F&I: Maximizing Used Vehicles
Used Vehicles Drive F&I Profits but That's Not All
Used car consumers often seek vehicle protection plans in order to keep older vehicles in top shape, says Wards Auto. Even though used-car demand may decrease as new cars become available, you should still be able to realize the increased F&I revenue for the remainder of 2022 and well into 2023.
Auto News seems to be optimistic about growth as well, “Sales of new vehicles are expected to increase from roughly 15 million units in 2021 to approximately 15.7 million in 2022, even though vehicle production in North America could see as many as nearly 2 million additional vehicles in production over the next year.”
Helping Customers Understand
“Even though the numbers sound great, it’s important that F&I products are discussed with consumers early in the process,” said Terry Schwer, Encompass Dealer Services consulting with Brady Ware. “When a shopper arrives at the finance office, there should be no surprises.”
“One way to help the consumer embrace F&I costs,” said Justin Ward, a Brad Ware Senior Dealership Advisor, “is by offering them insight into why they need it.”
For example, many customers do not realize the amount of technology that it takes to operate a modern vehicle. By clearly explaining the multitude of on-board computers, the increased cost of labor and the inflation-era parts pricing, justifying the cost of vehicle service contracts becomes easy for a customer to understand.
With the current used car market, wear-and-tear coverage with ancillary products are also on the rise. Some dealers also assist with depreciation programs that cover accidents, total losses, or trade ins.
Another F&I trend is in the certified pre-owned (CPO) market. Dealers are creating their own CPO programs. “Internal programs let dealers certify all brands on their used car lots, which allows them to benefit from additional gross, faster turn, and increased customer satisfaction,” Schwer said.
Focus Your Future F&I efforts
Where should you focus your F&I efforts this year and next?
- Pre-owned vehicle service contracts
- Certified pre-owned or Lifetime Warranty programs
- Ancillary programs to protect key elements, such as key fobs, tire and wheel replacement, windshield repair, exterior appearance protection, interior protection, and theft deterrent
- Maintenance programs that drive service retention
- Digital retail offers
“Training is also key,” Ward said. “Upskilling your F&I team on a regular basis, with easy-to-understand and dealer-customized training is invaluable. With one-on-one or group training sessions, with real-life scenarios, your team gets a leg up on the competition by discovering opportunities they may have missed in the past.”
Customized Services to Reach Your Financial Potential
Presently, there are plenty of opportunity for dealerships who offer the right selection of F&I products.
