, eventually, the internet.

Smith said advertising was much cheaper in the past.

“Back then, you could do shopper’s guides or the local newspaper ads and they were cheap,” Smith said. “We did things like the Fort Worth Star-Telegram and you’re talking $2 to $3 for a small ad.

“In the 1980s, we even did a full-page ad in a little shop- per newspaper and it was $500 a week.”

Smith prefers the old way of advertising to the inter- net. For example, he had a vehicle advertised online that generated numerous hits, but sat on his lot for over a year.

“If there’s that many people looking at it, why in the hell ain’t somebody buying it?” he said.

Recovering cars without starter interrupt or GPS de- vices made parts of the job more tedious.

Without GPS, Threadgill and Smith worked the customer application and con- tact sheet to find the car through references, etc.

“Or you call them and tell them they won a free pizza, and get the address,” Smith said.

However, when Smith was forced to get a computer for e-tags, he also made the move to GPS units and realized how much easier it is.

“I’m telling you, I would never go back,” he said.

Regulations were not a problem decades ago

“I wasn’t worried when I came in to work that the CFPB (Consumer Financial Protection Bureau), the FTC (Federal Trade Commission) – and on and on – would come up to my door over stuff I never thought would be relative to our industry,” Threadgill said. “In 1975, when you did a deal, you had four documents if it was financed. Today, if you don’t have a file that’s two inches thick, you’re probably haven’t done something right.

“I think it’s much harder today than it was back then.”

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