Can I broker?

rg1 · 04-10-2014, 04:35 PM

Hi There, I'm new to the site and the auto industry. I currently have a wholesale license and I'm getting tons of request to buy new cars. I was wondering if I could setup a broker relationship with new auto dealers within a 500 miles square radius of NYC but I'm not getting good results with dealers, I'm leaving messages and no call backs what do you guys recommend?. thanks and for the help and best wishes.

DealerEx · 04-10-2014, 11:04 PM

Quote:

Originally Posted by rg1

I was wondering if I could setup a broker relationship with new auto dealers within a 500 miles square radius of NYC but I'm not getting good results with dealers, I'm leaving messages and no call backs what do you guys recommend?. thanks and for the help and best wishes.

I think you have the answer right there... in the responses you are not getting...most franchised dealers have no interest in dealing with an independent broker. They have millions of dollars invested in their franchise, and a ton of overhead expense in facilities, service equipment, parts departments, employees and training in order to have an exclusive right to represent and sell their products in a specific area. They resent the idea that you want to act as a middleman and make a profit selling their products with zero investment and no responsibility to take care of the customer after the sale.

Jeff Duvall · 04-11-2014, 02:40 AM

Well said DealerEx.....plus the manufacturers forbid brokering.

XDCX · 04-11-2014, 11:44 AM

rg1 - First post, Welcome to DealershipForum.

Like the others have stated, I concur that brokering vehicles is no longer in vogue and that would explain why you haven't had much of a response from the dealers you've contacted.

In addition to what's been stated above, I know some states have some pretty strict laws that limit brokering. Washington state passed a tough law several years ago in response to customers who lost their money because the broker they were using failed to convey the funds to the dealer to purchase the vehicle.

If you'd still like to pursue some opportunity to assist your customers who are looking for a new car, my suggestion would be to contact the Internet Department of some dealers in your area and ask if they have some "bird dog" or referral program in place.

mryan55 · 04-11-2014, 05:42 PM

Bird dog programs in their own right can be a slippery slope in some states, although I haven't (knowingly) run afoul of any bird dog laws, at least in my state. Of course, every state views that in a different light.

I do think there is a space out there for a new vehicle broker who isn't a broker in the traditional sense. But more of a matchmaker between buyer and seller... if someone is a product expert and has a sufficient business plan in place, why shouldn't they be able to find buyers and match them up with sellers?

Of course, deals for a such a broker could be few and far between, but they are definitely out there. I have a few experiences with such brokers, and I have one relationship that is very good.

If a new car broker wants to get involved, I think the best course of action would be to operate like a "TrueCar.com with a heart." TrueCar circumvents a lot of state-level broker laws by simply saying they are selling a lead to the dealership, and payment is only due if a sale is made. Of course, some states have debunked this sidestep made by Scott Painter and company, so in some states TrueCar now operates on a pay per lead basis.

I do some deals with a local credit union that has partnered up with a designated "vehicle matching service" that is located near the premises of the credit union. The communicate all of the figures with the credit union member, get a commitment, and then I get a normal retail delivery and usually get some finance or lease reserve. I pay them $350 on a car up to $50,000, $400 if over. It's a regular finance deal most of the time, or sometimes they go with their affiliated credit union if there is a rate special or anything like that... Ultimately I gain a customer for +/- $350, which is only a wee bit higher than my average advertising cost per sale.

Since there is no cash passing between broker and myself, and the NVDR and all else is no different than any walk in or internet lead, I'd like to think I'm in the clear.

There have also been some "know it all broker types" who I just want to kick out of the dealership... so other than this one local new car broker and TrueCar.com, I normally don't mess with any others.

Feel free to send me a private message if you have any questions... I do feel that there is a spot out there for such a new car "matchmaker" of sorts, but your cards have to played right!

XDCX · 04-14-2014, 11:12 AM

Quote:

Originally Posted by mryan55

I do think there is a space out there for a new vehicle broker who isn't a broker in the traditional sense.

I've often thought the ideal business plan for a broker would be one where the majority of the money is made from dealerships who are looking for sold units. How much would a dealership be willing to pay if they're just a unit or two away from their stair-step objective or if they're getting MSR hate mail from their OEM?

Granted, the deals would have to be structured in a manner that ensured that they were in compliance with state laws, franchise agreements and incentive rules.

Quote:

Originally Posted by mryan55

I do some deals with a local credit union that has partnered up with a designated "vehicle matching service" that is located near the premises of the credit union. The communicate all of the figures with the credit union member, get a commitment, and then I get a normal retail delivery and usually get some finance or lease reserve. I pay them $350 on a car up to $50,000, $400 if over. It's a regular finance deal most of the time, or sometimes they go with their affiliated credit union if there is a rate special or anything like that... Ultimately I gain a customer for +/- $350, which is only a wee bit higher than my average advertising cost per sale.

Since there is no cash passing between broker and myself, and the NVDR and all else is no different than any walk in or internet lead, I'd like to think I'm in the clear.

