CHESTERFIELD, Mo. — Behind capturing the financing, the sale of F&I product offerings represents the second largest opportunity for margin growth for dealers (57.6%), according to results of a dealer survey conducted by Protective Asset Protection.
The F&I product provider surveyed 1,573 dealership owners and professionals between March 5-9. Results show that a majority of dealers are concerned with falling auto sales, as well as dealership consolidation and administrative challenges to their current roster of F&I products. More than three-quarters (78.8%) of dealers surveyed said their current F&I products don’t offer enough margin for the dealership, and nearly half (48.5%) said their current F&I offerings are too much of an administrative burden.
A significant number of dealers said they sell a vehicle service contract on 15% of all new vehicles sold, while 36% said they sell a vehicle service contract on 25% of used vehicles sold. Dealers also said the Top Three barriers to selling vehicle service contracts include inadequate coverage (66.7%), price and customers not seeing the value (both at 63.6%).
Ideally, 63.6% of dealers said they would like to have more control over claims adjudication for their F&I products, and another 57.6% said they would like to have control over branding their own F&I products. Training remains critical, as 54.5% said more training is needed to sell F&I products, and 51.5% said more education is needed to help sales staff when handing customers over to the F&I office.
“Margin opportunities will remain a central concern for dealers in the coming years, especially as sales pressures increase for both new and used vehicles,” said Rick Kurtz, senior vice president of distribution for Protective Asset Protection. “Many of these dealers will rely on F&I offerings to make up this margin, but they’re saying they want their own F&I products they can offer to their customers to increase margins further, help with the overall branded experience, and improve customer satisfaction.”
Originally posted on F&I and Showroom