From the implementation of better technology to improving menu presentations and offering greater transparency, F&I is shifting towards a more customer-centric process
Learning about finance and insurance options remains one of the least pleasant aspects of the car buying experience for consumers — but that is changing, according to Derek Sloan, Vice President of Sales and Training at Sym-Tech Dealer Services.
Sloan works for a Canadian provider of training programs, protection products, F&I software and other support, and he is knee deep in the F&I part of the business. Through his recent travels, offering classes and training to dealer groups across Canada, he was able to pinpoint three big trends to watch for: non prime, menu presentations/better technology solutions for customers, and hybrid F&I.
“I think the biggest trend first of all, if you’re talking specific to F&I for new car dealers, and the one I’m confronting the most right now, is non prime,” says Sloan. “The growth in the non prime market is increasing, and that pertains to both F&I and car sales as well.”
It’s a category that is becoming more prevalent and a bigger focus for new car dealers, who may not understand this aspect of the business as well as some more traditional used car dealers, he adds.
F&I is also moving to a more compliant and full disclosure process that is more customer focused. The old and more conventional way that managers would present these products is slowly fading, and the shift to full disclosure-style menu presentations, with good technology solutions that present products in a more customer-centric way (giving customers the option to make choices), is making its way to the forefront.
The final trend Sloan sees coming up is the hybrid F&I process, where there is no F&I manager and the sales representative handles the transaction from beginning to end.
Sloan says he instructs dealer groups on how to take the deal from point A to Z without transitioning to an F&I manager, but that this trend is “not as strong today as it will be in the next three to four years.”
“I just had a speaking engagement with a dealer group a few weeks ago and it’s the old saying, ‘you have a choice.’ There’s going to be a technology company that is going to come out and discover a better way and a better experience, and they are going to take all of this away from you. Or, you can do it yourself,” says Sloan. “You can be a disruptor or you can be disrupted.”
He believes that the F&I process will become less painful in the future, where customers will simply be able to go on their smartphone, get a list of F&I products, and choose whichever ones they want, on the car that they are buying, on their smartphone. “But that’s still down the road a little bit,” says Sloan.
Rob Mackenzie, Vice-President of Sales at Final Coat, a provider of appearance protection and other F&I products, also sees technology as playing a big role in F&I. However, he highlights retention and transparency as two of the big trends to watch for.
“I think dealers are looking for more and more ways to bring their customers back into their facilities,” says Mackenzie. “Dealers are not seeing customers every 5,000 kilometres like they were a few years ago. Now they might be seeing them every 16,000 to 20,000 km, so there is definitely a push on to look for an angle to drive a customer back into the dealership.”
Mackenzie believes that competition between dealers has always been strong (and is only going to get stronger), and that they are always looking for F&I to add an edge to the deal “so that the deal makes sense to the business.” Technology will help them drive that retention, and transparency is a part of that equation.
The need for more transparency is no longer a new trend, but it’s still one to pay attention to because so many dealers consider F&I to be an important piece of the business.
Now that modern car buyers are more educated and more easily informed than ever before, thanks to technology, F&I operations will have to become more transparent than ever. Much like selling new vehicles, F&I managers and salespeople will have to brush up on their consultative selling skills.
“F&I has always been and probably always will be an important component of a car deal, and what we are really just seeing is how that is manifesting, and how that is transitioning from the beginnings of step-selling F&I to a more modern digital presentation,” says Mackenzie.
