Used-vehicle inventory became harder to find and more expensive to acquire this year, and for Charlie Spradlin, sales director at Art Moehn Auto Group, that created a straightforward problem.
"There's a used-car shortage," he told Sam D’Arc, host of Daily Dealer Live. "And really, we kind of have a new car shortage as well, compared to what we're used to. So you have no option other than paying more."
Paying more to acquire meant margins on the front were getting squeezed.
And in turn, the only place to make it up was the back end, which meant fixing how his team approached F&I first.
The F&I fix: For a long time, Spradlin's team said no to more deals than not, always ready with an answer why.
The car was too cheap. The customer wasn't a good candidate. The price point just didn't support it.
But when inventory dried up, he decided that mindset needed to stop.
"The biggest change we made in our process was throwing out the excuses, throwing out the option to fail just because a car isn't a good car for F&I," he said. "A car deal is a car deal. It should always be like that."
Charlie Spradlin
With that shift in mentality alone, F&I PVR crossed $2,000, a meaningful jump for a store retailing everything from $1,000 beaters to $110,000 trucks.
Spradlin credits the mindset swap for the upswing.
"We let that be an out for a long time," Spradlin said. "And I just think that difference mentally just changes the game."
Turning to sourcing: With the back end producing, Spradlin said he then turned his attention to where the cars were coming from.
The group had already been working the service lane for some time, and at its peak was pulling 20 to 30 cars a month from it.
Sustaining that number, he said, just comes down to avoiding knee-jerk reactions to slower months.
"It's one of those things that you just have to be steady with. You can't take 60 days of results and be like, 'It's not working, I'm tossing it out.' You have to do it over time, and you have to commit to it."
For example, he said January was slow, that February rebounded, and that (so far), March is trending stronger.
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Looking ahead: Spradlin's target is 100 to 200 acquired units per month outside of trade-ins. And to hit that, he's creating a dedicated internal acquisition department separate from sales, with its own manager and headcount.
As he sees it: "If we're going to go to a place where we're acquiring outside of auctions—100, 150, 200 cars a month—you need to have a department dedicated to it," he said. "You can't just have one guy. It has to be a culture of acquisition."
For now, the group has two buyers: one a private-party specialist and the other a service-lane specialist.
But eventually, Spradlin plans to scale that to around ten.
During his segment on the show, he even noted that he recently brought in outside acquisition consultant Frank Knox to help build toward that goal.
"I'm not the smartest guy on the planet. I don't know everything," he said. "It's important to get people around you that will help you build this kind of stuff out."
Worth noting: Running a centralized buy center across three rooftops raises an obvious question, aka which store gets what.
In this case, though, Spradlin says proximity helps.
All three locations are within 15 miles of each other, and because he controls the sales process across all of them, internal friction, for the most part, doesn't exist.
"It takes away a little bit of that GM ego competition," he said. "This is what we're doing, and we're doing it as a group."
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