We are delighted to announce Advanced Dealer Solutions was presented the 2021 Agency Growth Award from Axiom Product Administration. We were able to spend some time working with part of the Axiom team learning about different product updates and going through processes. We also found ourselves taking some time to get to know each other a little better through friendly and competitive gaming.
It is hard to believe we are already in the month of August! The recent heat waves across the country surely reminded everyone we are in the dog days of summer! Hopefully, everyone was able to find some comfort near a pool, lake or in the comfort of their air-conditioned home.
ADS is excited to make a few big announcements…
View our newsletter to see all the exciting things happening soon!
This weekends celebration of America comes at a time when we may need to celebrate the birth of our independence and unity more so than in years past.
The courage our Founding Fathers showed 246 years ago by forging ahead for what they believed in, as a better and more equal way for Americans to live and prosper, leaves us awestruck and inspired still to this day. Their courage and resilience continues to pay dividends for all of us fortunate enough to live in this amazing country.
Although much has changed over the last quarter of a millennium in terms of technology, social norms, communication, etc., the core tenants and beliefs the Founding Fathers fought for are still relevant, alive and vibrant today.
God Bless America!
We hope you all have a safe and enjoyable weekend!
To view our full newsletter https://mailchi.mp/advdealer.com/july-newsletter.
Ryan Nelson interviewed Colonnade Advisors CEO and Managing Director Gina Cocking on Advanced Principles Podcast. Colonnade Advisor’s provided a summary of the first episode together to hit the highlights of the conversation.
This interview highlights the important role that Colonnade Advisors plays for their clients when they embark on the process of selling their company, raising capital, or seeking to acquire another company.
Colonnade Advisors has deep experience in the automotive dealership services industry. They publish Quarterly Updates on the Auto F&I sector with information on dealer profitability and recent transactions.
In this most recent interview, Gina and Ryan cover the following questions:
Their focus is on industry dynamics, business models, valuation metrics, accounting issues, and participants. They maintain a dialogue within their extensive network of owners, investors, and buyers in their target sectors.
Gina: Our focus goes back over decades. In the early 2000s, we worked with Mepco on its sale to Independent Bank. Mepco had two lines of business: 1) insurance premium finance and 2) vehicle service contract (VSC) finance. We worked closely with Mepco on both lines of business to create a successful outcome for their owners and team.
We became experts in the insurance premium finance industry and the leading advisor on transactions in this space. We are the leading investment bank in the United States in insurance premium finance. We’ve done 28 transactions in the insurance premium finance industry.
Through our work with the team at Mepco, we also got to know the vehicle service contract (VSC) space. After a decade of working with our clients at Mepco and Independent Bank, we assisted with the sale of Mepco’spayment processing business to Seabury Capital Group.
Eventually, that took us into the overall Auto F&I (Finance and Insurance) space where we’ve had the opportunity to work with direct marketers, agencies, and administrators. (Read more about the F&I ecosystem here).
We also work with finance companies in the automotive sector: subprime lenders, near-prime lenders. We closed a transaction last fall for OpenRoad Lending, a direct-to-consumer marketer of auto loan refinancing.
We’ve been doing a lot in auto finance. This has taken us into data analytics, especially on the direct-to-consumer side. Direct-to-consumer marketing is all about data and data analytics. We have now worked with a number of data analytics companies and marketing companies associated with the automotive space.
Gina: We have pattern recognition, and we’re rarely surprised.
Every transaction’s different. There’s always something new. When things are new and different, we have the skill set to navigate the situation.
What differentiates us from our competitors in this space is the tenure, institutional knowledge, and experience of our senior bankers.
At other Investment Banks, team members float through the different groups. They don’t stay long enough to develop industry and institutional knowledge. Their junior teams turn over. More importantly, they don’t have anything but transactional experience.
Clients, especially entrepreneurs or family-owned businesses, need more than just the transactional experience. They are looking for long-term relationships like we provide at Colonnade.
Gina: The Private Equity (PE) firms have a pool of capital to invest in one or more companies. Their goal is to become the owner of a company. They’ll negotiate and buy a company so that the company is then part of their portfolio, which they’ll eventually sell and hope to make two to three times their money.
