Historically, dealers banked on the Blue Sky of their business and the underlying real estate as keys to their long-term wealth development. However, the ever-changing franchise landscape and complexity of the business model have made these wealth creation cornerstones much less reliable and insufficient.
In addition to Blue Sky and Real Estate, incremental approaches to wealth development are vital. That is the development of non-dealership assets, such as reinsurance, captive and self-insurance, and dealer-owned finance companies. Even though dealers have been participating in underwriting profits of the products utilizing this opportunity and, frankly, leaving money on the table. ADG’s experience will help you analyze programs and make choices that are best for you and your customers.
To drive a really extraordinary return on investment typically takes gains on efficiencies within an existing business model that previously were not available. We accomplish just that through the utilization of a turnkey dealer-owned finance source that specializes in lower tier credit. As a dealer, you will experience new efficiencies and ultimately an extraordinary ROI. This will allow you to maximize your existing business while developing an entirely new asset outside of the dealership.
ADG has a finance company called Genessee Financial that was built entirely with the idea to enable dealers to have their own turnkey finance company. We provide the expertise of a proven business model, including a proprietary scoring system, complete underwriting, loan servicing, loss management, reporting and the people to make it happen. We even put up a portion of the capital.
At the end of the day, without increasing advertising, our dealer-partner owns a finance company, captures otherwise lost sales, creates new customers and improves dealership overall throughput. Because the attributable expense is so low, these new sales have high profit retention. Also, we are able to do this in a classy and professional way, we mitigate any potential risk of damage to your core brand.
We even have ways to help you access capital to support such a venture that you may have never known existed. Even though dealers have been participating in the underwriting profits of the products they sell for more than 30 years, we’ve found that most haven’t given a tremendous amount of effort to maximizing the available programs. At first glance these programs may seem complex with different structures, insurance carriers and tax implications. ADG can help you navigate these programs and make sure the choices you make are optimal for your dealership and business strategy.
We can show you legal and insured ways to hold the reserves for the products you sell. The advantages include allowing you to offset floor plan accounts, improve liquidity or control investment choices.
With no set-up costs, no annual expenses to consider and no tax implications involved, retrospectives offer the easiest mechanism for a dealer to participate in the underwriting profit and corresponding investment income of the products they sell.
For dealers who want to earn the highest return available from underwriting profit and investment income, owning a reinsurance company can have additional benefits such as preferential tax treatment, estate planning and key employee retention.
Most F&I products play a role in a wealth development. However, many programs are subject to cost and income sharing provisions that unnecessarily inhibit dealer’s income. ADG’s experience will help you analyze programs and make choices that are best for you and your customers.