How Byrider is Bringing a Customer-Centric Experience to the Subprime Space – Chris Hadley


Byrider‘s Vice president of Franchising, Chris Hadley, joined Jim Fitzpatrick on the CBT Stage at NADA 2020 in Las Vegas to discuss changes in the buy here, pay here market and the ways in which Byrider supports franchisees.


Jim Fitzpatrick: So we’re sitting down here with Chris Hadley who is vice president and franchisee at Byrider. I know that you know that franchise name. It’s a big one that’s been around in the industry for a long time. Welcome to the show.

Chris Hadley: Thank you. I appreciate you having me.

Jim Fitzpatrick: Sure, sure. So talk to us a little bit about Byrider today. How many franchises is it, what is it you do with dealers, specifically in the auto space? And then talk to us a bit about the franchisee.

Chris Hadley: Yeah, I’d love to. So essentially we’ve got about 150 dealerships across the country and as you mentioned Byrider’s been around for a long time. It was actually started by Jim DeVoe back in the 1980s. He had an auto credit seminar, decided that he wanted to franchising it. So in 1989 he licensed his first location and it’s grown to 150 since then.

Jim Fitzpatrick: Wow, you guys know how to do this.

Chris Hadley: So it’s done really, really well.

Jim Fitzpatrick: Thirty years experience.

Chris Hadley: Yeah. About 60% of our dealers are new car dealers, which they know how to sell cars, but one of the things they don’t know how to do is lend money.

Jim Fitzpatrick: Right.

Chris Hadley: So we really help those dealers-

Jim Fitzpatrick: This is an art form, for sure.

Chris Hadley: Yeah, it Sure is. So help them on both, not only the sales process, but the finance process as well.

Jim Fitzpatrick: Who’s the perfect franchisee? What’s the target audience for you? Is it any new car franchise of any size? Talk to us a little bit about that.

Chris Hadley: Yeah, it really is. So, I mean, it’s really somebody that looks at the subprime auto space, actually, is an opportunity. We’ve got a lot of new car dealers that looked at it as, I’ve got a lot of turndowns in my store. People that I’m not getting financed. I’d like to sell them a car. This is a perfect opportunity for them.

Jim Fitzpatrick: It just feeds right into that, right?

Chris Hadley: It sure does.

Jim Fitzpatrick: Rather than cutting them loose or having your salesperson be bird dogged by a salesperson at another subprime lender or something like that you can keep all of that in house, right?

Chris Hadley: Yeah.

Jim Fitzpatrick: It’s also an avenue, I would imagine, for dealers that want to step up a little bit more on a trade in and you go, “This should be a perfect Byrider car.” Does that make sense?

Chris Hadley: No, it makes perfect sense. And that’s what a lot of our dealers do, actually, is step up on the trade-ins, make perfect Byrider cars.

Chris Hadley: The other great thing that it does is you may have a subprime customer that shows up in the dealership and their credits strong enough that they can go get a new car. So it works both ways. Not only getting the referrals to the Byrider, but sending it back to the new car dealership as well.

Jim Fitzpatrick: And as you know, subprime customers can be very loyal to the people that help them. And what I mean by that is that if they start out with Byrider and you give them a solution to their vehicle and put them in a car, and they prove themselves on how they make payments and their credit comes together, they’re going to end up in your new car showroom chances are, right?

Chris Hadley: That’s exactly right. That’s exactly right.

Jim Fitzpatrick: Because you’ve shown them the love early on where were other car dealers said, “Your credit score is too low. We can’t help you, get out of here.” You guys are able to offer that solution, right?

Chris Hadley: Yeah.

Jim Fitzpatrick: It’s something I wish I had done when I was a new car franchise dealer. I couldn’t get my partner to go along with the idea. I could kick myself for not pushing that further because it’s a great way to keep that customer in the family of dealerships that you’ve got.

Chris Hadley: It is, it sure is. So, I mean, we see that with a lot of our customers.

Chris Hadley: Like I mentioned, a lot of our franchisees are new car dealers and that’s something that they put in place. So sell a lot more cars as well.

Jim Fitzpatrick: In anticipation of today’s interview, as I often do, I spoke to one of your franchisees at one of your dealers and they said, “We were very apprehensive about getting into the subprime business. However, Byrider came in, made the presentation, we were still a little bit skeptical, we went ahead with it. Best decision we’ve ever made,” because you guys had done it right. You’ve been doing it for 30 years. I think that makes a huge difference for dealers in that confidence level to say, “We know new car franchising, we know used cars. As soon as we get that deal fine funded, we’re off the deal and we feel comfortable about it.” And as you know, secondary is a little bit of a different animal, but if you partner with Byrider, then you’re in good hands.

Chris Hadley: Yeah, we’ve got an end to end model. Essentially, we teach them how to sell cars, we teach them what they should be working on as far as the service work and then the financing as well. And we’ve got a team of franchise consultants. We go out, we review their numbers pretty much on a weekly basis and make either a phone call or a store representative.

Jim Fitzpatrick: Like an OEM representative.

Chris Hadley: Absolutely, absolutely.

