Did you know….

• The average gross profit as a percentage of sales for Dealer Controlled Financing dealers (BHPH, LHPH & RTO) is 37% while it is only 15.2% for franchise dealers.
• The average net profit as a percentage of sales for DCF dealers is 16.5% while it is only 1.50% for franchise dealers.
• Service & Parts (typically the most profitable department in a franchise store) average net profit as a percentage of service and parts sales was 8.38%.

Adding a Dealer Controlled Financing operation to your existing franchise store will create a new profit center that is more profitable than any department in your current operation. 

• The average age of all vehicles in operation in the United States is 10.4 years.
• 87% of all used vehicles sold at franchise dealerships are 8 years old or newer.
• Franchise dealers wholesale the majority of vehicles in their inventory that are older than 8 years old.
• The average vehicle sold by a DCF operation is 10.8 years old, virtually the same as the average vehicle on the road.
• The average used car gross profit for DCF dealers is $4149 while it is only $2245 at a franchise dealership.

Why would you want to wholesale the vehicles your Used Car department is not going to sell and risk losing money at the auctions when you can retail those same vehicles through a Dealer Controlled Financing operation and make gross profits as high or higher than your average at your new car dealership????

•  70% of Americans have sufficient issues in their credit file that they may not qualify for conventional financing.
• 25% of the population has a credit score below 620, 15% below 550.
• The number of people with scores below 620 has grown by 78% in the last 3 years.

The number of customers looking to finance with a Dealer Controlled Financing dealer continues to grow.

• In 2010, DCF dealers originated 1.8 million loans totalling $24 billion dollars
• In 2010, 14.38% of all used car purchases financed were financed by DCF dealers
• In Q1 of 2011, that percentage grew to 20.13%

How many of these customers have walked into your new car dealership and left without a sale because you could not finance them? Now imagine how many more people never even came to your dealership because they already knew they couldn't get financed. Adding a Dealer Controlled Financing operation to your dealership provides a way to sell to all these customers.

Alan Mosher is a senior consultant at Constellation’s DCF Consulting Group, a provider of start-up, training and consulting services for Dealer Controlled Financing dealers.