New-car sales drive F&I. Period

Jim Henry is a special correspondent for Automotive News
Excuse me for stating the obvious, but most customers buy F&I products such as extended-service contracts and fabric-and-paint protection when they buy a car. Period.

You could get the impression that’s changing as big retail groups such as Asbury Automotive push to sell extended-service contracts to service customers as a way of becoming less dependent on new-car sales.

But what works for the big guys doesn’t work for everyone. A couple of smaller dealers told me their service customers just aren’t interested in buying an extended-service contract. “For the F&I manager to have an opportunity to make a sale, they’ve got to have the (new-car) traffic,” says William Fox, a dealer in Auburn, N.Y.

Fox says that in December, F&I sales were generated the old-fashioned way: through new-car sales spurred by 0 percent loans.

“In upstate New York,” he says, “it’s all about the monthly payment.”