Tag Archive | "National Auto Care"

Beyond the Full Product Suite


Interest among dealers in F&I production and profitability is elevated as profit margins remain compressed, new-vehicle sales show signs of plateauing, and dealers seek to maximize opportunities for service-department revenue. Among F&I product providers and administrators, the pressure to deliver benefits that appeal to agents and dealers and deliver real value for end users has never been greater.

To learn how the industry is keeping pace with the evolving needs of agents, dealers, and car buyers, P&A met with six high-ranking executives from some of the provider and administrator segment’s biggest players.

The Importance of a Full Product Suite

Matt Croak, president of Wise F&I, says his company constantly updates, changes, and augments its F&I product mix. Product development has been a focus for the past decade, he says, stressing that, to be competitive, a provider must offer a complete lineup. But in the age of digitization, they also have to do a whole lot more.

“A full suite of products isn’t enough; it’s having the technology to bring those products into the dealerships through online contracting and menu providers and adapting to changes in the car-buying process,” Croak says.

Like Croak, David Pryor of Safe-Guard Products International says his company invests heavily in product development — at the corporate level as well as with dealer clients.

“Program and product design is a key part of the Safe-Guard process and is usually one of the first discussions we have with clients,” says Pryor, who serves as the company’s CMO. “Over a series of product design sessions, Safe-Guard will be able to understand the client’s goals, desired customer experience, and, ultimately, design the program and product requirements to drive success.”

Tony Wanderon, president of National Auto Care, says offering a full product suite ensures every agent and dealer can find the products that fit their customers’ needs. Partnering with a full-suite F&I provider introduces “numerous efficiencies,” adds Dave Border, president of Allstate Dealer Services, including easier account maintenance, combined billing and commission payments, and improved reporting.

Larry Dorfman adds “consistency in sales and F&I training” — a key consideration for any dealer that is serious about F&I production — to the list of additional benefits brought by a full product suite. A single provider can offer “streamlined training for all benefits, rather than two or more different companies fighting for shelf space and confusing the employees with different training processes,” says the chairman of APCO, home of the EasyCare and GWC Warranty brands.

For Patrick Brown, president of IAS, a full suite is “more than just VSC and ancillary products,” noting that his company offers services ranging from income development and reinsurance to compliance training and marketing solutions. “We can help them grow their business by offering everything they need to increase F&I production.”

Defining the Full Product Suite

National Auto Care’s Wanderon says that his definition of “full suite” depends largely on the client, but most will include vehicle service contracts, GAP coverage, tire-and-wheel, and appearance protection as the most critical benefits, relegating other product types to a lower tier.

Pryor also includes prepaid maintenance on his must-have list, followed by “daily driving” coverage, including but not limited to tire-and-wheel, dent, windshield, and roadside assistance. He says Safe-Guard is working to “round out” its suite with lot-management, connectivity, and theft-deterrence and -recovery products.

“We’ll continue to evaluate how consumers drive and use their vehicles and make sure that we’re offering products that offer extra peace of mind and convenience,” Pryor says.

Allstate’s Border divides F&I products into categories: Service contracts offer long-term peace of mind, GAP adds a layer of security to financing, and appearance products assure the customer their investment will be protected against undue disfigurement.

“The ability to bundle a number of these products into a combo product can greatly simplify the presentation process and increase consumer comfort. Additionally, a provider with a full suite of products should offer a competitive reinsurance program,” Border says.

Brown agrees, adding that components such as income development and training, technology that streamlines the sale and administration of F&I products, and “multiple, A-rated underwriters” are somewhat less tangible but still valuable features that can help make a product suite complete. Finally, Dorfman says new technology can help dealers and managers build smarter processes and help establish lasting relationships with car buyers.

“It shouldn’t stop with vehicle coverage,” Dorfman says. “Retention tools like the SAVY Driver app tie the customer to their vehicle and to the dealership for service and repeat sales, which is instrumental in today’s digital age.”

As for which products to leave out, Wanderon says that, if pricing cannot be based on the underlying risk, he’s not comfortable with it. “In other words, some administrators underprice their products to gain market share, and we will not chase those who chose that path.”

Brown stresses that each of the products in IAS’s suite provide value to dealers and customers and that his company takes extra steps to ensure they are properly presented and sold.

“We’re not comfortable providing products that don’t have a clear benefit to the consumer. Additionally, we stay on top of the regulatory environment to ensure that products are being provided in a compliant manner,” Brown says.

