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The business unit was launched a year ago to provide BMW dealers with financing for the non-BMW makes they sell. The Alphera Commercial Finance Self-Serve function makes it possible for a dealer with a $10 million floor-plan line to save upward of $30,000 annually by utilizing the same-day payoff vs. the normal three-day payoff processing time to pay off each individual unit.
AUTO NEWS
Q&A
Alphera Financial Services, a division of BMW Financial Services, is poised for expansion.
The business unit was launched a year ago to provide BMW dealers with financing for the non-BMW makes they sell. Now Alphera is extending its scope to non-BMW dealers.
Alphera President Shaun Bugbee, 45, described the company's expansion plans to Staff Reporter Donna Harris.
How many dealers do you service?
We currently serve 529 non-BMW franchises related to 364 dealer groups. We are expanding our relationships with the public groups. We have a relationship with public groups Sonic Automotive, Group 1 Automotive and AutoNation. Our largest privately owned dealership group is VT.
What is your footprint?
We are in 20 major markets (spanning) 25 states. In 2008 we plan to be in 40 states.
Alphera was launched in October 2006. How has your loan portfolio grown since then?
We had $532 million in retail outstanding as of Sept. 30.
You aren't restricted to retail?
No, we launched a floorplan program (to finance non-BMW vehicle inventory) in September. We also offer real estate and capital loans.
Are those commercial loans available only to dealers who have BMW stores?
When we started, we worked with BMW dealers in their non-BMW stores. Now we are offering the same retail product and commercial product for nonaffiliated dealers. It was a fourth-quarter initiative. We only offer retail financing, not leasing, on non-BMW vehicles.
There is plenty of competition in the market. What is your niche?
What made this a viable option for affiliate stores is what makes it attractive to nonaffiliates.
We offer the same service mentality. We have the ability to fund quickly. It's what we call self-serve funding. Dealers get paid the same day for the contract. It's a big selling feature, especially for larger stores. It virtually eliminates contracts in transit. And it has been just as well received on the nonaffiliate side as it is on the affiliate side.
Floorplan is probably the number-one cost on the balance sheet to the retailer. We are paying off cars quickly, just the same as we do on the retail side.
From the price (rate) point, we are competitive, but not the lowest. Our systems allow dealers to manage inventory to the point where they can limit additional cost.
Often dealers have to communicate by fax with the floorplan lender, and the cars are paid off by check. Our dealers can manage their account online.
It takes two or three days to pay off a car, and dealers are incurring interest expense on a daily basis. We're limiting the wholesale expense by paying dealers on a timely basis.
Can you give an example of how much you can save dealers using technology to speed up payment?
The Alphera Commercial Finance Self-Serve function makes it possible for a dealer with a $10 million floor-plan line to save upward of $30,000 annually by utilizing the same-day payoff vs. the normal three-day payoff processing time to pay off each individual unit.
What kind of field staff do you have working with dealers?
Each sales and marketing manager has no more than 50 stores. That allows the representative to get into the stores on a regular basis. It's a differentiator. A lot of competitors manage dealers by phone or a fax.
How are you promoting Alphera to nonaffiliated dealers?
It's promoted by word-of-mouth. The dealers themselves are the best advertising. Once we are in a territory, we have many requests from dealers to participate with us.
Do you have a target?
We don't have a target number of dealers. We view it more from market potential. We have made assumptions for the first year on the contracts per dealer we would receive. The number is higher than we expected.
Copyright Crain Communications, Incorporated Nov 12, 2007