The neat organization of dealership F&I departments isn’t so neat anymore. And industry researchers believe online retail is the reason why.
F&I managers have long performed the orderly task of moving vehicle buyers through the paperwork, loan processing and purchase of ancillary F&I products. But those clearly defined job functions are showing signs of unraveling, said Ted Kraybill, CEO of ESI Trends of Largo, Fla.
“We’re seeing some new approaches to F&I department organization out there that we’ve never seen before,” said Kraybill, whose firm manages studies on the nation’s auto dealership workplace for the National Automobile Dealers Association.
“And we’re hearing some F&I job classifications that NADA simply doesn’t have in its playbook. We want to get a better handle on what’s going on.”
Kraybill’s company is studying some 300,000 dealership employee payroll records to analyze trends for the 2015 NADA Dealership Workforce Study to be released later this year. His team has spotted a number of evolutions:
- At some stores, F&I managers have been eliminated altogether, and sales personnel are handling loan paperwork and selling ancillary products, such as extended service contracts.
- Some retailers have turned their F&I managers into “deal facilitators.” At those stores, the salesperson handles the financing and insurance issues; an F&I specialist is called over to the negotiations only when needed to resolve a problem or answer a complex question.
- Some dealerships have begun dividing up F&I department workloads, introducing second-tier department employees to prepare transaction documents before they reach the F&I manager. That shift in particular would represent additional headcount at dealerships. But it might also point the way to improved F&I throughput, if it frees up managers to work with customers to finish more deals.
It also has implications for F&I department overhead, if the department is employing more personnel at lower compensation levels.
“The real driver behind all of this is the increased use of online retail tools,” Kraybill said. “The customer is coming into the showroom already knowing a lot of what used to be handled by four different people. They know their trade-in value. They’ve probably locked into a sale price. They might have their loan preapproved. So they don’t want to deal with a lot of different people at the dealership. That impacts the function of the F&I office.”
Any evolution in the organization of F&I departments is significant, as the departments deliver more of the retail trade’s gross profits. Last year, NADA reported that combined sales from F&I, service contracts and other products accounted for 39 percent of the new- and used-car departments’ gross profits in 2013, up from 37 percent in 2012.
The evolving nature of the F&I department is coming to light as NADA looks more closely into how the nation’s 18,000 new-car dealerships are managing their employees — an aspect of auto retailing that the association traditionally has not tracked. In last year’s Dealership Workforce Study, NADA presented Kraybill’s findings on such points as average salaries by job description and trends in employee benefits packages.
As his team begins analyzing dealer data for the 2015 study, Kraybill said, it will dig deeper into how F&I jobs are changing and why.