Change & Challenges Highlight a Great Start to 2012

1. Change & Challenges Highlight a Great Start to 2012 GREG GOEBEL, CEO AUTO DEALER MONTHLY

2. Welcome! Thanks to sponsors and staff Subprime Sponsors

3. Food For Thought… • Experian defines Prime credit at 680+ • Average credit score for a used car buyer is 659 meaning more than half are subprime

4. Food For Thought… • Experian defines Prime credit at 680+ • Average credit score for a used car buyer is 659 meaning more than half are subprime • Subprime loans accounted for 44% of auto loans in Q2, up 41% from 2011.

5. Food For Thought… • Experian defines Prime credit at 680+ • Average credit score for a used car buyer is 659 meaning more than half are subprime • Subprime loans accounted for 44% of auto loans in Q2, up 41% from 2011. • According to Equifax, in Q1, new vehicle buyers with credit scores <680: • Hyundai/Kia, 31% • Chrysler, 29% • GM, 23% • Ford, 20%

6. Food For Thought… 1Q2012 Percentage of 2012 Model Sales Subprime: Mitsubishi Galant, 43% Suzuki SX4, 41% Dodge Avenger, 39% Kia Forte, 37% Dodge Caliber, 36% Nissan Sentra, 26% Chrysler 200, 24% Dodge Journey, 21% Nissan Versa, 21% Chevrolet Sonic, 20%

7. Don’t Call them “Bogues!” • Well written F&I scribe’s favorite term. • “…sick of being nice to them. Pay your d*mn bills and lose that smart-@ss entitlement attitude. You did it to yourself…”

8. Don’t Call them “Bogues!” • Well written F&I scribe’s favorite term. • “…sick of being nice to them. Pay your d*mn bills and lose that smart-@ss entitlement attitude. You did it to yourself…” • Unemployment hit 10% • Underemployment may be worse • More subprime pre-owned buyers than prime • Is your business really too good for them? • …call them valued customers!

9. Why Can’t We All Just Get Along? • Conflicts rule the dealerships! • New vs. Used • Used vs. Service Department • Internet vs. Bricks & Mortar • “Me” vs. “We” • Dealer’s plans vs. Company Agent’ s plans • Is there any wonder why we feel like firemen/women more than managers? • Prime vs. Subprime

10. Prime vs. Subprime • 80% of all stores are at odds • Comp plans are the often the root of the conflict • Two scenarios • F&I hangs a deal that costs them money to contract • F&I Manager vs SF Manager: Someone has to lose for the other one to win • Fix it and everybody wins: More sales, more F&I products, more gross profit

11. 2012 SF Benchmarksby Greg Goebel Training & Consulting Overview of the results: Huge shift to new vehicles in SF Surprise drop in deal gross profits Poor deal structure is generally the culprit Down payments have increased Dealers spending more for marketing Per deal F&I gross profit up significantly

12. Average SF Retail Price

13. Average Net Cash Down (PRU)

14. Average Trade Down (PRU)

15. SF Units as a Percent of Total Retail Volume

16. Average SF Units Sold per person in SF dept. 2012 Franchise Benchmark – 9 2012 Combined Benchmark – 9 2012 Independent Benchmark – 8

17. Special Finance Manager(s) Average Comp.

18. 2012 SF BenchmarksAdvertising/Marketing Spend

19. 2012 SF BenchmarksAd Spend by Media TOTAL = $22,258

20. 2012 SF BenchmarksLead Count & Percent of Total Leads

21. 2012 SF BenchmarksSales and Conversion % by Lead Source 59 Units = 13.9% conversion rate

22. 2012 SF Benchmarks:Sales Volume

23. 2012 SF Benchmarks:Deal Gross Profits

24. 2012 SF Benchmarks:The Basics – Year over Year

25. Industry is Ever Changing Capital is flowing

26. Industry is Ever Changing • Capital is flowing “Wall Street analysts say inventors are lining up to pump funds into the auto lenders…” Survey of finance company executives indicate their concern is that industry is quickly forgetting its lessons of four years ago and going people will soon hit the wall.

27. Industry is Ever Changing Capital is flowing Auto loan collections never better

28. Industry is Ever Changing Capital is flowing Auto loan collections never better SAAR is soaring

29. Industry is Ever Changing • Capital is flowing • Auto loan collections never better • SAAR is soaring • Europe be damned, the U.S. market is back • Now at 14.5 M new vehicles • 2013 forecasts for 15+ M new vehicles • Used vehicle market rebounding also

30. Industry is Ever Changing • Capital is flowing • Auto loan collections never better • SAAR is soaring • Consumer Financial Protection Bureau is here! • 1100 employees by 2013 • 10% of entire Federal Reserve budget • Effects everyone directly or indirectly • Communicates directly with FTC • MUST show “heads-on-sticks” to prove value

31. Industry is Ever Changing Capital is flowing Auto loan collections never better SAAR is soaring Consumer Financial Protection Bureau is here! Huge shift towards new vehicles in SF

32. Industry is Ever Changing Capital is flowing Auto loan collections never better SAAR is soaring Consumer Financial Protection Bureau is here! Huge shift towards new vehicles in SF This adds up to more sales and profit opportunities – but with added risk.

33. NCM Associates Benchmarks® NCM Associates, Overland Park, KS Originators of the Automotive 20 Group program in 1947 Have been producing industry Benchmarks® for over 60 years. Benchmarks® are based on 75th percentile of profitable dealers Serve as a measuring stick for you results

34. NCM Associates Benchmarks® Monthly F&I Gross Profit Distribution

35. NCM Associates Benchmarks® Monthly F&I Gross Profit Distribution

36. NCM Associates Benchmarks® Sales Penetration and Gross Profits * Indicates penetration percentage of financed contracts

37. NCM Associates Benchmarks® Sales Penetration and Gross Profits * Indicates penetration percentage of financed contracts

38. NCM Associates Benchmarks® Prime F&I: Net Per Retail Unit * Net after all chargebacks and F&I compensation paid.

39. Reverse Math Net F&I per car: $987 Average Chargeback/car:$135 Subtotal $1122 Commissions @ 22% $ 217 F&I Gross Profit at sale $1339 per car

40. In Summary • Balance of 2012 and 2013 should be strong • Sales of Finance & Insurance products stronger than ever. • Credit market still trending down • Huge increases in new car SF volume • Well over half of used vehicle loans are SF • Put a plan in place to reduce conflict and everyone at conference is a winner.

41. Before You Leave… Finance Survey – Please complete it Going to break – Finance Companies

42. So How Do You Get There? Enjoy the sessions today and tomorrow, learn and profit!