Higher Car Cost Means Getting Creative with the F&I Menu
Used cars are running at unprecedented prices due to the chip shortage and low inventory which is making car shopping particularly painful these days. Car shoppers are traveling hundreds or miles or more to find anything that is even close to what they need.
In a word….it’s nuts.
But F&I has become the big winner here with record high PVR across the country with some stores topping $2k per deal. At the intersection of higher cost to purchase and higher interest rates is a BIG win for dealer revenue.
With low used car inventory comes some opportunities for a more creative approach to help buyers with the overall higher cost of buying F&I products on the back of a higher payment.
You may have buyers who want ancillaries like interior/exterior, PDR, and alloy protection but due to the higher payment they may be facing they may feel it’s just too expensive. One way to help give them what they want and still preserve the ability to keep PVR and penetration up is to create packages.
Make the package a smaller cost when taken together (which shouldn’t be a problem if your administrator offers low backend costs anyway….like TruWarranty. But enough about us…).
For those dealers who may already offer packages, many stick to one or two at most. Conventional wisdom is that too many packages could confuse the buyer and that the straight ‘up and down’ menu is the better way to go.
F&I menus should not be difficult to navigate and there may be a better option when it comes to making sure you have the packages that make it easy to take one versus none.
If you have a large enough F&I product offering, your dealership could simply build out 3 different levels of ancillary packages to include all the most popular and important products to keep their new-to-them used car looking good for their potential trade-in down the road.
Buyers want choice…now there is an easy way to give it to them.
Imagine three different ‘combination’ packages could look like this:
3 main products - $295
4 main products - $495
5 main products - $695
….you get the picture.
Consumers, when presented with three graduated levels of a service with adjusted pricing to match, will almost always pick the middle or higher package. Why? No one wants to look cheap or like they cannot afford the middle or higher priced package.
Offer the packages or bundles for a price that makes sense to the buyer…not too high, though, as you could make them nervous. After all, remember how high those monthly payments are right now. It’s best not to scare them off from an appearance protection package that’s too expensive to be added to the loan.
We all generally react well when given choice and that’s the thing to remember here…it’s not a take-it-or-leave-it proposition. You are presenting them with choices based on the level of protection they want and that can be a powerful way to help sell more product.
And the buyer will appreciate the ease of looking at a well-thought out bundle and being able to quickly see the value without a long, protracted sales pitch. It’s a ‘here they are…pick the one’ scenario that takes a ton of pressure off F&I.
Click here to learn more about how ExoGloss, powered by TruWarranty, can be a part of that package-of-choice strategy in F&I.
Credit unions are the financial institutions to have tighten credit the most, which presents a new opportunity for F&I departments
Online reviews are critical to the success of just about any business and yes, that includes car dealerships.