AUTO MARKETING: J.D. BYRIDER WORKING FOR NATIONAL RECOGNITION

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What McDonald's Corp. did for hamburgers and french fries, J.D. Byrider Systems hopes to do for the small, mom-and-pop used car lot that caters to the "buy here, pay here" customer.

To do that, Byrider needs to overcome the perception of the corner used-car lot as a place where consumers are preyed upon, says W. Steele Gudal, exec VP-chief operating officer.

"The merchandising of our stores and the marketing of our business tells the consumer that we're different than Joe's Used Cars," he says. "We're trying to build a Blockbuster . . . and have a national brand name that's marketed properly."

BLUE-COLLAR TARGET

Byrider's target customer is the blue-collar worker who is looking for a reliable 5-to-10-year-old car in the $5,000-$6,000 price range-a target not sought by the new superstores.

But that customer quite often will have a poor credit history. So Byrider dealers provide on-site financing through the company's CarNow Acceptance Co. subsidiary.

"Our customers are looking for basic transportation to get them back and forth to work or to school," Mr. Gudal says. "They just need a Ford Taurus, not a BMW."

Byrider was founded in 1989 by James F. DeVoe, a Marion, Ind., Chevrolet and Cadillac dealer. The company has grown to 85 franchised and company-owned stores with total 1996 revenue of $210 million. Byrider says it sold more than 30,000 cars last year, a 49% increase from the 20,613 sold in 1995. Plans call for another 25 stores to open this year.

Byrider's ad production, geared primarily to TV, is directed by the J.D. Byrider National Advertising Group. The group is controlled by a board of six franchisee members and three corporate representatives.

The board has given Mr. Gudal control over this year's $750,000 production budget, double that of last year, which is funded from franchisee contributions. The national ad group prepares print and broadcast materials that franchisees place with their own dollars in local media.

Byrider is currently assembling 15 new TV spots with Pearson Crahan Fletcher England, an Indianapolis agency that began working with the company in late 1996.

MEDIA POWER

Mr. Gudal says Byrider has an opportunity, and the buying power, to dominate TV advertising in its market niche. For example, its 22 stores in Indiana contribute $3,000 per month for TV time, for a total of $792,000 annually.

"The independent used-car dealer just can't fight that type of awareness," Mr. Gudal says.

New Byrider TV spots focus on what Mr. Gudal calls the "trust issue." The company's recent focus group research has shown that used-car salespeople rank at the bottom of the trustworthiness scale, right alongside politicians.

The Byrider TV ads use two themes: a "buddies" approach in which friends, spouses, neighbors and coworkers talk to each other about used-car shopping; and the "authoritarian skeptic," which features G.W. Bailey, an actor who appeared as an officer in the "Police Academy" series of movies.

In both approaches, Byrider addresses the trust issue head on by outlining its no-haggle sales approach backed up by a service and parts warranty.

"Your advertising drives your business and it really distinguishes you from other companies," Mr. Gudal says.

The recent turmoil in the sub-prime automotive lending market-notably the problems experienced by Mercury Finance and Jayhawk Acceptance-doesn't affect Byrider's bottom line, Mr. Gudal says.

That's because Byrider gets income from both CarNow Acceptance loans and also the margins from auto sales, he says. Independent subprime lenders, which serve customers with less-than-sterling credit histories, must rely solely on earnings from their loan portfolios. And, because of the risky nature of the loans, charge-offs can run 20% or more of the value of the loan pool.

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