Sales of finance and insurance products contribute a sizable share of the typical auto dealership's profit. So cutting costs in F&I departments is a way for dealers to boost income, right?
Some dealers and dealership advisers say there are opportunities to trim F&I overhead. Others, though, are skeptical.
Standardizing processes, curbing payrolls and adding technology, mainly to reduce paperwork, are among the most promising moves, the cost-cutting advocates say. A few dealerships even have eliminated their F&I departments.
But Carl Ragsdale, vice president for dealer services at the National Automobile Dealers Association, preaches caution.
He says that F&I professionals generally are the dealership employees who explain the products to customers.
They also provide a growing array of disclosures, most of them required by federal and state governments, Ragsdale says.
The F&I department is not the first place to look to save money, he warns, because violations of disclosure rules can create far more costly legal headaches.
"Explaining the products is fairly technical," Ragsdale told Automotive News. "It takes a high degree of expertise and knowledge of all the statutory regulations and ethical requirements. So I don't see the F&I department as the area where dealers are able to reduce their expenses very much right now.
"Of all the departments, perhaps that is the one in this day and age that demands the highest-quality and most knowledgeable professionals."