Digital F&I transparency

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Many Canadian dealerships have made great strides in boosting transparency, as you will discover from the feature story in this issue.

But although steady progress has been made in sales and service, it hasn’t yet fully made it to most F&I offices in Canadian dealerships. That’s too bad.

I get that full transparency into the inner workings of the business office can make dealers nervous. Frankly put, there’s a lot of money at stake. In a July 2016 article, Forbes magazine reported the average per-car profit from F&I was just over $1,600. Those are American numbers, but Canadian dealers will know their own numbers.

But it’s about more than money. Consumers who are used to spending countless hours shopping, pricing and configuring their vehicles and playing with the payment calculators on OEM and dealer sites won’t really be happy with entering the F&I office mostly unarmed.

In fact, research shows they don’t much like it at all.

In a study of more than 500 consumers by Cox Automotive, 71 per cent of participants said they would prefer to do their F&I research at home, compared to only 29 per cent who said they would prefer to do their “learning” at the dealership.

For the 71 per cent who want to shop at home, 34 per cent would prefer using a third party site, 32 per cent a dealership website, 22 per cent through an OEM website and 11 per cent through a print publication.

The challenge is, there’s not a lot of good, easy to access information for them to research from home. Some dealers and their F&I providers are working at improving this by offering more information, but it’s not where it needs to be. Yet.

Perhaps the best finding from the study, for dealers, is that giving consumers access to information before they arrive at a dealership, also leads to an increased willingness to purchase these products

The fears of some dealers, that more information will lead to lower sales of these products isn’t necessarily rooted in fact.

The same study found customers see value in F&I products and they do want to know more about them: 85 per cent say they believe F&I products have real value and 72 per cent say they are interested in learning more about F&I products.

But perhaps the best finding from the study, for dealers, is that giving consumers access to information before they arrive at a dealership, also leads to an increased willingness to purchase these products, with 63 per cent saying they would be “more willing to purchase” if they had the option to do research before finalizing their vehicle purchase.

If that’s the case, then OEMs, dealers and their F&I partners should be developing more robust online tools to showcase the range of F&I products, with some information tools to help consumers educate themselves about the pros and cons of various products for their particular situation.

They should also use more digital tools like videos, apps, kiosks or self-guided portals to let consumers browse F&I products while they are in dealerships. Gone are the days when a handful of dog-eared brochures from all the different F&I providers would do the job.

When you consider the vast range of products that cover everything from credit and financing, prepaid maintenance plans, tire & wheel protection, Guaranteed Auto Protection (or GAP) insurance, window tinting, anti-theft products, paint and fabric protection, excess wear and use protection, credit insurance, rust protection, accessories and a host of other aftermarket products — it’s not reasonable to expect an F&I manager or a consumer to talk about it all during a brief business office meeting.

The greater risk is that even your best F&I manager focuses on the lowest-hanging fruit, the consistent repeat sellers, and ignores many of the other products that consumers might be most interested in. That’s not good for anyone.

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