WHAT WILL BE ON YOUR NEXT F&I MENU?
It seems everyone has an appetite for F&I products these days.
In the U.S., Cox Automotive announced that through its acquisition of F&I provider SilverRock Holdings, dealers will be able to offer customers products such as extended service contracts, GAP and vehicle-theft protection.
Earlier in October, Hyundai Canada rolled out a new suite of branded F&I products that it said will triple the size of its current offerings.
It’s not surprising that more and more F&I products are saturating the market, given all of the revenue-generating opportunities in the business office.
Some F&I products have been around for years, such as roadside assistance or creditor insurance, while others, like paint protection, have exploded in popularity more recently.
But have you thought about what’s going to be on your F&I menu over the next five years or even decade?
As technologies, demographics and buying patterns shift, it’s hard to predict what products customers will want.
Chris Cawston, President and General Manager of Sym-Tech Dealer Services Inc., says trends in the marketplace are dictating what products might have staying power — at least within the next few years.
Here’s what might stay on your F&I menu:
Extended warranties: As Canadians hold onto their vehicles longer, they will need coverage that exceeds their manufacturer warranties. Customers will look for ways to protect themselves from expensive repairs, making extended warranties an attractive option, says Cawston.
Flexible offerings: Why pay for 20,000 km worth of coverage when you only drive 10,000 km a year? The best products out there offer a dynamic rating, meaning they determine what the customer needs and tailor the offering accordingly, says Cawston. Customers will appreciate having control over their coverage, leading to better CSI.
Appearance protection: With more people deciding to keep their vehicles on the road longer, they will want to keep them looking good and protected from rust and corrosion.
Products that don’t offer any flexibility to the customer could also be on their way out. These days customers, especially millennials, are driving the car buying process, and they are looking for choice.
Lease protection plans: When a vehicle lease is up, customers want to hand over the keys and move on to their next vehicle. What they don’t want to be doing is incurring hefty penalties for excess wear and tear. That’s why many of them opt for the peace of mind that comes with various protection packages.
Lease penetration has been growing rapidly but whether or not these will remain popular over the next decade is hard to say, as the last economic downturn also reflected a decline in leasing.
Credit life and GAP products: With finance terms stretching out as long as 74 months, negative equity for extended durations is a reality in many finance contracts. Credit Life & Disability and GAP products protect consumers in the unfortunate event of illness, disability or loss of life.
And the products that might not make sense in the future?
That’s trickier to figure out, says Cawston.
I’m hearing lots of conversations about autonomous vehicles at conferences and in the press.
There’s no question that as this technology matures, there will be pressure on legislators, insurance providers, OEMs and dealers to adapt their offerings.
The move to transportation as a service that we hear about will evolve as an additional option for consumers over a period of decades, not years says Cawston. The suite of F&I products must reflect consumers needs, preferences and ownership styles.
Demand will continue for current F&I products but we will also have the opportunity to create new offerings that meet the needs of consumers as their style of interaction with vehicles evolves.
These days customers, especially millennials, are driving the car buying process, and they are looking for choice. Products not offering flexibility to the customer could also be on their way out.
Even if a few products phase out over the next few years, it looks like the F&I menu will continue to be full of options. But that doesn’t mean you need to offer everything, either.
Your F&I offerings should be just like the menu of a gourmet restaurant. Some of the best restaurants opt for a small, focused menu made of top quality ingredients that go well together. They don’t have endless pages of dishes.
Instead, they know what their clients want.