Self-Administration and White-Labeling

Dorfman says each of APCO’s products are self-administered and -insured, noting, “Our EasyCare and GWC brands are on them and we assure the service delivers our brand promise.” Allstate Dealer Services “proudly” stands behind their products as both administrator and insurer, says Border, and his company develops and insures white-label products as a service for other admins.

“As a full-service F&I provider, we have complete control over the design and pricing of our programs and products,” Border says.

“We have seen a demand for white-labeled products in various channels and are able to provide that service for our clients,” says Croak, noting that Wise F&I administers every product in its suite. IAS and Safe-Guard self-administer nearly every product in their lineups, according to Brown and Pryor, with roadside assistance serving as a notable exception for both companies.

“Safe-Guard administers all of the products we offer except roadside assistance. Roadside requires significant scale to efficiently operate a 24/7 response center and the associated dispatch networks. We prefer to partner with a dedicated roadside provider to provide this service to our clients,” Pryor says.

Although more than 95% of his company’s products are self-administered, Brown prefers to rely on third parties for “smaller bolt-on services,” roadside included. “The key for us is ensuring that we have the ability to deliver the best product, service, and value to the consumer. We strongly prefer to do that in-house, but if we can’t, we partner with third parties to ensure that we can deliver best-in-class solutions.”

Wanderon says National Auto Care’s 34 years of experience in the administration business has been “critical” to the success of the company and its agent and dealer partners. He counts more than 6,000 dealerships, credit unions, and banks and finance companies on NAC’s administrative services roster and millions of contracts sold to date.

“We believe providing these services to our partners, along with the product offering, is imperative. Being the administrator allows us to have unwavering commitment to superior customer service and support,” Wanderon says. “In addition, it allows our partners to place their trust in us to take care of their customers — and the end consumers — in a time of need.”

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National Auto Care Acquired by Private Equity Firm


PONTE VEDRA BEACH, Fla. — National Auto Care Corp. announced it will be acquired by Lovell Minnick Partners, a private equity firm with offices in Philadelphia, Los Angeles, and New York. The acquisition is subject to receipt of standard regulatory approvals and satisfaction of customary closing conditions.

NAC, established in 1984 and acquired by Trivest Partners in 2012, is headquartered in Jacksonville, Fla. NAC is one of the longest-operating providers of products such as vehicle service contracts, guaranteed asset protection, limited warranty, tire, wheel and a full suite of ancillary protection products nationwide.

The executive leadership team at NAC will continue its day-to-day management of the company, and it will maintain operations at its current locations — in Westerville, Ohio, and Miami and Ponte Vedra Beach, Fla.

Through its independent agents, NAC supports over 2,300 partners that distribute its products. These include automobile dealers, credit unions, financial services companies, recreational dealers, and other strategic partners across North America. Company President and CEO Tony Wanderon said he is looking forward to the growth and opportunities NAC’s partnership with LMP will bring to NAC and its partners.

“LMP has strong experience investing in service-oriented businesses across the finance and insurance value chain that will prove invaluable as NAC builds upon our flexible and customized solutions to support our agency distributor partners in driving sales and profitability,” Wanderon said. “We believe LMP’s expertise in identifying and negotiating strategic transactions will add significant value to our acquisition strategy.”

While Wanderon and his team are excited about the changes, he notes that NAC enjoyed five years of outstanding success under its previous majority investor, Trivest Partners, which served as a great asset in NAC’s path to becoming a dominant player in the finance and insurance industry.

“NAC is the premier national market leader in developing innovative products that help protect consumers from a wide range of risks that can arise with Vehicle or Power Sport ownership,” said Trevor Rich, a partner at LMP. “We look forward to partnering with President and CEO Tony Wanderon, who is an accomplished veteran and innovator in the automotive protection industry, and his experienced team at NAC, as our investment positions the company to aggressively pursue acquisitions that complement its strong growth trajectory.”

LMP has a strong record of investing in and building fast-growing businesses across the insurance value chain, including J.S. Held, a specialty advisory firm providing property loss consulting, dispute resolution and construction and development services, and Worldwide Facilities LLC, one of the largest wholesale insurance brokerage companies in the U.S. Houlihan Lokey served as financial advisor to NAC and Trivest, and Sandler O’Neil was advisor to LMP. Madison Capital Funding LLC and NewStar Financial Inc. are providing debt financing for the transaction, which is expected to close in the third quarter of 2018, all according to the announcement.

