F&I departments as we know them today are doomed, if they continue along the traditional path. To survive F&I in the brave new world of automotive retail they have to evolve from a transactional, dealer centric process to a streamlined, customer-centric experience.
Resistance is Futile
Numerous studies have shown that consumers are dissatisfied with the F&I process and prefer a faster, less fragmented, consumer friendly experience. The demand for change is overwhelming and since most dealers are afraid to deviate from the current highly profitable, but often-confrontational model, the digital disruptors and the OEMs will drive the change.
Digital disruptors like OMS Direct, Carvana, Vroom and Beepi allow consumers to buy a car online and have it delivered to their door with no sales person or F&I interaction. They offer unprecedented vehicle return guarantees that eliminate risk and build confidence in their brand. Each of these companies developed technologies to provide an omni-channel, customer centric experience that drives sales, CSI and loyalty. Ryan Keaton, Chief Brand Officer of Carvana, which is currently selling 2,000 cars per month says it best, “We’re a tech company, that sells cars!”
If you look at the credentials of their executives, you’ll find people with Ivey League educations that entered the auto space because it’s a fragmented, multi-billion dollar industry where there has been virtually no innovation for over 75 years. The digital disrupters will continue to grow and take market share from conventional dealerships.
“The demand for change is overwhelming and since most dealers are afraid to deviate from the current highly profitable, but often-confrontational model.”
Manufacturers have been pressuring dealers to provide a more streamlined process for years and will continue to exert pressure until dealers are forced to act. The writing is on the wall as eleven Lexus dealerships recently launched a one person, one-price sales strategy under the direction of Lexus USA.
The OEM Driven Sales Process
Manufactures will mandate a technology driven, single point of contact, one price sales process where there is no need to negotiate and no turnover to an F&I Manager.
Dealers will be offered lucrative financial incentives to hit both sales and F&I targets. While this will add to the challenges that dealers are currently facing, it will also allow them to increase profitability while dramatically improving CSI. Plus, redistributing the wealth from the F&I Managers to the sales professionals will allow dealerships to pay base salaries and higher commissions.
A New Breed of Automotive Sales Professional
The technology driven processes that offer lucrative pay plans will attract people with greater levels of expertise, professionalism and competency. This means that retail automotive will become a “go to” as opposed to a “fall-back” position and will it no longer be the last bastion of the unemployable.
Sales departments will be divided into sales teams. These teams will be supervised by team leaders that allocate leads and continually interact with their team members and customers to assist with rapport building, appraisals and closing. This will allow the sales professionals to remain at their clients’ side during the entire transaction. The team leaders will report to supervisors that ensure every step of the process is adhered to. The supervisors will also manage inventory, handle dealer trades and report to the GM. This type of structure provides a clear path for growth within the dealership, which will dramatically lower turn over and decrease HR costs.
The salaries paid will ensure that the mandatory processes are adhered to. These processes include an interactive dealership tour with an introduction to service and several F&I product demonstration stations where the sales executives plant the seeds and build value into their integrated F&I presentations. This will ensure that every customer receives the same high level of boutique style customer service.
21st Century F&I
Financing menu creation and paperwork will be scaled to handle multiple dealerships in a centralized location. These finance centres will be staffed by teams of hourly administrators that report to team leaders, under the supervision of F&I Directors who are former F&I Managers. This will also increase the dealer groups’ ability to get tough deals financed as their scale has grown from one F&I department that serves one rooftop to one department that serves multiple rooftops.
Sub-Prime Special Teams
In the Finance Centres you will also find special teams of sub-prime administrators that handle the ever-growing numbers of customers with credit challenges.
F&I and the vehicle sales transaction will be handled simotainiously using a mobile device that acts as an interface between an off-site F&I administrator and the Sales Professional. The F&I administrator gets deals financed, creates a needs-based menu so the sales professional can present the products. Administrators will also process the paperwork to ensure it is flawless.
The average transaction time will be 45 minutes to a maximum of one hour and deliveries will occur as soon as the paperwork is completed.
The Blue Chip Takeover
Dealerships that don’t evolve will be absorbed into dealer super groups that are run by blue chip investment companies like Berkshire Hathaway. Alternately the progressive dealer groups like Sonic and AutoNation will continue to gain market share and absorb the antiquated, under performing dealerships.
My Vision of the Future
There you have it, after years of working with traditional dealerships and studying and writing about the digital disruptors this is my vision of the future. Am I a visionary or a fool, only time will tell?
Author: James De Luca
James De Luca, Vice President of Digital Road to a Sale Inc., has been increasing profitability at car dealerships with innovative training solutions since 1998. In 2015 he developed the world’s first Omni-Channel F&I process to empower dealerships with the ability to eliminate “No T/O’s” by delivering equally effective F&I presentations to anyone, anytime, anywhere, on any device. In 2015 he founded the Digital Road to a Sale Inc.