Interesting - thanks for the information. Does the "vehicle matching service" deal with more than one credit union? I wonder how widespread this practice is?

Also, if I can ask, do you pay a commission to a salesperson for deals done via the "vehicle matching service" or are they house deals?

mryan55 · 04-14-2014, 01:24 PM

The perfect place for a broker to be is to get money out of the dealerships pocket, not out of the consumer's pocket. Of course, if the title, registration, etc. is all executed between the dealership and the final end user there's not too much to run afoul of, you know?

I happily pay my $350 (or rarely $400 if it's an SRT over Overland Summit) for incremental sales that might be "the one" that gets me to my next level. I've never been to the point where a single deal has kept me from a fast start of VGP program, but that could definitely happen at one point!

The vehicle matching service works with just one credit union -- Eli Lilly Federal Credit Union -- the employee credit union of a rather large pharmaceutical company.

I usually pay a salesperson still... I just rotate the broker deals among salespeople so there's no favoritism -- and also so they deals are the same as any other retail deal as car as an auditor might be concerned, you know? Occasionally I just put them in my name... but not all the time.

Lakeshow · 04-15-2014, 04:38 PM

We still sell a good amount of new GM units, even though we haven't been a dealer since 2010. Of course these are through dealers/friends we have known for 35+ years. Right now we have three dealers who do this for us on a regular basis, and have used as many as five. These guys are more than willing to accommodate us for the 3-5 new units we still deliver through them every month. That being said they know us personally and know our reputation. Without that we'd probably be in the same boat. We have also set up relationships with a few foreign dealers as there are no foreign dealers in town, and that has worked well also.

Our customers sign purchase orders and all factory paperwork from the new dealer, as well as a purchase order from our dealership. We pay invoice minus incentives to the dealers, and keep the trades. It's been a great relationship for us as we desperately need the used inventory like everyone else. And it helps these guys obtain their sales goals as well.

Our local Chevrolet dealer who was gifted our franchise has challenged this many times to GM as we still out sell him on a continual basis. As long as everything is above board with the new dealer as far as paperwork, they have had no problem with this to date.

While I realize our situation is definitely unique, it can be done with the right relationships.

mryan55 · 04-15-2014, 05:06 PM

We also deliver a handful of vehicles for a terminated Chrysler dealer up the road from us. They voluntarily closed last year and are good to send us a few deals each month. I'm always happy to help as they have been nothing but helpful to me when I needed things over the years.

I guess I have a soft spot in my heart for the 5 car a month new car stores that have closed, since I got my start at one of those little guys!

XDCX · 04-16-2014, 11:16 AM

Quote:

Originally Posted by Lakeshow

Our local Chevrolet dealer who was gifted our franchise has challenged this many times to GM as we still out sell him on a continual basis. As long as everything is above board with the new dealer as far as paperwork, they have had no problem with this to date.

This was my favorite part of your post....

Congratulations on your continued success despite having your business being destroyed by GM's bankruptcy. Yours is another great example why the OLDCO terminations never made any sense.

XDCX · 04-16-2014, 11:17 AM

Quote:

Originally Posted by mryan55

We also deliver a handful of vehicles for a terminated Chrysler dealer up the road from us. They voluntarily closed last year and are good to send us a few deals each month. I'm always happy to help as they have been nothing but helpful to me when I needed things over the years.

I guess I have a soft spot in my heart for the 5 car a month new car stores that have closed, since I got my start at one of those little guys!

That's cool - Good Karma for you.

Some of the nicest people I've ever met in the car business either owned or worked at they type of store you just described.

mryan55 · 04-16-2014, 12:22 PM

Thankfully my auto matchmaking service has been busy... 2 retail deals thank to them so far today... otherwise I'd be at 0 today! Yikes!

See, new car brokering can work out if done right

!

04-10-2014, 04:35 PM	#1
rg1 New Member Join Date: Apr 2014 Posts: 1	Can I broker? Hi There, I'm new to the site and the auto industry. I currently have a wholesale license and I'm getting tons of request to buy new cars. I was wondering if I could setup a broker relationship with new auto dealers within a 500 miles square radius of NYC but I'm not getting good results with dealers, I'm leaving messages and no call backs what do you guys recommend?. thanks and for the help and best wishes.

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04-11-2014, 02:40 AM	#3
Jeff Duvall Senior Member Join Date: Jul 2010 Posts: 149	Well said DealerEx.....plus the manufacturers forbid brokering.

04-11-2014, 11:44 AM	#4
XDCX Administrator Join Date: Nov 2007 Posts: 14,869	rg1 - First post, Welcome to DealershipForum. Like the others have stated, I concur that brokering vehicles is no longer in vogue and that would explain why you haven't had much of a response from the dealers you've contacted. In addition to what's been stated above, I know some states have some pretty strict laws that limit brokering. Washington state passed a tough law several years ago in response to customers who lost their money because the broker they were using failed to convey the funds to the dealer to purchase the vehicle. If you'd still like to pursue some opportunity to assist your customers who are looking for a new car, my suggestion would be to contact the Internet Department of some dealers in your area and ask if they have some "bird dog" or referral program in place.

