F&I in 2023 - 6 Strategies to Prepare for a Wild Ride

As the industry is nearly 3 years removed from the upheaval of COVID-19 and the effects that lingered for what seemed to be an eternity, dealers are unfortunately entering 2023 with little optimism. 

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2023 has been forecasted to be a difficult year for car buying and it isn’t just one thing that’s driving that pessimism…

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Rising interest rates, inventory levels not fully back to pre-COVID times, cratering used car values down from a record high, and more consumers taking themselves out of the car market amidst recession fears. 

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It’s looking pretty ugly out there. 

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But what’s in store for the new year? How can F&I departments in both franchise stores and independent lots prepare for what could be a quiet 2023?

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Here are 6 predictions for the F&I space in the upcoming year:

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1. Bigger Emphasis on Training - Hiring has been an ongoing issue at dealers across the country. Older managers retiring and fewer younger workers seeking out jobs in dealerships has created a tough situation for staffing. But quality training (which we argue can be done in-house more effectively than by provider ‘schools’) will be a bigger factor in getting new F&I managers up-to-speed faster.

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Good training can also help with staff retention. Give them the tools and strategies they need to be successful and they will stay longer. 

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2. Leveraging Economic Factors - Given that most car shoppers have little disposable cash or credit to pay for unexpected repairs, 2023 will be the year of  the VSC. F&I managers should be prepared to lean in heavily on selling more VSC and actively tying it to the worsening economic climate. After all, higher interest rates on their new car loan takes money away from that big repair in the future. 

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F&I departments also need to add an email process to recapture lost VSC sales after the deal is done. For decades it was assumed that customers would not add product after delivery but that’s a missed opportunity. F&I managers should not be afraid to contact buyers after the sale…even closing a handful in a month can make a significant difference to the department’s bottom line.

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3. Increased Digital Presence -  A study by Cox Automotive in late ‘21 revealed that 67% of car shoppers were more likely to buy F&I products when they had ample online information available to them. COVID forced most dealers to sell digitally and with that came the opportunity to offer F&I products info on their website…something that was rare to see pre-pandemic.

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The trend towards a more robust digital presence will continue into 2023 and beyond. There is no going backwards on this…car shoppers want this information upfront and are more likely to buy. Offering F&I sooner in the process is a winner for everyone.

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4. More Transparency - In keeping with the last trend, giving car shoppers a more transparent experience will continue into 2023. More dealers are offering online short form credit apps, payment calculators, and detailed product or bundle information that all serves to save valuable time once they get to the lot. Gen Z’s biggest complaint about the dealership process? Wasted time. 

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Upfront transparency can fix much of that. Add explainer videos, online F&I chat, and monthly ‘lives’ on social media to help educate buyers on F&I products. It’s what buyers want and 2023 is the time to offer it if you’re not already.

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5. Enhanced EV Focus - Nearly every OEM has announced their intentions to bring more (and in some case, all) of their models to market as EVs. With this comes the F&I space leaning heavily on products that are tailored to the unique build of EVs. Less moving, lubricated parts and more battery tech leave F&I providers scrambling to make sure they have protection plans that allow for those components to be repaired or replaced.  F&I departments have to be ready with the products meant to pair with these vehicles now, not later.

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6. CPO’s, Bigger than Ever - With monthly payments for both new and used cars rising due to higher interest rates, more dealerships will likely turn to CPOs if they don’t already have a program in place. As car shoppers are forced to keep a car longer in hopes that rates will drop and they become more affordable, CPO vehicles become a more attractive and less expensive option for finding a quality low mileage car now. 

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Dealerships can create their own in-house CPO program (we can help you do that here at truWarranty) and leverage private labeled VSC and ancillary products to compliment 150 point inspections. This helps give buyers a better chance to find something close to what they want at a lower payment. 

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2023 doesn;t have to be doom & gloom. Sure, things look a little dicey but PVR’s are holding at an industry record of close to $2k which signals that implementing some of these strategies can do nothing but help navigate a rocky year with success. 

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Let us hear from you…we’d love to show you how we can help your dealership coast into 2023 with every product you need to raise profits and keep your customers happy. We’re built by dealers, for dealers.

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