Draw your own conclusions, but ultimately one event Collapsed an entire company. Finance Companies have too much power and control. Illegal? I think yes and I would love to know if this happened to other dealers across the country as well.
To protect the identity of the finance company because I am looking into litigation, I will call this Finance company, Sea Funding.
End of March I get a phone call from my Rep at Sea Funding, he was all excited, he told me that I only had to sell 12 more cars to fill my bucket. A bucket is a certain number of cars sold through one finance company and they pay you a big commission/payout for doing the deals with them. I asked him what is my bucket worth? He said right now it is worth $85,000 if you close it now. Now it could be worth more because I was going to add 12 more cars to the bucket.
We normally sold 12-15 cars per month through this lender, so I knew by the end of April I would probably have my bucket filled. I got very excited and called my entire staff in my office and ordered 12 GPS units. I instructed everyone to sell as many cars through Sea Funding as possible. I even stated I didn’t care if we sold the cars at breakeven just push them through Sea Funding.
End of April came and I pulled sales reports. Not one Sale was sent through Sea Funding. I called my entire staff in and in a professional manner I bitched them all out and said WTF, we normally sell 12-15 cars a month through Sea Funding. All the staff said, we are trying to send the deals to them but they are not getting approved. I then stated I don’t care what it takes I want this bucket filled, get to work.
End of May comes I pull sales reports. Not one Sale was sent through Sea Funding. Now I am totally irate. I call my entire staff in and tell then their jobs are on the line, if they can’t fill this bucket I am going to find someone who can. They all agree to do everything in their power to send the deals to Sea Funding.
Middle of June I start checking sales reports and no deals with Sea Funding. I call the staff in and we all sit down and talk. Seems they are trying everything to get deals done and can’t. I then pick up the phone and call my rep at Sea Funding and tell him my concern. He says, I was wondering why you haven’t been doing deals with us, let me do some checking and I will see if I can figure out what is going on. A few days later, the rep at Sea Funding calls me to tell me he figured out what happened. Someone at the company went in and changed my Rating from a Class 1 dealer to a Class 5 dealer. He said he had no idea why because I was rated an A in every single category they rate. He said the only thing I could do was to call the corporate office that he has no answers and couldn’t do anything for me but he said I should have never been changed to a level 5.
Rating Defined: Depending on volume, compliance and performance a dealer is rated by a finance company. The better the rating the more deals the finance company will approve and the larger the checks. Many times, a dealer rated a level 5 cannot get any deals done, while a Dealer rated a level 1 can get almost every single deal approved and closed. So changing a dealer from a level 1 to a level 5 is the kiss of death and will kill a dealership.
I then get on the phone to the VP, the Regional, all sorts of people in the corporate office. I sent emails and had many conversations over the next couple weeks. Every single person I talked to said they had no idea why my rating had been changed. Not one person could give me an explanation. To this day no one has been able to answer why our rating was changed.
My guess is, they could see I was about to fill my bucket and changed my rating to ensure I didn’t make my goal and fill that bucket. I wonder how many other dealers they did this too? I absolutely think it was done on purpose.
Ultimately, not only did we lose our bucket of over $85,000 but we also lost 12-15 sales per month for 4 months. That’s a total of 48-60 lost sales over the course of 4 months. These lost sales totaled around $720,000 and ultimately forced my business to go under. We built our business based on sales history and we could not sustain a loss of $720,000 in sales in a 4-month period.
So what do you think? Did the finance company change our rating on purpose out of greed? They didn’t want to pay out the promised bucket? Only time will answer this question.