Tuesday, Sep. 12, 2006, 08:00 PM UPDATED 11:59 AMBy Nick Zulovich
PORTSMOUTH, Va., and BURNSVILLE, Minn. -- Higher Turnover recently announced it has been selected by Northland Auto Enterprises as their premium dealer Web site solutions provider. In addition to other services, Northland Auto Enterprises also offers a Rent'T'Own program as an alternative to buy-here, pay-here.
Discussing the selection of his company, Robert Jacobson, president of Higher Turnover, said, "We are honored to be selected by such a reputable organization. In the end it came down to having a business relationship that will ultimately benefit the dealers.
"Both Northland and Higher Turnover have similar business philosophies, which was the key in determining a good fit for a relationship, and ultimately for the end users of our products," he added.
The deal provides Northland the opportunity to offer Web site designs for dealer clients and associated Web-based products for their distribution network. The network currently includes approximately 200,000 new and used dealers throughout the U.S.
"Being able to offer quality products at reasonable prices has enabled us to meet our customers' stringent needs at the right price," explained Ray Bonneau, senior vice president of development for Higher Turnover. "By joining forces with Northland, we anticipate rapid growth and development of new Web-based software products to further help our customers effectively sell."
Gary Knoepke, senior vice president of Northland, and Marshal Cane, vice president of Northland, jointly added, "Northland is proud and excited to be associated with Higher Turnover. This association will provide and support quality Web site solutions at affordable prices. Higher Turnover's Web sites are well-designed, easy to use and they harness the power of the Internet to drive more customers and traffic to dealerships."
Higher Turnover is based in Portsmouth, Va., and offers dealers throughout the country Web site services and inventory management solutions, in addition to consulting, online marketing, training opportunities and lead management services. For more information, call (800) 430-2119, or visit .
Along with supporting dealers through several services, one of Northland's specialties is offering a rent-to-own program that serves as an alternative to BHPH.
The company introduced its Ren'T'Own program shortly after the company was founded in 1990. Through word-of-mouth, the program has gained much ground recently as more dealers are looking to get into the BHPH business and discovering Ren'T'Own as a viable, cost-saving alternative.
Al Lentsch, founder of Northland Auto Enterprises, said he started the company in direct response to the back and concerns of nearly 7,500 dealerships in the Upper Midwest. He gathered the input while serving as executive director of the Northland Independent Automobile Dealers Association. The Northland association was created when dealers joined together from Minnesota, North Dakota and South Dakota in 1979. Since then, South Dakota has gone on to form its own independent association, but the organization remains vital to the other two states. While Lentsch continues to serve as the association's executive director, he said Northland Auto Enterprises is a completely separate entity.
The Ren'T'Own program works much like a BHPH business plan, with several exceptions. A dealer leases out vehicles to subprime consumers instead of selling them. The agreement with the consumer must be 12 months or longer, according to Lentsch. He explained that most lease agreements average between 24 and 30 months.
Through the program, dealers can require their clients to make weekly or bi-weekly payments. Unlike BHPH, the title to a Ren'T'Own vehicle remains in the dealership's name. This means the vehicle is not subject to a bankruptcy, as the dealer is the title-holder. Additionally, Lentsch said dealers run into less hassles with repossessions because if a car is not returned upon demand it can be reported as stolen.
"Dealers really like the program," said Lentsch. "The chasing rate (or collections rate) for BHPH is around 30 percent, with Ren'T'Own the chasing rate is less than 5 percent. Consumers know if they don't pay, they have to worry about the vehicle being reported stolen. Many dealers prefer this program because they aren't spending all their time chasing after customers for money."
Lentsch even suggests including a section in the agreement regarding late payments.
"On the front of the contract, where the consumer can see and even initial if a dealer would like, it should say 'If my payments are not in the office by the due date or the car back on the lot with keys included, we may report the vehicle stolen and you must suffer the consequences," he said.
Another benefit of Ren'T'Own versus BHPH is that a dealer's tax liability on the transaction is based on the revenue as it is earned within a taxable year. Whereas, with BHPH the dealer must pay all the taxes up front right after the transaction is concluded even though he doesn't see all the money until the end of term. Also, since the program is all about payments and collections, there are no interest charges and no interest disclosure needed for consumers. This means the Ren'T'Own agreement is not subject to usury laws.
In lieu of asking a consumer to put down a large deposit, as is normally the case in BHPH, through Ren'T'Own the dealer takes in an origination fee. This fee translates into a direct profit for the dealer, which goes straight to his bottom line, explained Lentsch. At the end of term, the dealer may offer the consumer the option to purchase the vehicle.
He went on to say that joining the Ren'T'Own program is like getting a franchise without franchise costs. Northland Auto Enterprises offers a full turnkey operation. In order to sign up for the program, a dealer must pay a one-time $249 fee to become a Ren'T'Own associate. For a low monthly rate, Lentsch said his company provides the dealer with contingent insurance coverage and all program materials, including rental agreements, guidebook, start-up training and support.
As for insurance, each Ren'T'Own customer must, of course, provide proof of primary insurance coverage to the dealer, exactly like in a lease transaction. Ren'T'Own dealers are also offered contingent (excess) liability insurance up to $1 million per occurrence (lower levels in Florida), in addition to collision damage. The cost for contingent liability and collision damage insurance is $20 per vehicle per month.
Ren'T'Own is named as an additional insurance company on each customer's primary policy. Should a policy lapse or be canceled, Lentsch said his company will send notification to the customer to reinstate the insurance or return the vehicle.
Northland Auto Enterprises offers the Ren'T'Own program in 47 states. Lentsch said several thousand dealers have already signed up.
"In the last six months we've had quite an upswing," he noted. "We furnish dealers with the insurance they need and provide all forms and everything. As time goes on, more and more dealers are hearing about our program. Word of mouth is causing many dealers to sign up with us. We welcome dealers to our Web site, and invite them to learn how Northland's sales tools can make each dealership better."
For more information on the Ren'T'Own program, call Northland Auto Enterprises at (800) 252-1766, or visit .