Jim Fitzpatrick: That’s pretty cool.

Chris Hadley: Just trying to work with them to improve their businesses.

Jim Fitzpatrick: Do you find that most of your franchisees will have multiple locations?

Chris Hadley: We do. We do. So typically they may start with just one, but they like the returns. It was a natural bolt on to those new car stores and they open up multiple locations. So it’s something that we’re excited for them to do it and they’re excited to do it as well.

Jim Fitzpatrick: That’s right, that’s right. It’s also a franchise, I should say an industry, that does well in bad times and it does well in good times. Talk to us about that.

Chris Hadley: So true. So I mean, we all know what banks do. They either loosen up or they tighten down.

Jim Fitzpatrick: That’s exactly right.

Chris Hadley: As they do that, Byrider’s perfect, right? You’re always going to have that subprime customer. But as those banks start to tighten up, we get a lot more customers into our dealerships as well.

Jim Fitzpatrick: So it’s one of those industries in the car business that you wish you had a Byrider franchise or something like that during 2008, 2009, 2010 when it was very, very difficult, as you know, on the new car side. Is was like, “Wow, but how could we capitalize on those individuals that still need sound transportation?” And in many cases, dealers found themselves without an alternative on it.

Chris Hadley: It was interesting back in 2008, 09, 10, I mean we were worried about it as well. But what we found were those were our best years, some of our best years.

Jim Fitzpatrick: No kidding.

Chris Hadley: Yeah. Absolutely. So we’ve just got a lot of great customers. They paid on their car loans and yeah, it was great returns.

Jim Fitzpatrick: What are some of the things for the dealers that are watching it or what have you found that dealers are apprehensive about? What are the most that you can put to bed to say, “Here’s their concern and here’s where we can answer that problem.”

Chris Hadley: Sure. Probably the first would be the lending. We’re not really sure how we should be lending to a subprime customer. So we’ve got a credit scoring model that essentially segments the credit risk. It’s really, really predictive. So we’ve got the tool on the lending side.

Chris Hadley: And then just not really understanding what it means to be an end to end dealer. So selling, financing, and service and how you make that all come together as one.

Jim Fitzpatrick: And as dealers, right now, look at their look at their operation, it’s a question of how to make as much money as you possibly can within the campus. Have you found that dealers will say, “Hey, let’s put this in a corner of our dealership, of our overall campus.” Can they do that?

Chris Hadley: Yeah, they can. So we’ve got a number of dealers that we work with. It’s about the right situation, the right dealer. I mean, we really try to be selective on the dealer partners that we select and that select us and we work with them to put them in the right situation.

Chris Hadley: Ultimately, it’s about helping the customer. I mean, we’re very, very customer-centric, which you don’t always get in the subprime space. So focus within that.

Jim Fitzpatrick: I know, that’s right. Yeah, the subprime business, billions and billions can be made as long as you know what you’re doing, right?

Chris Hadley: That’s right.

Jim Fitzpatrick: The dealers that want to do this alone, be careful dealers, because I know good friends of mine that have dabbled in it, tried it and said, “Oh my God, did I lose a boatload? I should have partnered with somebody that knows what they’re doing.” And Byrider’s been around for over 30 years doing it right.

Jim Fitzpatrick: You were JD Byrider, same company.

Chris Hadley: That’s right.

Jim Fitzpatrick: Re-branded. Talk about the rebranding for a second.

Chris Hadley: Yeah, the rebranding was, we did a lot of customer research. People didn’t really understand what JD was. We did, obviously, internally, but our consumer didn’t. So we tried to shorten it up. New logo, just a new fresh feel. And we’re still focused on taking care of that customer.

Chris Hadley: So like I mentioned earlier, very customer-centric. We want to make sure that we back every car with either a warranty or extended service contract because when we sell a car, it’s not just we sold a car, get across the curb. We’re living with it for three to four years just making sure that that car is running and that customer’s making it work.

Jim Fitzpatrick: And what better to be putting these vehicles out on the road, those people are also going to come back to you, the dealer service department, right?

Chris Hadley: Absolutely.

Jim Fitzpatrick: To have vehicle work done, which is huge right now.

Chris Hadley: It is.

Jim Fitzpatrick: We still suffer with about 30% coming back to the dealership. That’s a tough one. This helps in that area in ways.

Chris Hadley: Absolutely it does.

Jim Fitzpatrick: Well, Chris Hadley, vice president of franchiser of Byrider. For dealers that are listening right now to us, you owe it to yourself to look into this in 2020. I think you’re going to like what you see. We’ve done a little research before bringing them in to CBT. We were impressed with what we saw. As I mentioned, we spoke to some of your franchisees. They were thumbs up across the board.

Jim Fitzpatrick: So for dealers that are thinking about it, make the call or go on to Byrider’s. Is it

Chris Hadley:

Jim Fitzpatrick: You owe it to yourself. Do it in 2020. Thank you so much.

Chris Hadley: Perfect. Thank you so much.

Jim Fitzpatrick: Love to have you back and talk more about this.

Chris Hadley: Yep, thank you.

Jim Fitzpatrick: Thanks.