Which finance and insurance products will dealerships be selling in five years? Experts say it's simple: The best-selling F&I products -- the ones that also are consistently profitable for dealerships -- have been and will be those that provide the most value to consumers.
"It gets down to what is going to help the consumer manage their cost of ownership over the long haul," said Forrest Heathcott, president of JM&A Group, an automotive finance company in Deerfield Beach, Fla. "Those that offer great value are still selling strong because that's what the consumer wants. If the consumer doesn't see value in a product, they are not buying it."
And customers are buying, according to the 2015 J.D. Power and Associates Sales Satisfaction Index Study released in November. Roughly one-third of the customers in the study bought F&I products with their new-vehicle purchase. Extended warranties, more properly known as extended service contracts, were the most commonly offered -- and most commonly purchased -- product, the study found.
Becky Chernek, founder of Cher-nek Consulting in Cumming, Ga., and a former dealership F&I manager, said extended service contracts are generally wise choices for consumers with nonprime and subprime credit who buy used vehicles. Many of those customers are on tight budgets and if their vehicle breaks down "maybe they're going to repair the car and not make the car payment," she said.
She also cautioned against overcharging for products.
"We have these wonderful products, but if you abuse the customer, they're no longer good products, right?" Chernek said. Then "it's a good product with a bad reputation."
Larry Dorfman, CEO of EasyCare, an F&I product provider and training company in Norcross, Ga., said products that are the same should be priced the same to all consumers.
"It shouldn't be that one person pays $595 for GAP [guaranteed asset protection] and another person pays $995 for the exact same GAP on the same car," Dorfman said. "Dealers should charge the same price. If it's a higher price, it's OK to make money on it, but fix the price. You lose credibility and trust of the customer when you negotiate the price."
It boils down to this, say experts: Customers who are happy with the value of their F&I purchases are more likely to return to the dealership to buy more vehicles and service.
So which products offer and will continue to offer value in consumers' eyes? Here are some F&I products that will enjoy continued longevity, according to several experts.