Luxury car expert: Driving $725M in sales a year! Slinging Porsches and Land Rovers

Welcome to another episode of the Car Dealership Guy Podcast.

Today’s guest is Dennis Gingrich, Sales and Finance Director at The Niello Company, who takes a deep dive into all things F&I (finance and insurance). Dennis has been in the car business for 27 years and has held a number of roles across the industry. At Niello, he continues to apply his knowledge of F&I to boost profits and ensure the success of the brand’s luxury car business.

You can stream the full episode now on YouTube, Spotify, or Apple.

1. Dennis’ career.

Dennis started as a car salesman in 1997, around the age of 18, but didn’t get really serious about the business until after finding out he was going to have his first kid at 20. After becoming an F&I manager, an acquaintance at insurance firm Zurich North America got him a position at the company’s corporate office. Because of his management experience, the transition from retail into corporate life was easy, which he says is due to both jobs’ focus on helping subordinates improve their performance. “It was all about getting things done through other people,” he explains.

2. Successful vs. unsuccessful dealerships.

Dennis believes there is one key difference between a successful dealership and an unsuccessful one: the ability to differentiate between something that can be controlled and something that can’t. He explains that while some factors can be predicted and mitigated, many things in the car business simply won’t go according to plan. Having a sense of humility allows employees and managers to take accountability when things go wrong and make more effective decisions than those who pretend to know all the answers.

3. The Niello Company.

The Niello Company was founded in 1921 in the Bay Area. Today, the family-owned business employs around 650 workers and runs 10 storefronts in Sacramento, with multiple franchises including Porsche, Jaguar Land Rover, Acura, Audi, BMW, Mini, Volkswagen and Volvo. The brand sells roughly 1,100 retail units a month, with $725 million in annual sales. Dennis attributes the company’s success to its core values and culture, which owes much to the kindness and empathy of the owners.

4. F&I performance.

Since Niello is focused on luxury vehicles, it naturally sees higher profit margins than other groups. This is also true for its F&I department. Porsche and Jaguar Land Rover tend to see the best F&I earnings, followed by BMW, Audi, Volvo, Acura, and then Volkswagen. However, Niello’s back-end earnings are particularly strong, outperforming several of the top public dealership groups. Dennis has seen the brand’s F&I PVR (Per Vehicle Retailed: a measure of how much profit each sale generates) double in the short time since starting his leadership role. He notes that investments in training, heightened awareness of how important F&I is to a dealership’s financial health, strong team players, and incentives to improve performance among employees helped reach this achievement. 

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5. The importance of merchandising.

The dealership group has started to focus on its used car business in recent years, which Dennis notes has resulted in an emphasis on proper merchandising and pricing. Niello, he adds, has a very specific philosophy when it comes to merchandising: “We would rather not have a car deal [than risk] losing a customer because we didn’t treat them right or give them a good product.” In other words, the company only sells vehicles it believes are the right fit and price for customers, a sentiment it backs up through its seven-day, no-questions-asked return policy. While this philosophy has made factors like meticulous reconditioning essential, it has also served to solidify the brand’s reputation as a trustworthy business, driving its preowned sales. Another element boosting the performance of Niello’s used car business is its streamlined process for acquiring and processing inventory. Beating depreciation is essential to maximizing profits in the preowned market.

6. Reconditioning processes.

Reconditioning costs per vehicle average roughly $4,000 across Niello’s franchises. While this isn’t surprising for a luxury dealership, making a profit with such a big up-front expense does require some effort. Dennis explains that it boils down to running a proper appraisal process and having transparency with the customer trading or selling their vehicle. Factoring reconditioning costs into appraisals helps guide the process and ensures profits are maximized down the line.

7. Why photography is crucial.

Photography is an extremely important component of car sales. Dennis notes that each store in the Niello group has in-house staff responsible for taking pictures of vehicles as they enter inventory and using Dealer Image Pro to ensure a consistent look. “Twice a week, we really measure what percentage of our inventory, new and used, has photographs, because if it’s not photographed, chances of somebody clicking on that vehicle, submitting a lead just plummets significantly,” he remarks. “I believe if you do not have photos, you’re not going to sell that car.” 

8. F&I processes.

Sales staff at Niello’s dealerships are trained to mention specific F&I products to customers during the initial proposal. The reason for this is that consumers show interest in purchasing finance products like protection plans, but only if they’re introduced early in the conversation. Dennis notes that security-focused products like warranties continue to perform especially well, which he thinks is related to the high inflation environment. Consumers are looking for ways to mitigate risk, and these products can help protect their investments. Cosmetic products are also seeing increased interest across Niello’s dealerships.

9. Challenges for dealers.

From Dennis’ perspective, affordability remains the number one concern for dealers and consumers. Even though Niello specializes in luxury brands, it still sees many customers desperately searching for deals across its franchises. Particularly worrisome are interest rates, which have yet to decline despite some encouraging signs from the Federal Reserve. The Federal Trade Commission has also become more aggressive in recent years, making compliance more difficult and onerous for dealerships.

10. Looking ahead.

However, Dennis remains optimistic about the future of the industry, even though the economy continues to present challenges for both dealers and consumers. “America, its citizens, [have] a love affair with their cars,” he observes, which has helped drive demand higher and higher for the last three decades. As the car business continues to evolve, he expects to see dealers become more efficient at meeting customer needs, speeding up the transaction process, and making the entire buying experience more enjoyable.

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