Changing the F&I Line-Up

Changing the F&I Line-Up

I n today’s marketplace, change seems to be the theme. The lending advance model is not immune to this wave and it has changed over the past year. Advances for the traditional F&I products and services have been curtailed by the lenders. As we all know, when the advance is cut the F&I income streams are the first to be sacrificed. Yet, it is vital to the health of the financial statement that F&I remains a critical profit center. Therefore we must rethink the F&I product and services line-up. It is no longer the line-up of the usual suspects. Think about F&I selling accessories that are considered by the lenders to be “hard adds.” Hard adds are defined as things that need to be added to the vehicle. Once they are installed they cannot be removed. Make a list using the used car guide as a resource to identify the opportunities.

Our customers want to customize their vehicles and, in some environments, they really need to invest in additional items to properly maintain and protect the vehicle. For example, window tinting is a product that actually adds value—it protects the interior from harmful UV rays and cuts the heat in the vehicle, which allows the air conditioning to operate more efficiently. I am continually surprised at how many dealerships are not offering this product to their customers.

Recent SEMA research has shown that over the first three months of this year, nearly one out of every 10 consumers surveyed (nine percent) planned to purchase accessory and appearance products. This translates to slightly more than 10 million U.S. households planning to purchase some type of appearance accessory for their cars or trucks.

According to SEMA, the top five aftermarket items are:

1. Appearance/body accessories

2. Engine products

3. Suspension system products

4. Custom tire and wheels

5. Exhaust system products

Are you offering any of these products to your customers or are you sending the profits down the street?

Focusing on customizing opportunities will benefit the parts department in addition to benefiting the service department. The income stream is spread out over three departments and the customer has the convenience of one-stop shopping. Since the items can be added to the vehicle at the time of sale, the cost can usually be included in the amount financed as an addendum to the invoice or book value of the collateral.

After listing the available customizing opportunities, think about how you can include theses items in your presentation. Best business practice is to make an accessory presentation book. This sales aid will assist you in creating a mental picture of your customer using these particular add on items.

If, for example, your customer has children and the family often goes on long road trips, a DVD entertainment center would be a lifesaver. You might be thinking, but my sales consultants do this already. They might, but how many of their deals have actual add-on items? Most sales consultants are fearful of adding on anything because the customer may want that item “tossed in.” The result is the sales consultants view accessories as a cost-of-sale item and not an income-producing venue.

Yet, when you have vehicles on sale, customizing them is really the only way to increase profits. The sales consultant will have to remind the customer they are purchasing the vehicle at a “special price” and there simply is no room in the deal for the dealership to enhance the vehicle gratis, which most customers should find understandable.

Other dealerships will have a special accessory or a “pre-F&I” stop on their road to the sales process. This is a great way to grow future F&I professionals. It is a step that can be used to exhaust the seven to ten minutes between the commitment on the purchase from the customer and the F&I professional introducing himself or herself to the customer.

Whether you have F&I do the accessory presentation or an accessory professional give the upgrade opportunities, this is a process that should be capitalized upon by your dealership. Do you hear the opportunity knocking on your door?

Dealer Marketing Magazine, December 2009