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ReprintsBig service contract results without the 'fluff'
Automotive News -- January 4, 2012 - 9:31 am ET
 | Lustine Toyota General Manager Jim Giddings: "First of all, Toyota is a great manufacturer. The people who buy this type of car are looking for that quality and reliability. If you menu-price it and explain the product, it's an easy sell." |
Dealership General Manager Jim Giddings says his store doesn't get fancy with F&I products.
The dealership, Lustine Toyota in Woodbridge, Va., near Washington, D.C., doesn't rely on products such as tire and wheel or fabric protection -- "We don't do fluff" -- and shuns reinsurance programs, which, while lucrative, can be "hit or miss," Giddings says.
For the most part, he says, the dealership sticks with the "meat-and-potatoes products that build value for the customer," such as F&I products from Toyota Financial Services, GAP and prepaid maintenance.
And it does just fine -- especially selling extended-service contracts. The dealership's penetration rate is about 60 percent for new and used vehicles combined.
Special Correspondent Jim Henry spoke with Giddings by phone last week.
What were the big sellers in F&I products in 2011? Any new wrinkles?
We sell the factory extended warranty. That is the Toyota products, also GAP and (prepaid) maintenance. We try to stick to the meat-and-potatoes products that build value for the customer.
You don't sell anybody else's products?
We have very high penetration. First of all, Toyota is a great manufacturer. The people who buy this type of car are looking for that quality and reliability. If you menu-price it and explain the product, it's an easy sell. I believe that's the reason we're so successful with it.
We also have this thing we call "Auto 4 Life." For every customer, it's a policy we put on every new car sold. It covers engine, transmission and drivetrain as long as the customer has it.
How high is your penetration?
I'd say it's about 60 percent, new and used combined.
How does that relate to the factory warranty?
When we offer Toyota maintenance, all cars come with two years of free maintenance. The scheduled maintenance is every 5,000 miles or whatever it is. You rotate the tires, little things like that. The 15,000-mile interval is a little bigger, 30,000 is also bigger.
It's a no-brainer to get people to add to that. We can sell the extended warranty, which is basically bumper to bumper.
What about selling F&I products in the service lane?
Our pay plan is set up so the more policies the employees sell, the more they make. We have (sold in the service lane); we try to. We've played with it and flirted with it in the past.
It doesn't sound like you do much of it, though. What about products such as wheel and tire or fabric protection?
We don't do fluff. We do stuff that provides an obvious value to the customer. Toyota is priced very competitively. We do sell credit life and A&H (accident and health).
Do you do reinsurance, in which you sell the dealership's own contracts?
No. I understand you can make a lot of money doing that. But we're in it for the long haul. ...With Toyota, you know you're with a safe company. Years ago, you know, some of those companies went out of business. There was some hit-or-miss stuff. It's a quick buck. I'd much rather partner up with a company you know is going to be there.