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National Auto Care names Steve Verney as Chief Financial Officer


WESTERVILLE, Ohio – National Auto Care today announced the appointment of Steve Verney as the company’s Chief Financial Officer, leading the finance, accounting and reinsurance teams. In this new role, he will work to help National Auto Care amplify its recent profitable growth and build an even stronger foundation for the next level of success.

Steve retired from Allstate Insurance in 2015 after a distinguished 34-year career. He held multiple senior- level roles in Finance and Risk Management, including CFO of both property-casualty and life divisions, Treasurer, and head of strategy and M&A. He completed his career at Allstate as Executive Vice President and Chief Risk Officer. In each of these roles, he helped improve growth, profitability and financial strength as well as drive transformative change while developing strong financial talent and organizations.

“I am thrilled to join National Auto Care as we work together to build on the great work the team has done to achieve even greater success for our agents, employees, business partners and ultimately our shareholders,” said Verney.

“Steve’s strong qualifications and strategic mindset make him the perfect fit to take our financial management to the next level,” said CEO Tony Wanderon. “With his expertise in all facets of financial operations, insurance and M&A, Steve brings a balanced ability to develop and execute strategies that will drive growth and competitive advantage for the company on a national level.”

Steve earned his bachelor’s degree and MBA from the State University of New York at Buffalo. He is a member of the American Institute of Certified Public Accountants and the National Association of Corporate Directors.

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The Big, Scary World of F&I


The first panel discussion of this year’s P&A Leadership Summit began at 2:05 p.m. on Tuesday, Aug. 30. Helmed by Jimmy Atkinson, senior vice president and COO of AUL Corp., “Threats Facing the F&I Industry” promised to tackle the various forces working against dealers, agents, product providers and third-party administrators (TPAs) today and in the near future.

Atkinson was joined by a diverse panel of experts that included David Pryor, CMO of Safe-Guard Products International, Mike Saint, lead risk analyst for Assurant Risk Management, and Tony Wanderon, CEO of National Auto Care, David Neuenschwander, vice president of National Automotive Experts (NAE)/NWAN, was unable to appear but did contribute questions to the panel.

Anticipating a Downturn

The discussion started off with a warning: Don’t get complacent. The panelists agreed that the automotive industry as a whole has been strong for the last few years, leading many to take success for granted and forget to ensure the basics are all covered.

“The challenging thing for me right now is a lot of companies seem to have forgotten the bad times,” Wanderon said. “Things have been good for so many years that they don’t really have a disaster recovery [plan] in place. I always get scared a little bit when things are so good — you forget the little things. Disaster recovery is figuring out your expenses, having all the right people in place and figuring out which business might be at risk.”

Pryor agreed, noting that new-vehicle sales have likely plateaued after passing the 17 million-unit mark in 2015.

“I think we’re looking at that and saying, ‘What’s next?’” Pryor said. “Dealers are resilient. They’re going to continue to look at ways to drive their bottom line and drive their profitability. As an administrator, there’s sometimes a silver lining when we do face a downturn, or at least an era of stagnant growth. Dealers start to look at other parts of their business.”

Specifically, Pryor noted, dealers will refocus on F&I and fixed operations, both of which are susceptible to inertia when times are good and cars are flying over the curb. He urged providers to offer a wide range of proven products that will maximize profits and customer satisfaction in any economic climate.

Virtual Reality

The subject then turned to the digitization of F&I, beginning with information about products on provider and dealer sites and evolving to an Amazon-like experience that would allow car buyers to select and price protection products the same way they spec the vehicle.

Whether the industry likes it or not, Pryor said, the virtual space is going to play a large role in the future of F&I.

“We know it’s coming. We can look at what has happened on the vehicle sales side,” Pryor said. “Customers are doing their shopping online. They’re only visiting 1.2 dealerships before making the decision to buy. The sales process is happening in the digital space.”

Atkinson reminded the panel that information about F&I products is already out there, but the typical source is a dissatisfied customer. “When a customer hits their phone and Googles an F&I product, the first thing they see is something negative.”

Wanderon agreed, noting that bad reviews are spreading faster than ever. “Social media is changing things for us in a lot of different ways,” he said. “I think it’s time for us as an industry to start talking about what we do and how we do it and how we take care of customers.”

As an example, Wanderon told a story of a working F&I manager who purchased a service contract he had sold to his own customers. When a strut had to be replaced, his claim was denied, and he took to social media to vent his frustrations — before contacting the provider. If he had, he would have learned that part wasn’t covered.