Most private equity folks have gone through investment banking at some point in their careers. What’s different about what they do is that they’re managing other people’s money.
In investment banking, we are advisors on either the buy-side or the sell-side. Sometimes I’ve had people say, “Well, you’re kind of like a real estate agent.” My answer: “Not really.” There are business brokers that are more like real estate agents, however.
We are there to work with the (client) company side-by-side. If they’re selling, we help them prepare for the sale and go through the process. That includes getting to know the company so well that we can tell their story almost as well as they can. We help them to articulate their story: Where they have been, where they are today, and where they’re going.
We then prepare written documentation, called a Confidential Information Memorandum (CIM). We identify the potential buyer universe. We contact those buyers. We negotiate with buyers. We answer all their questions. We deal with thousands of documents in the data room.
We negotiate the terms of the transaction. We work closely with the attorneys on all the transaction documentation. We’ll provide our industry perspective and our business knowledge, but we’re not attorneys. We help get the deal to close. One of the important things is we keep the deal on task. It’s all about not letting people lose focus, keeping the deal going, and getting it to close.
In investment banking, we are paid a success fee upon the close of the transaction. Whereas a private equity firm is buying the company (and gets paid on the subsequent sale of the company after growing its value).
Gina: Everybody freaked out in the Spring of 2020. But we’ve worked with some visionary companies where we’ve been able to create some fantastic win-wins.
We had a deal that was supposed to close at the end of March 2020. The buyer put it on hold but worked with us to restructure the deal with an earnout. The transaction closed, the seller hit all their earnouts, and it was a fabulous deal for all.
Let’s talk specifically about the Auto F&I side: administrators and agencies. While everyone dipped in the spring of 2020, performance improved in the second half of the year, and then 2021 was a fantastic year. This was not as predicted, considering the supply chain issues. Fewer cars were being sold.
Why the fantastic year? The dealers are hyper-focused on making money when they can. The dealerships realized that F&I is uber important to the long-term profitability of the dealership. Dealers are selling more F&I products with every car. That has benefited the administrators.
Consumers have also had great experiences with these products. They’ve had claims paid out on their vehicle service contracts. They’re telling their family and neighbors, “It’s really a good product.” We have finally seen the maturity in the F&I industry that this is a peace of mind product. It’s not just a product that a dealership is trying to push onto a consumer; it’s a valuable product.
2022 has been a great year for Administrators. The dealerships are profitable, and they’re also getting better at selling products. We’ve started a new phase.
Colonnade Securities is a leading investment banking firm that has completed over $9 billion in M&A transactions for clients in the business and financial services industries.
Advanced Dealer Solutions is a full-service, dealer development agency focused on automotive, RV, and powersports dealers across the United States. Please contact 844-320-3722 or [email protected] for any inquiries.
We hope everyone had a safe and enjoyable Memorial Day Weekend and found time to honor and recognize all who have, and are serving this great country of ours!
The more things change, the more they stay the same…
Another month has come and gone and it feels like the story of the last year and a half just continues to repeat itself.
– Inventory concerns, check.
– Staffing issues, check.
– EV adoption rate questions, check.
– Inflations concerns, check.
– Industry consolidation, check
– Global/social unrest, yep, check that one as well!
Dealers persevering and finding ways to win, CHECK, CHECK and CHECK!
To read our full newsletter follow the link https://mailchi.mp/advdealer.com/june-newsletter.
The month of May brings us to the eve of summer, and later this month, many Americans will celebrate Memorial Day with friends and family around a lake, at a barbecue or watching a parade.
For a huge swath of the country that endured a long, cold, wet winter, summer cannot come soon enough and hopefully May brings us the sunshine and warmth we have been anxiously awaiting since late October 2021.
Typically the warmer weather and sunshine bring increased vehicle sales. Summer sales, new model introductions, etc. all lead to more customers purchasing new, or new to them, vehicles. Although most dealers are still dealing with little to no inventory, there have been some signs of improvement. Many questions remain about what the new normal will be, and when we will all settle into it. For now, dealers continue to enjoy demand outweighing supply.
