Online F&I product sales a 'struggle'

Driver's Village has readily embraced offering credit approvals on its e-commerce site,, but it has yet to sell extended service contracts and other F&I products online.

Dealership staffers must either present F&I products to customers when they take delivery of their car or contact them later by phone, says Lou Bregou, a director of operations at Driver's Village. Selling F&I online is "an uphill struggle," he says. "We're not there yet."

Sun Toyota in Holiday, Fla., finds itself in a similar situation. While the dealership's website,, has been taking online credit applications for several years, the site has yet to progress beyond simply providing F&I product information, acknowledges Michael Chaparro, the dealership's sales and marketing manager.

The two companies' lack of progress underscores how even tech-savvy stores can be flummoxed when it comes to creating a viable online F&I sales process.

At the moment, though, it's not a particularly big concern for Driver's Village, which operates 16 dealerships and 20 new-car franchises at a former shopping mall in Cicero, N.Y., north of Syracuse. The company, as a whole, is not "a big F&I store," says Bregou, who is director of operations for 10 of the group's dealerships.

The stores Bregou oversees produce about $550 in F&I profit per vehicle retailed, representing about 30 percent of total sales gross. In comparison, top F&I dealerships can generate $1,500 in F&I revenue per vehicle, which could amount to 50 percent of total sales gross, he says.

Sun Toyota, by contrast, is a large F&I producer, already falling into the $1,500 category. Still, Chaparro is looking forward to the time when the dealership can add F&I products to its website.

"I would absolutely love to increase our ability to sell these online," he says.

The Tampa-area dealership started taking online credit applications five years ago, when Southeast Toyota Finance, which offers auto financing in five Southern states, came out with a credit amnesty program. Customers who made their last payments on time were automatically preapproved for a low-rate loan. The dealership sent an email blast to customers directing them to Sun Toyota's website, where they could fill out a new credit application without having to come into the dealership.

Sun Toyota specializes in "secondary" customers, meaning those with bad credit, Chaparro says. But the dealership doesn't run credit checks on customers until they come into the showroom. Instead, the credit application is simply a lead source.

"We will schedule an appointment with every customer," he says. "When the customer comes in, we know what the customer is looking for and find them a car that meets their needs. Then, in front of the customer, we assess their credit situation. We know in the finance world that everybody can be approved under the right deal structure."

Information from the online credit application gets exported electronically to Sun Toyota's customer relationship management tool and is used to populate the actual credit application, which runs through Dealertrack software.

If customers leave the online credit application before completing it, Sun Toyota uses digital retargeting ads when they visit other websites to remind them to come back and complete it.

Chaparro says Sun Toyota gets 200 to 250 credit applications a month on average. By comparison, he says, "I'd like to think the average dealership gets 15 or 20." Sun Toyota's conversion rate from credit applications to sales is about 25 percent, he says.

F&I product sales are an important part of Sun Toyota's profitability. The dealership averages $1,500 per vehicle on back-end products on the about 650 new and used vehicles it sells monthly. Sun Toyota looks to spur F&I sales by explaining product offerings on its website.

Prominent on the dealership's home page is a Financing button that includes a scroll-down menu. The third option on the menu -- after "Get Pre-Approved In Seconds" and "Incentives" -- is "Finance Products." Click on it, and another scroll-down menu appears. It lists Car Care, Gap Insurance, Vehicle Protection Plan, Lease Excessive Wear & Tear and Road Hazard Tire & Wheel Protection.

The Gap Insurance page includes an audio description as well as written material that explain the product, along with a link to print a PDF brochure.

The other F&I product pages are similar. The Vehicle Protection Plan page, for example, includes several tabs with descriptions of coverage options, along with a PDF brochure link. In addition, Sun Toyota's customer relationship management system automatically sends emails to customers whose manufacturer's warranty is about to expire that hyperlinks them to the Vehicle Protection Plan page.

To purchase any of the products, however, customers have to contact Sun Toyota and come into the dealership. Sun Toyota has a dedicated Internet sales team to answer customer questions.

Chaparro admits that Sun Toyota's online F&I effort so far "is not setting the world on fire by any standard." But the dealership is making progress, and there is evidence that customers are willing to browse its online F&I product brochures and, when they arrive at the store, make a purchase as a result. For example, he says, it is "common to have a customer walk into the showroom and negotiate a car deal and say they also want GAP insurance and Car Care, and then they'll pull out the brochure they downloaded from our website."

One obstacle to online F&I product sales, he says, is the amount of documentation consumers have to produce to complete a contract, such as a copy of their driver's license and an accurate odometer reading. "We are trying to figure out how to sell them online, but we'll get there," Chaparro says.

In the meantime, the store continues to draw a couple hundred credit applications a month. Chaparro says dealerships that don't have an online presence "are missing the curve."

"The days of just posting your inventory on the website are long gone," he says. "You need to keep people on your site and give them all the information they're looking for."

Bregou, of Driver's Village, agrees.

"If you think e-commerce for cars won't ever get here, then don't do anything," he advises. "But if you feel customers want to do more online, that they want to have the trade appraised and they want their credit approved before they walk in, you should do it for your customers. That's what we are doing."

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