Rising used-car prices shouldn't hurt F&I

The cost of used cars will keep rising this year. But that doesn't mean customers won't have the funds to buy those pricey F&I products on the back end.

The National Automobile Dealers Association expects the used-car supply to remain tight, keeping prices up. In some vehicle segments, such as minivans and near-luxury vehicles, prices could increase by 3 percent or more from last year, said Jonathan Banks, NADA's executive automotive analyst.

So, if people are paying more than ever for a used vehicle, would they still have the funds or financing to buy F&I products?

According to Banks, data show that last year dealers sold many F&I products, even to those paying for high-priced used vehicles.

"I think dealers have figured out how to explain to consumers the reasons for buying those products," Banks said. "I don't see rising used-vehicle prices hurting those F&I sales in 2012 either."

Banks speculated that perhaps as dealers focus more on customer service, used-car buyers feel the same as new-car buyers in the way the dealership treats them. Indeed, many dealers say their used-car buyers are given the same treatment and offered the same amenities that new-car buyers get.

Services that were once reserved for new-car buyers, such as special vehicle service clinics, now also are extended to used-car buyers at some dealerships.

It stands to reason if a customer wants a service contract or roadside assistance or some other F&I product, dealers will find ways to get it financed, offer an acceptable price and make it happen.

F&I is a big profit generator no matter where it comes from. As Banks said, "Buying used isn't a dirty word anymore."

25

Shares

ATTENTION COMMENTERS: Over the last few months, Automotive News has monitored a significant increase in the number of personal attacks and abusive comments on our site. We encourage our readers to voice their opinions and argue their points. We expect disagreement. We do not expect our readers to turn on each other. We will be aggressively deleting all comments that personally attack another poster, or an article author, even if the comment is otherwise a well-argued observation. If we see repeated behavior, we will ban the commenter. Please help us maintain a civil level of discourse.