Tablets are far from mainstream F&I tools

Since he started using an iPad to take car buyers through the finance and insurance process, Tim Dulaney has seen product sales and profit per vehicle jump.

Dulaney, finance director at Chandler Chevrolet in Madison, Ind., made the change in January 2012. By year end, the dealership's product sales had gone from an average of less than 1.5 per vehicle sold to 2.5. Profit soared by $425 per vehicle, a 22 percent gain.

"I knew by the end of the first month it was what I was going to be on permanently," Dulaney said. "With the iPad, you have the flexibility to go and sit down where the customer is. It breaks down that barrier, and that's where I believe a lot of our success is coming from."

With encouraging results from some early adopters, dealers increasingly are exploring the use of tablet computers to present menu options in their F&I departments. Some dealers and vendors say tablets will improve product sales and profits, boost customer satisfaction and possibly trim transaction times. They expect widespread adoption as tablets become common in other areas of the dealership, such as sales and service, and as consumers become more accustomed to using them in their everyday lives.

But despite the promise, tablets are still far from mainstream in F&I. Challenges facing a more widespread rollout include expense, resistance from finance managers and integration problems with dealership management systems.

Some public dealership groups are studying the technology intently.

"It's a work in progress," said Mike Jackson, CEO of AutoNation Inc., the nation's largest retailer in terms of unit sales of new vehicles in 2012. It has done some pilots on using tablets in F&I.

Sonic Automotive Inc., the nation's third-largest retailer, plans to wrap F&I into an iPad-based sales process slated to be rolled out during the second half of 2014. Sales reps at Sonic's 100-plus stores will handle a vehicle sale from beginning to end, says Jeff Dyke, Sonic executive vice president of operations. Sonic will retain current finance managers to help supervise the process.

"We've got a sales associate with an iPad in their hand, and they'll be able to complete the entire transaction, including the appraisal, including the desking of the deal and including finance, all on their own," Dyke said.

Sonic executives decided to move to a tablet-based process because consumers are demanding a quicker, more seamless experience, Dyke said. "We're going to be prepared for the future customers," he said.

Adoption by public retailers could create a tipping point for the technology, said Shawn McCool, co-founder of iTapMenu, a vendor in Carmel, Ind.

The company, which launched its iPad-based menu at the beginning of 2012, is conducting pilots with two public dealership groups, McCool said. He declined to name them. Hundreds of dealerships use iTapMenu, McCool said, though he wouldn't share a precise number. Dulaney, the Chandler Chevrolet finance director, is one user.

Another vendor, MaximTrak Technologies, says the mobility a tablet allows is attracting dealerships. Some finance managers, particularly in Florida, use the company's product to conduct remote sales.

"It basically just rendered everything we do portable," said Jim Maxim Jr., president of the Wayne, Pa., company. "We do see a better customer experience."

Clients typically gain a $250 to $300 increase in profit per vehicle retailed, and transaction times are trimmed 10 to 15 minutes on busy weekends, Maxim said. In a pilot the company did for Chrysler Group dealerships, profit per vehicle increased 27 percent, and service contract penetration rose 33 percent.

OptionSoft Technologies Inc. in Clifton Park, N.Y., has about 450 stores using its Mobile Menu product launched in 2010, shortly after the iPad's introduction. "It wasn't the mobility that was the big interest for us," said Nick Sennett, sales and technology manager. "It was the interactivity with the client."

The 150-plus dealerships that already had been customers saw a 12 percent increase in profit per vehicle retailed after adopting the technology, Sennett said. That translates to an average bump of around $100.

Despite such reported gains, many dealers and finance managers are still waiting and watching.

Many finance managers, in particular, are skeptical about tablet-based menus. One concern often expressed is that dealers could use the technology to displace them and create hybrid sales/F&I positions that pay less money.

Vendors say they try to discourage such moves.

"Hybrid managers are not why this product was built," Sennett said. "If anyone ever asks me my opinion on it at the dealership level, I say stay away from it. Without an F&I professional, our product is not going to be ineffective -- but far less effective."

Some dealership service pro-viders say it's too soon to tell whether tablets are the best option. Dealerships have experimented with other methods of electronic menu presentations such as using a second monitor or putting a flat display screen on the wall.

Dealerships shouldn't seek out tablet-based menus "just for technology's sake," said Chris Woerner, vice president of product management at ADP Dealer Services, a supplier of dealership management systems. "The F&I managers have to see value," Woerner said. "They're going to use tools that help them do their job and sell more products."

ADP will conduct a pilot with a large dealership group this summer on using a second monitor in the F&I office. That second monitor could be positioned in various ways -- back-to-back with the finance manager's primary monitor and facing the customer or mounted on a wall for both customer and manager to view together. Though it won't start this way, the monitor could be enabled with touch-screen capabilities later to promote customer interaction. Woerner would not disclose the retailer but said it is among the country's 10 largest dealership groups.

Reynolds and Reynolds, another dealership services giant, expects tablets to take a bigger role in the sales department, said Ed Pontis, the company's director of product planning. But though customers also want a more interactive process in the F&I department, Pontis isn't convinced that tablets are the answer there. Reynolds already sells DocuPad, an electronic F&I menu screen and processing system that is embedded into a desk in the F&I office.

Whether tablet systems win out over DocuPad or other approaches, it seems clear that change is coming.

"The thing that will drive [an electronic process] ultimately is consumer demand based on the experiences they get with other retailers -- whether I'm buying electronics or clothes or my groceries," Pontis said.

Regardless of which technology wins, it's important to remember that the hardware used isn't the ultimate key to success in the F&I department, said Craig Monaghan, CEO of Asbury Automotive Group Inc., the nation's seventh-largest dealership group. Asbury has experimented with tablets in some departments at some dealerships, but the company has no corporate initiative under way to convert its F&I departments to tablets.

"We're very proud of the success our F&I people have had. We've come a long way," Monaghan said. "But we got there with people and process and training. Not a tablet."