Subaru store lifts vehicle sales, F&I with combined process

The move to a noncommission, combined sales and F&I process led to higher F&I profit per unit, sales and customer satisfaction scores at Subaru of Las Vegas, General Manager Burton Hughes, right, says. He's shown with Ted Terry, the store's general sales manager and F&I director. Photo credit: LAUREN PETRE

Burton Hughes never worries that the salespeople and F&I managers at Subaru of Las Vegas will clash.

About 18 months ago, he began a transition that has culminated in combining F&I and sales.

The result -- an 89 percent increase in profitability over the first five months of this year compared with the same time period in 2015 and a sales process that eliminates some of the negatives Hughes disliked about traditional car sales.

“I wanted this dealership to be as transparent as we could make it while preserving the profit center,” Hughes, the general manager, told Automotive News. “I could see [when I began work at auto dealerships 39 years ago] at age 19 that there were high-pressure tactics. I didn’t like that. I don’t want the salespeople to be under pressure to make a sale in order to pay their rents, so I thought about how we can make this work as seamlessly as possible?”

Winning strategy
Subaru of Las Vegas moved to noncommission sales in the 4th quarter of 2014 and reworked its F&I process in the 4th quarter of 2015. Here's how the dealership has improved in the 18 months since the changes.
F&I profit per retail unit15%
New car sales25.80%
Used car sales22.40%
Customer satisfaction score+32 basis points

His solution was to break down the sales and F&I operations by level with clear-cut duties. Product specialists greet customers, answer general questions about vehicles and capture basic customer information. Salaried purchase advisers replace traditional salespeople. One purchase adviser is assigned to work with each customer through the entire transaction, including selling the vehicle and F&I products and walking the customer through financing and signing all paperwork. F&I managers work behind the scenes, devising finance options and putting together the paperwork.

‘No surprises’

Hughes believes the revamped sales and F&I process makes the customer experience better. “Our [product advisers] present each customer with the finance options along with the products and services available -- such as service contracts, GAP, tire, wheel, dent-and-ding and other products -- during the initial deal presentation,” he said. “The customer agrees on the options best suited to their needs, and the digital contracting is completed by one of three F&I officers. There is no upselling during the final contracting stage, eliminating one element that can lead to buyer’s remorse: coming out of the finance office with a vastly different deal than was initially agreed upon with the sales department.”

He added: “We’ve had great customer satisfaction success. Customers prefer having all buying options presented upfront rather than negotiating a price for a car and then coming out [of an F&I office] owing $50 more per month because of extended warranties, GAP insurance or maintenance agreements. There are no surprises along the way.”

The purchase advisers’ one-on-one work with customers frees time for the F&I managers to negotiate with lenders and complete all necessary paperwork. Hughes noted the dealership has the fewest finance contracts in transit and the fastest funding among the 28 stores making up Findlay Automotive Group, of which Subaru Las Vegas is a member.

“We average a 30 percent reduction in the typical ‘days to fund’ than other high-volume retailers in our automotive group, Hughes said. “I believe this is a byproduct of the finance work load being spread out to multiple officers managing their own contracts and communication with the banks and credit unions versus one finance director/manager trying to chase the funding for a majority of the transactions of the dealership.”

CarMax, Apple influence

Hughes designed Subaru Las Vegas’ noncommission sales system and F&I process based on reading what some auto giants, including CarMax -- from which several of his employees hailed -- do to increase sales and customer satisfaction. He also “took notice of the Apple Store way of providing excellent and informative customer service and the relaxed vibe of the Starbucks culture,” he said.

He calls the changes made at Subaru of Las Vegas a “revolution.” But he notes that other auto retailers are latching onto the notion of a noncommission operation, too.

“We do have a unique store here,” Hughes said. “But we are not alone. Many dealerships are starting to transition away from commissioned sales and F&I as a way to improve the customer experience.”

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