LAS VEGAS -

The National Alliance of Buy- Here, Pay-Here Dealers (NABD) recently completed two BHPH training conferences which were held at the Wynn Las Vegas on May 18 through 22. These two conferences included more than 100 speakers and approximately 1,700 attendees who participated in a BHPH Compliance Academy and the 16th annual National Conference.

The goal of the Compliance Academy was to connect the “ideal compliance world” of the regulators with the “real world” BHPH operators navigate daily. The National Conference that followed the Academy focused on helping make 2014 a better year by overcoming the special finance competitive challenges in 2013.

Because not everyone in the industry was able to attend these conferences, this article will summarize the most important “takeaways” which came from BHPH week. NABD’s goal is to help BHPH operators become more successful through training, networking and by providing performance benchmarks.

Highlights from Compliance Academy

At the Compliance Academy, the presenters explained that many operators are suffering from “compliance denial.” That is, they focus on selling the “next vehicle” instead of “getting compliant.” Other operators feel they will be “exempt” from regulatory scrutiny because they are small or because they are in geographically remote locations.

Neither of these beliefs are valid. In fact, regulators are likely to target these types of operators because they are “easy prey” from a non-compliance perspective and are a great source of audit revenue. Unfortunately, the industry will be judged based upon the worst—not the best. We all must comply.

Generally, BHPH operators are unwilling to commit significant dollars to compliance in the highly competitive environment of today. Such unwillingness will likely prove to be “penny wise and pound foolish,” because compliance has become a necessary cost of doing business in the BHPH industry of today.

Further, the initial compliance steps and best practices discussed at the Academy include appointing a chief compliance officer, keeping current on regulatory developments and installing a complaint resolution system. None of these initial steps are cost prohibitive. Instead, they are good business practices, which will provide long-term benefits.

Many of the new compliance tools showcased in the exhibit hall are available to help operators navigate their compliance journey. The three-day sessions were audio recorded, and these recordings will be available by calling NABD headquarters at (832) 767-4759 or by ordering online at www.bhphinfo.com.

National Conference Rundown

During the conference, I discussed 2013 industry performance and released updated benchmarks. These can be downloaded free of charge at www.subanalytics.com. An initial review of these benchmarks indicates that last year was a very challenging period for even the best operators.

Special finance competition significantly reduced profitability and market share by “renting” some of the best BHPH customers. I have previously authored articles on the high level of repos the special finance lenders are now experiencing from “putting too much vehicle with too little customer.”

Their losses will continue during 2014 from these “silly loans.”

If 2014 is to be better, operators must approach the market differently. That is they must reconnect with prospective customers who were “lured away” and invest in technology to become more efficient and competitive. Two ways to do that were explained at NABD 2014.

In case you missed it, AutoTrader has recently launched a new Buy-Here, Pay-Here Center online where BHPH operators can participate free of charge during the next 12 months. This great new portal is dedicated exclusively to BHPH customers and is an excellent way to connect with millions of prospects.

In addition, Manheim has developed some impressive new inventory sourcing tools that will help operators find the inventory they need more efficiently. Operators should familiarize themselves with these tools as soon as possible. Visit www.bhphinfo.com for more information.

Parting Thoughts

Despite the compliance challenges ahead, BHPH profit opportunities will improve as subprime customers and repossessed vehicles return to the BHPH market from special finance deals that default. However, operators should not expect different results if they continue to do the same things.

The Internet and other technology is needed to improve competitive efficiencies. This will require some short-term investments in exchange for long-term benefits. Operators must have financial flexibility in order to capitalize on the profit opportunities.

A controlled growth strategy with an emphasis on improved customer relationships and compliance will help. Where can operators learn the best ways to improve their operations? Networking, reading and dealer training are most valuable when the old ways are not working as they used to. Good luck!

Ken Shilson is president of Subprime Analytics (www.subanalytics.com) a consulting company that provides subprime portfolio analysis services and custom credit scoring solutions (Profit Max). Subprime Analytics utilizes state-of-the art data mining and extraction technology in order to identify loss trends and areas for underwriting improvement. Questions can be directed to him at ken@kenshilson.com. Shilson is also founder and convention chairman of the National Alliance of Buy- Here, Pay-Here Dealers (NABD). For information about upcoming BHPH training events visit their website at www.bhphinfo.com or call (832) 767-4759.