The value of financing and car warranties are the foundation of a successful auto dealership. A study by IBISWorld revealed that the market size for auto warranties in the US would be at $18.4 Billion this 2021.

Furthermore, about 85% of new vehicle purchases are through car financing.

These studies prove that people who buy cars are also willing to purchase service contracts and get them through financing.

However, this does not immediately translate to higher profits for every car dealership. You need to use the right approach and technique to get a bigger slice of the sales pie.

Your Finance and Insurance (F&I) department is the key to improving your business performance. Read on and discover various ways to properly polish and manage your dealership’s F&I.

Importance of Financing and Insurance to Dealerships

According to Automotive News, F&I profit soared for most dealership groups in the U.S. in 2020. However, other dealers are lagging behind because they wrongly believe that their sales team is enough.

To achieve higher profits, the sales team must be in sync with the F&I department. The department still does a great deal of the work, though – helping buyers look for the best financing and insurance options they can get.

Why F&I is Still Significant for Auto Dealerships Today

As most buyers prefer purchasing online, F&I has also adapted to a digital environment. However, large shopping platforms like Amazon have spoiled customers with their quick and easy buying process. Therefore, your F&I manager should also make the entire procedure as efficient as possible.

To stay on top of the new norm, your F&I department must turn to creative solutions. Have your finance experts use the right tools and software to provide customers with the best options while increasing the dealership’s profit margins.

Another thing to note is that no single F&I package can work for all customers. Thus, it is crucial to understand each buyer’s unique needs and preferences before even attempting to upsell with add-ons.

Maximizing Your Dealership’s F&I Profits

People get easily intimidated when faced with pages after pages of words and numbers. It is what they would feel if your F&I department tried to upsell without much explanation or preparation.

You should know that the secret to maximizing your sales and profits is making the customers feel more comfortable with your F&I manager and your dealership as a whole.

First, connect with your online customers by shifting your perspective to relate to their needs and preferences. Introduce your brand and make them trust the dealership.

Inform the customers how your products and services can help them – subtly injecting in their minds that they can’t do without these items. Additionally, make it easy for the buyers to purchase from you by having a user-friendly website and a simple checkout process.

Doing these steps will boost your dealership’s sales and make the customers happy with your service. This way, they will recommend you to their friends and colleagues – giving you more potential clients.

Regular Assessment of F&I Performance

To help you succeed and improve your F&I performance, ask yourself the following questions at least once a month:

  1. How are you growing to help the dealership?
  2. What are you doing every day to move closer to your goal?
  3. Are you able to build a connection with customers?
  4. Are your offers irresistible enough to make the customers buy?
  5. Is your goal helping you on your path to success?

Answering the questions outlined above as honestly as possible can help you see which areas you need to improve. Closely monitor your progress and keep yourself accountable every step of the way.

Not Everyone can be an Excellent F&I Professional

Most F&I firms are insurance experts but know nothing about the auto industry. However, there are a select few, like The ACE Group, who provide automotive consulting services backed by extensive experience in the car business. Working with F&I professionals who are also car guys like you can benefit your dealership in more ways than one.

Some of the products and services offered by The ACE Group includes the following:

  • GAP insurance
  • F&I product financing
  • Warranties and extended service contracts
  • Compliance services
  • Sales and F&I training
  • Inventory management services
  • Prepaid maintenance programs

F&I professionals who genuinely understand what your dealership needs and wants will be able to provide the best solutions for your customers, allowing you to grow your business.

Boost Finance and Insurance Performance

Providing finance and insurance services can be an overly complicated task. But with the proper guidelines, you will be able to incorporate F&I into your dealership with no problems. The steps below can help you optimize your business strategy and increase your dealership’s revenue:

1. Use Proper Timing to Introduce F&I

It can be challenging for average F&I personnel to master when and how to introduce the add-ons without jeopardizing the entire transaction. Even though they know deep down that a service contract is a wise investment, most customers cringe at the thought of increasing their car’s monthly payment.

If you’re having trouble getting the most out of your F&I department, the following pointers can help you get started:

  • Build rapport: Create a connection before providing options that can satisfy both your customer’s needs and your dealership’s goals.
  • Know how to handle objections: When faced with disapprovals, your F&I department should know how to acknowledge and narrow it down to its cause. This way, it will be easier to explain the offer for the customer to understand its benefits.
  • Train the team: Never underestimate the power of training your entire team. Properly trained professionals can help boost customer satisfaction and retention.

2. Bundle Your F&I Products

Another way to boost F&I performance is to relieve your customers’ concerns and reduce overwhelm. Offer bundled packages and explain how these add-ons can benefit the buyers and save them money in the long run.

3. Partner with the Best Auto F&I Consulting

However profitable your dealership is, you need an equally satisfactory auto F&I solution to complement it and drive even more sales.

With F&I accounting for half of a dealership’s revenue, you must offer competitive auto service contracts. And if you want better profitability for your dealership, it would be wise to partner with an excellent auto F&I consulting firm like The ACE Group. 

The best automotive F&I consulting services can help ramp up your dealership’s sales and profits through the following:

  • Establishing a Dealer Owned Warranty Company (DOWC) program in-house
  • Offering customers with products and services not provided by your competitors
  • Providing continued training programs for your F&I department and sales staff that include guidelines on compliance and the best practices

Improve Your Auto Dealership with F&I Deals

Keep in mind that consumers want the best deals that meet their needs rather than the dealership’s interest. Taking the key points outlined above into consideration, you should be able to demonstrate to your customers that you have their back and not just out to make a buck. Work with the industry leader in auto consulting, The ACE Group, for help in doing all these while adhering to the compliance standards.

Are you ready to bring in more sales and revenue to your auto dealership? Contact The ACE Group today to get a free analysis.