6 Tips to Be Ready for F&I Success in 2022
F&I in 2022 should, by most accounts, be a solid year for profits. 2021 saw PVR rise to record levels due in large part to higher prices across the board. Even though new car sales were hampered by the chip shortage and supply chain issues, F&I staff were making the most of the deals they were able to do.
A record rise in used car prices didn’t hurt either as some areas were showing as much as a 30% rise YOY. And everyone knows more used car deals will always lead to higher PVR with increased risk to the buyer at a time when they can least afford unexpected repairs or a lost key fob.
As 2022 is a month in, it’s a good time to look at how dealerships can set up their F&I departments for increased success to help insure another strong year. Industry surveys are showing that 50% of car shoppers will likely put off buying in 2022 but as much as 40% of those buying will switch their focus to used cars instead of new. With a forecast like that, it’s important to be on your A-game.
Here are 6 important tips to be sure the New Year has F&I ready for big things -
- Quality Training - With many F&I ‘school’s popping up across the industry, there is no excuse for having F&I staff not trained properly in sales techniques, compliance, and product knowledge. There is no bigger CSI-killer than a customer getting the sense that their F&I manager is making things up as they go or pressuring them into buying products.
Develop a training plan that helps keep the team accountable through consistent sessions, role-play, and the use of outside trainers if necessary. There is always something to be said for a fresh set of eyes on the things that need to be fixed sooner rather than later.
- Sales Handoff - Your sales team plays a pivotal role in preparing your customers for the F&I part of the process. Make sure they understand how to properly qualify the customer, watch for any red flags that need to be addressed, and encourage the use of dealership financing (especially if they suspect the customer may have credit union pre-approval). Consider team incentives as motivation.
- Lean Into Digital - If COVID taught this industry anything, it made dealerships realize the importance of a strong digital presence and process. Make sure your F&I staff is embracing the online presentation channel and making themselves available for online Q&A and presentations with customers who prefer that over coming to the lot prior to delivery. It’s here and it’s not going away.
With 92% of surveyed car shoppers saying they do research online prior to starting the car buying process, it’s more important than ever to have your F&I staff engaged as much as sales. Offer education on the features and benefits of products and in some cases (think ancillaries), offer an online price for a bundle to make it ever easier to add into the transaction. Transparency leads to a faster sale and a higher level of trust between you and the customer.
- Better Reporting/Compliance - A deep dive into all the numbers in F&I is important to being able to quickly identify and fix any issues with product or personnel. What’s selling, what’s not, PVR penetration analysis, chargeback percentage and on what products, etc are all key statistics to look at regularly (at the very least monthly). These valuable insights can usually be found through your DMS or here with TruReports as a part of a suite of F&I products.
Compliance procedures should be looked at every year as a part of keeping up with regulations that may have changed on a governmental level or with your vendors. There is no excuse for missteps with so much information online and through F&I schools to keep your F&I department on the straight-and-narrow.
- Realistic Benchmarks - Average revenue by the Fall of 2021 was closing in on $1900 PVR (new and used) with VSC leading the way for product followed by GAP, appearance, and PPM. For any F&I department, it’s important to set your own benchmarks of what your market should bear. A single-point store in a more rural area may not have that high of a number for the PVR goal. Crunch the numbers and see what a realistic goal should be where you are.
- More Financing Options - Review all of your current finance options across captives, local banks, and indirect relationships with local credit unions. A quarterly review will help shed light on sources that either are too locked into prime or super prime only and those that are actively offering more flexible terms for buyers that have a few dings. Make sure all of your finance arms are working with you, not against you.
TruFinance can help you in your search for new local sources of financing that could be a solid compliment to your captives. Buyers, especially now, need more options and preferably ones that work well with your F&I staff to buy strong and buy deep when needed.
F&I holds the key to a large portion of dealership profits and while most of these tips are important year after year, 2022 is likely going to have its share of challenges as ‘21 and ‘20 did with COVID and the lingering variants. Bright spots are starting to show but it’s always good to look at each new year with an eye on a getting-back-to-basics approach while staying relevant to changing times.
TruWarranty is your partner in this evolving F&I landscape and we’re here to help your F&I department take the next steps towards higher PVR and CSI. We would love to speak with you about how to help your team today…contact us today!
Most people would agree that the dealership environment works best when all the managers across departments work together for the common good of the store. Each department is in some way interdependent on the other for support for the common goals of profitability. Service can support sales efforts in F&I, Parts and Service fit together like a glove on a daily basis, and F&I managers often lean on Sales Managers to help bring in buyers that are qualified before they come into the office.
What if we told you there was an easier way to consolidate your financing partners and your F&I providers all in one free menu?