“To get a negative response, you don’t ever have to ask your customer to post that,” Wanderon pointed out. “They’re going to post it. But to get a positive response, you should be asking your customers to go out there and post for you the same way, especially when you’re doing things that are outside the coverage provisions of your contract and you’re making an exception for them.”

Saint agreed, saying that dealers and providers need to get more proactive. “I think anybody in F&I should be very prepared to offer instances where there was a positive [experience] for the customer. I think we all need to pick it up as far as having educational items on websites. Just like they spec out the car before they buy it, well, they should be able to spec out the products we have as well. Because the customers are more and more educated. That’s the avenue I think we can expand into.”

“It doesn’t have to be just the administrator,” Pryor said. “Ask your dealers to go out and put those things out there.” Using GAP coverage as an example, Pryor noted that finance sources are stretching terms and loan-to-value ratios, leaving car buyers underwater for historically long periods. “Here’s a great product that protects them. We see $20,000 and $30,000 checks going out. That makes a huge difference to someone. … So how do we get them to go online and push that message out there? ‘This is a great product, I had a great experience with it.’”

Turning the discussion back to putting information about products on dealer sites, Wanderon cautioned that could cause complacency to rear its ugly head in the finance office.

“It’s easy for the F&I manager to think it’s a shortcut,” Wanderon said. “‘It’s online, so I don’t have to present it.’ The biggest reason they don’t sell products is that they don’t present them. We don’t want to let that be a crutch.”

A Captive Audience

To the likely surprise of some attendees, Wanderon raised the specter of a rarely mentioned threat to the F&I industry: captive reinsurance companies. They can be a great source of revenue for some dealers — particularly high-volume dealers — but they can lead to disaster for others.

“Dealers think that because they sell five cars a month, they should own their own company and make all the money,” Wanderon said. “Everybody wants to be someone else in this business. The problem that then comes into play is the agent or our distribution channel partners maybe aren’t educated enough to say, ‘Maybe that’s not right for you.’ Our job in the industry is to educate them on where the best option is — not where we make the most money, but where the best option is.”

“I think it’s amazing how much misinformation is out there,” Pryor added. “We still hear from dealers, ‘What do you mean it could go the other way?’ They don’t understand that they might have to write a check if the underlying products don’t perform. And good luck collecting on that if the dealer is in a cash crunch. They need to understand the economics of it and they need to understand the risk of it.”

“The dealer obviously has to be aware they’re on the hook until the tails of those contracts go away,” Saint said. “And you know some of the rewards don’t outweigh it. It has to be managed very well, but much more than that, it’s a risk that’s not for everyone.”

Part of what is fueling this trend, the panel agreed, is that dealers want more cash, and they want more of it upfront. So agents and providers are scrambling to write deals that, ultimately, aren’t a great fit for anyone.

“I’ve seen some crazy stuff, from dealer advances, from fee structures, and for the dealers who have cash-flow issues,” Wanderon said. “I saw one dealer who had $100,000 in the bank and a net worth of $22 million, and he wanted $4.5 million for 250 contracts. That’s a lot of money for 250 contracts at a $95 admin deal. Sometimes I think we hurt ourselves by competing to some of the levels that we do to get a deal, and ultimately that deal goes bad.”

Pricing the Future

Atkinson then brought up the subject of rapidly advancing in-vehicle technology and the pricing challenges it brings. “We’re pricing products that are going to have three-, five-, seven-year lifetime tails,” he said. “And we’re pricing to replace parts in that vehicle that we don’t really have a clue what it’s going to cost in three, five or seven years to repair.”

Complicating the situation, Saint added, are services such as “Vehicle Manager,” a new feature that allows OnStar users to self-initiate a diagnostic check.

“Does the claim qualify for coverage if the on-board system is telling the consumer you’re possibly going to have a problem or you have a problem?” asked Saint. “It still has to go to a technician to confirm whether it qualifies for coverage or not. That’s going to stay the same until the software gets so elaborate that there’s very [few] people who can use it.”

Adding to that uncertainty is that some systems are designed to alert drivers before a part fails — a great selling point, but one that can add both cost and frustration to an already complex situation.

“If the alternator fails, is it covered? Yes. If your OnStar says your alternator will fail within 1,000 miles, and the customer takes it to the dealership, and it’s still functioning at the dealership, is that covered?” Atkinson asked.

“We’ve seen the same thing,” Pryor said. “The frequencies are going up and that’s what’s driving it. … Under our terms and conditions, an OnStar alert would not be covered. The customer has probably become accustomed to that.”

