Yet even though Mr. Peltier's seven-acre used car "super center" in Tyler, Texas, offers bumper-to-bumper 30-day warranties, a three-day no questions asked return policy and a well-received road side assistance plan, he still feels he's at a disadvantage when it comes to customer loyalty.
He may be right.
There's an overlooked segment of the automotive market that when approached properly breeds customer loyalty. It's called subprime lending: the financing of car purchases by people with spotty credit records.
Manufacturers and dealer groups are looking at the subprime market as an area to breed customer loyalty-and hopefully create repeat customers.
REMEMBERING HELPING HANDS
"Loyalty from used-car customers is important as the used-car segment is growing," says a Ford Motor Credit Co. spokeswoman. "When people have trouble and you help them back to credit solvency, they don't forget. Our research does show that."
Ford Motor Credit is moving into subprime lending this May. Through its new subsidiary, Fairlane Credit, Ford will finance auto purchases for "good people with bad credit" at all of its new-car dealerships, which includes Lincoln-Mercury stores.
About 70% of subprime borrowers are used-car buyers. And Ford realizes people favorably remember those who helped them during tough times.
"When we're calling a past due, we're not going to just say give me the money. We're going to talk to them about what's the problem, what's the cause and can we help you with a cure," says Jerry Heimlicher, president of Fairlane.
For those with little problems paying off the loan, Fairlane will pre-approve the next purchase at the selling dealership through Ford Motor Credit, which gives a lower interest rate.
General Motors Corp.'s Saturn subsidiary is also trying to generate loyalty among used-car buyers at its stores-even if consumers are buying a used non-Saturn.
"Whether, it's a Saturn or a non-Saturn you get the money back guarantee, a 30-day or 1,500 mile trade-in guarantee," says a Saturn spokesman. "And then the no-pressure, no-haggle, no-hassle sales and pricing philosophy has been adopted to the used car process."
The customer who comes to buy a used car at Saturn works with one person through the whole purchase process, which includes a review of the independent data upon which Saturn based the price of the vehicle.
Saturn's data show that 87% of its used-car customers said they would definitely recommend the Saturn used-car process and 89% percent said they would recommend their retailer. Those percentages, the spokesman says, mirror new-car customer responses.
Some dealer groups are trying to engender loyalty through subprime lending.
Fletcher Jones Management Group in Las Vegas, Nev., started subprime lending in 1989. About 4,000, or 25%, of its annual transactions are subprime loans.
Tom Downer, the group's finance manager, says subprime customers do return. But the key to that loyalty, he says, is giving them a "positive, proper experience and [to] handle them with dignity.
"Our big solid rule is that we must, from the owner down to the newest porter, make an effort to welcome all people, whether they have good credit or bad credit, and treat them exactly the same," Mr. Downer says.
Ford and dealer groups like Fletcher obviously moved into subprime lending to make money. But they realize an important aside is they have the opportunity to generate customer loyalty and move used-car buyers into their new-car showrooms.
With the emergence of loyalty-oriented subprime lending programs and the relaxed showroom environments of the new superstores, it's obvious that thousands of independent dealers, new car and used car alike, are at an extreme disadvantage in the used-car loyalty game.