Success Story

Hendrick Automotive Group is a perfect example of what it means to be a successful dealership group. It was founded by Rick Hendrick in 1976, when, at 26, he sold his assets to purchase a then struggling franchise in Bennettsville, S.C, and became the youngest Chevrolet dealer in the United States. He quickly grew it into one of the region’s most profitable, and then looked to a second location and franchise. Today, Hendrick Automotive Group has around 100 dealerships that span the country, a testament to the success and hard work of not only Hendrick, but of the people he brought on board to help him bring his vision to life. In 2020 alone, the company generated approximately $10 billion in revenue after selling more than 219,000 vehicles, and servicing 2.4 million cars and trucks.

Hendrick also got into the NASCAR scene with the founding of Hendrick Motorsports in 1984, bringing yet another layer to the self-described “gearhead’s” portfolio. “If you know anything about NASCAR, [Hendrick) winningest owner in NASCAR history,” says Johnny McKellar, the Senior Vice President of Hendrick AutoGuard, Inc. and President of NationsGuard, LLC. “He had that business, the motorsport and racing business, but really it all started from the car business.”

But Hendrick wasn’t content to simply sell or race cars. In time, he also founded Hendrick AutoGuard, the company McKellar runs today, to handle the underwriting for the administration and customer service of the F&I products sold in his dealerships. “We sell a whole slew of products on the lots, and we underwrite and manage the risks,” says McKellar. “We are a separate group, under common ownership, but the two operate as separate entities.”

Years ago, McKellar notes, Mr. Hendrick realized it made more sense to bring the administration of F&I products inhouse, where they could better serve their vast network of dealers, and keep a tighter control over the roughly 1.5 million contracts on the books. This year alone, he notes, the group enrolled more than 400,000 new contracts in Hendrick AutoGuard, and more than 111,000 contracts in NationsGuard. McKellar notes that while the bigger third party administrators might do larger numbers, it’s still an impressive amount Hendrick AutoGuard is handling, given that volume is all a single dealership group. “We might be a tenth of the size [of some of the bigger third-party administrators], but we provide all the same services – enrollment, processing, risk management, marketing, forms, regulatory concerns, etc.”

In fact, the model has proven to be so successful, the NationsGuard brand was born, taking the same products, service, and experience to other dealerships and dealer groups. “We are now marketing our services to other dealer groups,” says McKellar. “We have a turnkey package to set them up and customize a program to meet their needs, and they can then keep the underwriting profit, and gain access to all the services we offer. We have some proprietary customer service and risk management processes no one else has, so we have an advantage. Plus, we’re also a dealer, and we understand how to meet their needs, and how to approach getting them what they ultimately want.”

Around six years ago, notes McKellar, Hendrick AutoGuard sat down and created a strategic plan on how to grow not only its core administration business serving its own dealership group, but also the NationsGuard business serving outside dealers. He notes that they identified three key areas.

The first, he says, was the people – getting the right people and resources into the right places to ensure the business could grow and flourish. The second was the processes and making sure there was a streamlined path for contracts to take from the initial consultation with customers in a dealership F&I office, all the way through enrollment and activation. Finally, was the systems, and getting the right administration software in place to bring everything together this is where they turned to PCMI.

Initially, says McKellar, Hendrick was focused on producing its own system internally, but realized developing its own system was very expensive and its needs were still not being met. Parts of the internal system worked great, but others still needed a lot of work. The solution, ultimately, was to partner with PCMI after meeting the executive team at a conference, who could come in and fill in the gaps where Hendrick was lacking. PCMI’s PCRS administration system would allow Hendrick to be flexible and customize the software enough to keep what was already working well for their workflow.

One such customization was the claims screens, which McKellar notes PCMI worked with them to customize fairly substantially. Hendrick AutoGuard had developed a streamlined system, making it easy for service managers to pull up a customer’s information, check to see if there is an active service contract or warranty issue, and see if the needed parts were covered. In a traditional system, they would have to call the claims adjuster, who would input all of that into their own system before giving the authorization for the work.

But with the Hendrick AutoGuard system, the service advisors could input the information directly, without needing to speak to anyone, and the claim goes directly into an online queue. Instead of needing days to move a claim through the system to get the authorization to do the work, now, McKellar says, it takes an average of about 15 minutes, giving them a competitive edge. Since they didn’t want to lose that aspect of their internal claims system when switching, finding a partner who was willing to build that into their implementation was a critical factor in choosing who to work with.

“That was the biggest thing we brought to the table partnering with them,” says McKellar. “It made it a lot easier.” The partnership worked because he notes that the PCMI team took the time to really talk to the Hendrick Automotive team, and really learn what their needs were and communicate with them on how to make them happen.

One of the big components that Hendrick AutoGuard was struggling to get right when it relied on internal systems, was the way a contract moved from one stage to the next, how long each stage in the process took, and how the information was actually moved.

He notes that each dealership would sell the contracts, and then print out all the information and send it all to their individual accounting offices to process. From there, the contracts would be bundled into batches and sent via Fedex to the Hendrick AutoGuard team, which would then have to open them, organize them all into product categories, and then physically input the information into the system. “It was a very inefficient process,” says McKellar. “And doing all of that, there was a lot of room for error. We might put the coverage on the wrong contract and have to cancel it out and recreate it, for example.”

They also had little to no e-contracting capabilities, something PCMI brought to the table, allowing Hendrick Automotive Group dealers to have a system that integrates directly with their DMS and menu systems.

“Now the F&I producer who sells the product, when they prepare the menu, instead of having to look all the rates up, they click a button that says ‘get pricing’ and it populates. It’s all built into the system and all the rates available for that vehicle come back, and they can prepare the menu and present it,” says McKellar.

He continues, “and when they close the deal in the F&I module, it shows up immediately in our system as pending. We now know what’s being sold every second of every day. And then when accounting closes it, they run an overnight process that goes in and automatically marks all of those contracts funded and activated – we never process business manually anymore.”

And the difference speaks for itself – before switching to the PCMI system, McKellar notes that it took an average of around 20 days from start to finish to get a new contract through the process. Now it takes just five days, allowing the team to process a vastly increased number of contracts, and do so without errors or problems. He notes that re-contracting has virtually been eliminated as well, further removing even more pain points from the process.

“It marries up all of the data from the DMS with the contract data, and all of our contracts are enrolled automatically when they’re closed in accounting,” says McKellar. “That was a really big efficiency we gained, and why we couldn’t do it ourselves – we had no idea how to make all those systems talk to each other.”

“The decision to buy rather than develop was that [a third party provider] has built out functionality of e-rating and e-contracting, and that made the financial services teams’ lives easier, and accounting teams’ lives easier, and our team on admin’s lives easier,” McKellar continues. “And it eliminated errors, and we have no re-contracting now. The efficiencies gained were enormous, but why we bought versus built was that we just couldn’t pull that off.”

And it was those gains in efficiencies that led to the launch of NationsGuard and taking everything Hendrick AutoGuard learned and making it available to other dealers as well. Thus far, McKellar notes, we are just getting started with an outside business, but NationGuard is enrolling and administering more than 100,000 contracts a year — and is looking for big gains in the coming years.

It all comes back to those initial three things, McKellar notes: people, process, and systems. Hendrick AutoGuard got the right people and processes in place, but it wasn’t until they partnered with PCMI that they were able to fully realize the systems that would take them to the next level. “And that is critical,” he says, “because otherwise we couldn’t make the organization as efficient as we have, and now be in a good position to build our business outside of the group.”