General Motors is bringing sales of its branded finance and insurance products in-house, taking over from captive finance company GM Financial, in a move designed to get those products on more GM dealerships' radar.
"Looking at the business and the focus it needs, and the whole landscape, we determined in conjunction with GM Financial to have GM Customer Care and Aftersales be the sales force," said Ken Mac, director of extended protection products for GM.
The change means a sales force dedicated to F&I products carrying the Buick, Cadillac, Chevrolet and GMC brands, he said. GM dealers learned of the change in a memo late last month.
GM also is adding to its offerings prepaid maintenance, lease wear-and-tear protection and other products, on top of the existing lineup of extended-service contracts, tire-and-wheel policies and guaranteed asset protection, Mac said.
Last year, GM assigned GM Financial field representatives to introduce GM dealerships to the program. GM launched the F&I products with a pilot program in Ohio in May 2013. It planned a nationwide rollout by the end of 2013.
But today "just north of 20 percent" of GM's roughly 4,300 U.S. franchised dealerships are signed up to sell the branded products, Mac told Automotive News.
He said GM Customer Care and Aftersales hopes to start improving sales penetration in the fourth quarter of this year and the first quarter of 2015. He said the new sales team also wants to help GM dealerships sell extended-service contracts in their service lanes.
Mac said the branded F&I products launched last year ran into a tough market. "There are very formidable competitors out there who have been doing this for decades," he said.
Former GM captive Ally Financial is one of the main competitors. That's especially true because Ally retains the right to use the GM Protection Plan brand name until November 2016.
Greg Williams, sales manager and business manager for Rentschler Chevrolet, in Slatington, Pa., said his dealership doesn't sell the GM F&I products, but he's open to the idea. "We haven't signed up for these plans yet as we've been a loyal GMPP dealer for years," he said. "I'm sure we'll be looking at them closer as they gain more traction in the marketplace."
One strike against the GM-branded F&I products is that they were initially introduced without the opportunity for dealers to participate in reinsurance. GM added reinsurance last summer.
In reinsurance, dealers invest in reserves used to pay future claims. Dealers share in the underwriting profit -- money left over after paying for claims, for insurance and for administration fees -- and also investment income, with big tax benefits.
GM also plans to introduce an option for "retro" profit participation for dealers late this year or in early 2015. That allows dealers to earn a portion of the underwriting profit, depending on the claims experience with the contracts the dealership originates. Retro participation is less profitable than reinsurance, Mac said, but also less risky because the dealer doesn't have to invest in reserves.
"The message I'd like to get out is, we're not waiting," Mac said. "Dealers really shouldn't wait for the time when Ally no longer has GMPP for sale, because we've got some exciting things as a member of the GM family that you can't get anywhere else."