Here are five F&I trends to watch out for in 2012, according to dealers and officials at financial institutions that do retail business with dealerships.
The first four are closely related; the last one is a wild card:
1. More players, more competition. The upside is that lenders will be courting dealers.
2. Thinner interest-rate margins. More competition among lenders inevitably forces them to cut rates and try to make it up on volume.
3. Greater volume. Increasing credit availability, the possibility of lower prices and recovering household finances should produce higher unit volume.
4. Greater emphasis on aftermarket products. Potentially thinner per-unit margins on financing mean more emphasis than ever on F&I product sales at dealerships.
5. New regulation. Assuming the Consumer Financial Protection Bureau gets its act in gear, it could generate new requirements for financial institutions that ultimately affect dealerships -- even though most franchised dealerships are exempt from direct bureau supervision.