Dealer Mike Thompson has spent about $200,000 over the past two years on additional training for his finance and insurance managers.
He wants them to sell more extended service contracts, tire-and-wheel policies and other F&I products so his dealership group can rely less on finance reserves from auto loans to support F&I revenue.
"I've known for the last 20 years, in the depth of my heart, that the days of the big finance reserve would go away. You have to be prepared," said Thompson, CEO of Montrose Auto Group in Akron, Ohio. Montrose owns 10 dealerships selling 17 brands in Ohio and Pennsylvania.
Thompson's fear that he could soon lose the ability to make a healthy profit from finance reserves is well-founded. The Consumer Financial Protection Bureau has been pressuring auto lenders for the past few years to stop allowing dealerships to set their own reserve amounts. Some F&I experts predict those pressures will result in most lenders adopting a flat fee structure to pay dealerships.
Some dealers, like Thompson, are preparing for the possibility of flat fees by giving employees extra training in selling F&I products. But most aren't, F&I insiders say. Only about one in five dealerships nationwide have boosted F&I product sales training in the past two years, they say.
"There is no doubt that all dealerships should be having training done now to teach more product and value [and] less rate so that when the real changes come they don't drop significantly, or at all, in F&I income," said Larry Dorfman, CEO of F&I product provider EasyCare.