04-11-2014, 05:42 PM	#5
mryan55 Senior Member Join Date: Mar 2013 Posts: 595	Bird dog programs in their own right can be a slippery slope in some states, although I haven't (knowingly) run afoul of any bird dog laws, at least in my state. Of course, every state views that in a different light. I do think there is a space out there for a new vehicle broker who isn't a broker in the traditional sense. But more of a matchmaker between buyer and seller... if someone is a product expert and has a sufficient business plan in place, why shouldn't they be able to find buyers and match them up with sellers? Of course, deals for a such a broker could be few and far between, but they are definitely out there. I have a few experiences with such brokers, and I have one relationship that is very good. If a new car broker wants to get involved, I think the best course of action would be to operate like a "TrueCar.com with a heart." TrueCar circumvents a lot of state-level broker laws by simply saying they are selling a lead to the dealership, and payment is only due if a sale is made. Of course, some states have debunked this sidestep made by Scott Painter and company, so in some states TrueCar now operates on a pay per lead basis. I do some deals with a local credit union that has partnered up with a designated "vehicle matching service" that is located near the premises of the credit union. The communicate all of the figures with the credit union member, get a commitment, and then I get a normal retail delivery and usually get some finance or lease reserve. I pay them $350 on a car up to $50,000, $400 if over. It's a regular finance deal most of the time, or sometimes they go with their affiliated credit union if there is a rate special or anything like that... Ultimately I gain a customer for +/- $350, which is only a wee bit higher than my average advertising cost per sale. Since there is no cash passing between broker and myself, and the NVDR and all else is no different than any walk in or internet lead, I'd like to think I'm in the clear. There have also been some "know it all broker types" who I just want to kick out of the dealership... so other than this one local new car broker and TrueCar.com, I normally don't mess with any others. Feel free to send me a private message if you have any questions... I do feel that there is a spot out there for such a new car "matchmaker" of sorts, but your cards have to played right!

04-14-2014, 01:24 PM	#7
mryan55 Senior Member Join Date: Mar 2013 Posts: 595	The perfect place for a broker to be is to get money out of the dealerships pocket, not out of the consumer's pocket. Of course, if the title, registration, etc. is all executed between the dealership and the final end user there's not too much to run afoul of, you know? I happily pay my $350 (or rarely $400 if it's an SRT over Overland Summit) for incremental sales that might be "the one" that gets me to my next level. I've never been to the point where a single deal has kept me from a fast start of VGP program, but that could definitely happen at one point! The vehicle matching service works with just one credit union -- Eli Lilly Federal Credit Union -- the employee credit union of a rather large pharmaceutical company. I usually pay a salesperson still... I just rotate the broker deals among salespeople so there's no favoritism -- and also so they deals are the same as any other retail deal as car as an auditor might be concerned, you know? Occasionally I just put them in my name... but not all the time.

04-15-2014, 04:38 PM	#8
Lakeshow Senior Member Join Date: Oct 2010 Posts: 217	We still sell a good amount of new GM units, even though we haven't been a dealer since 2010. Of course these are through dealers/friends we have known for 35+ years. Right now we have three dealers who do this for us on a regular basis, and have used as many as five. These guys are more than willing to accommodate us for the 3-5 new units we still deliver through them every month. That being said they know us personally and know our reputation. Without that we'd probably be in the same boat. We have also set up relationships with a few foreign dealers as there are no foreign dealers in town, and that has worked well also. Our customers sign purchase orders and all factory paperwork from the new dealer, as well as a purchase order from our dealership. We pay invoice minus incentives to the dealers, and keep the trades. It's been a great relationship for us as we desperately need the used inventory like everyone else. And it helps these guys obtain their sales goals as well. Our local Chevrolet dealer who was gifted our franchise has challenged this many times to GM as we still out sell him on a continual basis. As long as everything is above board with the new dealer as far as paperwork, they have had no problem with this to date. While I realize our situation is definitely unique, it can be done with the right relationships.

04-15-2014, 05:06 PM	#9
mryan55 Senior Member Join Date: Mar 2013 Posts: 595	We also deliver a handful of vehicles for a terminated Chrysler dealer up the road from us. They voluntarily closed last year and are good to send us a few deals each month. I'm always happy to help as they have been nothing but helpful to me when I needed things over the years. I guess I have a soft spot in my heart for the 5 car a month new car stores that have closed, since I got my start at one of those little guys!

04-16-2014, 12:22 PM	#12
mryan55 Senior Member Join Date: Mar 2013 Posts: 595	Thankfully my auto matchmaking service has been busy... 2 retail deals thank to them so far today... otherwise I'd be at 0 today! Yikes! See, new car brokering can work out if done right !