With increased volume, specifically F&I production, means dealers are generating more F&I reserve dollars than ever before. And for many dealers, participation in their F&I underwriting profit, or reinsurance, is seen as a retirement plan, or a method to generate capital to help fund their business. We have worked with too many dealers through our careers who are placed into structures that are clearly not the best option for them and their goals. Please take a moment to read through the article on navigating the myriad of options available to dealers today.
And last, but not certainly not least, Happy Mothers Day to all the amazing and wonderful mothers in each of our lives.
To read our full newsletter follow the link https://mailchi.mp/advdealer.com/may-newsletter
EV’s here, EV’s there, seemingly EV’s are everywhere… except on the actual roads, for now.
Based upon the headlines, commercials, recent IPO’s, and tweets from a certain celebrity CEO, you would think EV’s are as common on the road as an IC (internal combustion) powered F-150. To anyone outside of the industry, it comes as a big surprise to hear that EV’s only make up about 3% of the market share. A number that is expected to grow exponentially over the coming years, but we are not quite there yet.
If you were part of the 112.3 million viewers of ‘the big game’ in February, then you were a part of the population that was inundated with EV commercial after EV commercial. Certainly, a sign of where the market is headed. The question then becomes, how quickly do we get there?
Most people think Elon Musk kicked off the electrification craze when the Tesla unveiled a dynamic, all-electric roadster in in 2006 (officially released as a 2008 model). Actually, the first electric vehicles were produced well over 100-years before the Tesla Roadster turned motoring enthusiasts onto electrification. Here in the United States the first electric vehicle is credited to William Morrison, a chemist who lived in Des Moines, IA. In 1890 he created a six-passenger electric vehicle that was capable of a top speed of 14 miles per hour.
Over the next decade the industry saw several manufactures produce their versions of electric vehicles, reaching a pinnacle around 1900 when New York City had a fleet of 60 electric taxis and charging stations every few blocks to meet the rising demand.
As electric vehicle sales were climbing due to the easy, clean, and quiet operation, a true disruptor burst onto the scene, Henry Ford, and the Model T! The Model T car cost only $650 ($18,500 in today’s dollars) while the electric roadster of the day cost $1,750 ($50,000 in today’s dollars). The explosion (pun intended) caused by the internal combustion engine, the popularity of the Model T, and the access to cheap gasoline, led to a sudden and swift decline in electric vehicles.
Throughout the decades, there were a variety of inventors, tinkerers, and manufactures who dabbled in electric vehicles, but the demand for expensive, limited range and often odd-looking vehicles just didn’t justify production at any level of scale.
Although Elon Musk and Tesla get most of the headlines for the current hysteria around EV’s, credit should also be paid to Toyota who paved the way with the daring release of the Prius. In 2000, Toyota released to much fanfare and success, the hybrid-electric Toyota Prius. Although, Honda released the Insight first, it did not receive near the acclaim the Prius did.
Fast forward to today, when almost every CEO is racing to update their talking points to claim they will be first to convert their fleet to fully electric. The bold declarations have ranged from 10-years to 3-years, all of which are purely speculative talking points at this time.
There are many unanswered questions about the reality of a fully electrified fleet roaming the highways and byways of this great nation and the rest of the world. A few certainties we can count on, the cost for an EV will continue to come down as more manufactures fight for market share and ranges will continue to be extended as technology improves and battery costs lower.
One big unknown is the capacity of the power grid and how it can handle a sudden surge (another intended pun). Most Americans have experienced some type of power outage in their lifetime, and many experience power-outages annually during storm season. What happens to your EV when you cannot access power due to inclement weather? Another unknown is how to handle a vehicle running out of charge on a remote section of turnpike. There are many bells and whistles to alert the driver they need a charge. Ironically, my gas light goes off like its DEFCON 1 if I don’t pull over immediately. In spite of that, I have run out of gas and have been stuck on the side of an interstate. Who hasn’t played a game of mileage chicken with their gas light? The good thing is gasoline can easily be delivered in a little red can by most anyone. How many rest stops in middle-America have portable charging packs on hand to loan out or sell?
Lastly, what is the long-term impact all these battery packs are going to have on our environment? Almost every component of an IC vehicle can be salvaged and recycled at a reasonable rate. You can head to most auto-recycling centers and grab a ‘new to you’ engine, etc. Do Pull N Pick Auto Parts Centers sound familiar to anyone? In the future will we be able to wander through row after row of Tesla Model S, Chevrolet Bolts, and Ford Lightings to grab a ‘new to you’ inverter, low voltage DC-DC converter, etc.?
