Tax Season is the busiest time of year for all dealers, but especially BHPH dealers and subprime finance companies. Used vehicle sales are expected to increase 20-30 percent in the last week of February as tax refund season begins, according to Jonathan Smoke, chief economist of Cox Automotive. IRS refund checks will begin arriving shortly after Valentine’s Day. Over the past two years, the IRS distributed almost 50 percent of refunds by the ninth week of the year, which would be the last week of February. Peak demand usually ended by the 16th week of the year, or mid-April, which is when about 90 percent of tax refunds have been distributed. Many billions of dollars will be sent from our government back to credit-challenged consumers who always need affordable, reliable transportation.
Are you ready for Tax Season?
Did you secure funding to be able to purchase the additional 20-30 percent more vehicles you will need? Have you secured the right inventory? Inventory that’s acceptable not from just the consumer’s perspective, but vehicles your financing sources will find acceptable if you use indirect lenders, or vehicles that fit your BHPH business model. Selling vehicles is always easier during Tax Season as customers are flush with Tax Refunds. It’s important to remind yourself to closely adhere to your policies and procedures. It’s easy to wave a few stips when you’re staring at a $4,000 down payment, but it could serve to boost your delinquencies and charge offs months down the road. Also, it’s important not to take the full refund from the consumer. While affordable transportation is vital to consumers with subprime credit, they have many other expenses as well.
Marketing and Advertising
You could be tempted to ratchet up your marketing and advertising budget this time of year. However, when customers have cash they seek you out if you’ve secured the right inventory. Be sure you website is up-to-date, and if you’ve done a consistently good job of keeping the website fresh and optimized throughout the year, they will find you. Be sure to use your social media presence to discuss your “Tax Season Specials” or other messaging during this business time of year.
Is your dealership fully staffed to handle the greater influx of customers? If you typically have your sales team make outbound sales calls and handle inbound inquiries as well, you may want to hire temporary staff to field inbound calls. It will be far less expensive to hire and train a part timer rather than lose deals because salespeople are forced to stop working with a customer in front of them to answer a phone or email up. You will have to move more vehicles, and that will mean far more hours in reconditioning and moving vehicles. Beefing up your recon team is definitely important. Speaking of vehicles, make sure your lot if full of front-line ready vehicles. Get employees to park elsewhere. Move repos and mechanical-issue vehicles off site. When your customers come on the lot it should be inviting and loaded with high-quality inventory. Be sure your team starts the vehicles at least every other day and if you have GPS devices make sure you’re monitoring them for low vehicle battery alerts. Make sure the seats are adjusted to accommodate the majority of customers, and popular radio stations are pre-set. Go across the street and look at your dealership like a prospect might. You’ll notice things you wouldn’t from inside your office, and you can direct your staff to spruce things up.
Technology and GPS
Almost all BHPH dealers who hold their own notes or sell them off put some type of GPS tracking unit on their vehicles. Most finance companies who buy notes, or capital providers to the BHPH industry require GPS tracking devices. Some require starter-interrupt, while others do not. BHPH dealers and finance companies need to locate their vehicles in the event of a customer default, but today’s devices do so much more. The data they collect helps with stip verification and assists in making current collection decisions. Longer-term, the data they collect is very valuable, and with the addition of artificial intelligence can help with future funding decisions. Think of it like a researcher that never sleeps and only thinks about improving and optimizing your portfolio.
Advantage GPS offers a menu of products and services designed to fit the specific needs of our customers. We were the first in the industry to introduce a family of completely battery-powered GPS units. The wireless Revo GPS devices are backed by our event guarantee and include a core exchange program. Just last month we introduced a waterproof and a VIN Verify device to our line of wired Evo products. VIN Verify automatically recognizes the vehicle’s VIN when it is plugged in and activated. Finance companies love this feature as it ensures the vehicle, they’ve funded is the vehicle monitored by our GPS.
Other technologies to consider include an upgraded DMS. Today’s DMS systems provide far more information and can make accounting much easier. For those in Dealer 20 Groups, the monthly data needed for Composite Reports is easily accessible. Consider payment processing kiosks to make it easier for customers to pay. Texting customers is really important and encouraged, but please note the Telephone Consumer Protection Act has very stringent rules and steep fines if those rules are not followed. Some texting platforms allow for sending payment notifications to your customers who opt-in, and enable them to send a payment using that same texting platform. It’s really cutting-edge. Hey, if you’re going to utilize the most current technology why not spend a little money to make it easier for your customers to pay you?
We hope you have very successful and profitable 2020 Tax Season. If you are interested in using the most cutting-edge GPS technology be sure to check out our Advantage GPS Tax Season Specials!