“Everybody keeps saying the car business is the car business. No, it’s not,” Wanderon said in response. “Look at the total losses on GAP. There are more total losses now because of all the sensors and bumpers and airbags and it puts the car over the 50% limit. So it becomes more expensive to change, and we don’t know how much it costs when you don’t price it.”

A Sharing Economy

The discussion closed with the subject of commercial use of private vehicles, specifically among drivers for ride-hailing services such as Uber and Lyft. The panel agreed that vehicles used for livery were a grade above a privately owned pickup truck a construction worker uses to drive to job sites or a sedan a Realtor uses to drive from property to property. Should those vehicles be excluded, Atkinson asked?

“I have to believe, with how those companies have expanded worldwide, that we have to have thousands of them on the books right now that we don’t even know about,” Saint pointed out. “Traditionally, we haven’t covered taxis. Ride-sharing is a little different. This customer owns their car. They have a certain amount of maintenance and upkeep they have to have to be an Uber driver. … I don’t think we’re seeing a negative impact from it. There’s a lot of miles [on those units] and they drive out of their warranty really quickly.”

“I think it’s really a definition of what ‘commercial’ is,” said Wanderon. “Are we going to change that within our policy provisions? The challenge becomes, could you put a surcharge on it to say commercial is in there? Yeah, but you know who’s paying the surcharge? It’s the dealer, because they’re not charging them any more to buy that contract, they’re just eating up their profits. And then, ultimately, you have to deal with it when you have a claim. We need to start looking at pricing. You’re going to have a percentage of the cars that are going to have commercial utilization.”

Pryor agreed, noting he knows his company and others are covering vehicles in the “gray area” of commercial use.

“We know we’re paying claims on Uber vehicles,” Pryor said. “Every so often, you send an inspector out and you’ll get the picture back with the big Uber sticker in the window. We know those are happening. I think it does come down to the mileage and the usage.” As more U.S. vehicles enter the ride-hailing fleet, Pryor added, more drivers will rely on them as a direct source of income. “It starts to change the dynamic with the customer. We have to think about that.”

Noting that Uber is already offering new-vehicle financing options to new drivers, Wanderon said the real threat lies in the company’s foray into the F&I segment.

“I expect that they would have a service contract and a maintenance program out there at some point,” he said. “Their customer program is based on having a nice car and having it available. So that model is going to have some impact on us at some point.”

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National Auto Care Named to Auto Remarketing Magazine’s Power 300


WESTERVILLE, Ohio – Westerville OH-based National Auto Care Corp. announced today that the company has been named to Auto Remarketing Magazine’s Power 300, a list of the most influential companies in the pre-owned automotive industry.

The magazine refers to the Power 300 as a “collection of the industry’s heavy hitters,” and it includes companies from nearly every aspect of the pre-owned and remarketing business.

“National Auto Care is proud to be included in this prestigious group, which includes OEM’s, financial institutions, technology providers and more,” said Tony Wanderon, CEO. “National Auto Care has a long history of service to the pre-owned business, and we strive daily to provide the best products and services to our agent partners and their dealers nationwide.”

National Auto Care offers a broad assortment of F&I products for both the new and pre-owned markets, including VSAs, GAP, ancillary products, limited warranties, certified programs and more.

The Power 300 was announced in the August issue of Auto Remarketing magazine.

National Auto Care also was also honored with a Gold Award for F&I products by the readers of Auto Dealer Today in June 2016.

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Matthew Osborn Joins Ponte Vedra’s National Auto Care Corp. as Chief Information Officer


JACKSONVILLE, Fla. – National Auto Care Corp., a leading national administrator of vehicle service contract and ancillary products, has named insurance and TPA industry veteran Matthew Osborn to the newly-created position of Chief Information Officer. Osborn will be a member of the Senior Leadership Team.

Osborn brings more than 25 years of technology and business development experience to his new position at National Auto Care. He has served in various areas of the industry, including agency management, training, and most notably, as a technology leader for Allstate and Allstate Benefits. His new role will lead the IT, Project Management, and Process Improvement teams with the goal of improving and optimizing the business experience of agents and dealers working with National Auto Care through several transformative projects currently under way.

“I am very happy to welcome Matt to National Auto Care,” said Tony Wanderon, CEO. “He brings a wealth of experience as well as a positive management style that will further our efforts to offer the most responsive and effective service in the F&I industry.”

Osborn holds a bachelor’s degree in Computer Science from Barry University in Miami, FL, an MBA from Jacksonville University, and is a candidate for Doctor of Business Administration at Jacksonville University. He and his family live in Jacksonville, FL.

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