There is no question where we are headed, and after a bit of review, it is back to a place we have already been. A city filled with electric vehicles, charging stations readily accessible to everyone needing a bit of juice, and the sound of, or lack thereof, mid-day traffic. That is of course until, the next trip Back to the Future…
Spring is often associated with rejuvenation, regrowth, and rebirth. One could argue those three words take on more importance this spring season than most others in recent memory.
The good news is, all three seem to be in play this year, especially in the retail industry.
March brings a time change (for most of the country), one of the greatest sporting events ever created (March Madness) and Auto, RV and Powersports shows fill convention centers across the country displaying the latest and greatest each manufacturer has to offer.
The shows this season are filled with a variety of electric options from many manufacturers. This is not the first foray into electrification for this car-crazed country, in fact, far from it. Take moment to read the article below about the history of the electric automobile and how we got to where we are today.
Speaking of EV’s, please also take a moment to learn more about a VSC option from a great partner of ours, Axiom Administration, for the growing market of electric vehicles.
Lastly, make sure to visit the Toy Box below for an added history lesson about the electric vehicle and its ties to Cleveland, Ohio!
We hope all of you are ready to ‘spring’ into action as we head into the main selling season.
To read the full newsletter follow https://mailchi.mp/advdealer.com/newsletter-march
Keep consumers’ daring adventures protected with our new Revolution Powersports Product Suite! We’ve rolled out coverages for powersports enthusiasts that are looking to stay protected during every weekend excursions and joyride. The Revolution Powersports Product Suite offers a Vehicle Service Contract (VSC), Guaranteed Asset Protection (GAP), and Theft for a variety of powersports.
· ATVs/UTVs
· Mopeds/scooters
· Three Wheelers
· On-road & Off-road Motorcycles
· Snowmobiles
· Personal Watercraft
· Jet Boats
· Golf Carts
A VSC offers peace of mind for unexpected expenses by providing coverage for out-of-pocket repairs due to failure of mechanical and technological components that a covered powersport may incur. Coverage includes Emergency Roadside Assistance and Towing Services.
Powersports Guaranteed Asset Protection (GAP)
If a covered powersport is stolen or damaged and deemed a total loss, the owner is responsible for paying the difference between what they owe and what their insurance company says the powersport is worth. GAP can help cover the financial gap and potentially save your customers thousands of dollars.
Hundreds of thousands of powersports are stolen each year. The theft protection system deters theft by placing warning decals on the vehicle to indicate its protected. Traceable DNA stickers are placed strategically upon the vehicle at the dealership, if the stickers are removed, invisible ID numbers will be left behind, traceable by law enforcement. In the event your customer’s vehicle is stolen and unrecoverable, or recovered and is a total loss, they can take advantage of the Theft Protection System Limited Warranty benefit.
Extend the capability to customers of maintaining vehicle performance and ensuring powersport safety. For more information on the Powersports Product Suite, contact our us https://advanceddealersolutions.com/contact/.
Article originally wrote by Axiom Admin https://www.axiomadmin.com/media/now-offering-protection-for-powersports.
2022 is off to an interesting start to say the least. The combination of the Omicron variant wreaking havoc on dealership staff, mixed messages about how best to combat the spread of the virus, uncertainty about supply chain and changes in the Fed policy have added to the already nebulous outlook for 2022.
What hasn’t changed is consumer demand continuing to outweigh the abilities of the global supply chain, which is putting dealers in an odd, but enviable position. Many dealers thrive on volume, and although margins are strong, they long for the days of lots filled with ready to deliver inventory. It appears the industry consensus is showing a backlog of demand in the range of 2 to 2.5 million new vehicles. If those predictions prove out, then we can get comfortable with the current market conditions and continue to maximize the opportunities in front of us.
One potential downside to this market is the dealership fixed operations. Increases in parts and labor cost, further depletion of the technician labor force and lower sales volume create the potential for several missed opportunities causing a negative effect on a dealer’s fixed operations.
To read the full newsletter follow https://mailchi.mp/advdealer.com/newsletter-february.
