F&I offerings and presentations evolve

Ian Vandenbark and his finance and insurance staff for three Germain Motor Co. stores in Columbus, Ohio, used to "present and defend" F&I products. They would present the products to customers and then defend those products by explaining why customers needed them.

No more. Now, the team asks customers a simple question: Do you hope to get the most money for your vehicle when you get rid of it? Virtually everyone says yes.

That's the team's cue to explain that vehicles that undergo proper maintenance, are kept in top cosmetic condition and are still under warranty generally snag the highest resale price. They then point out that the dealership sells products consumers can buy to help make that hope a reality.

The switch to the more consultative, conversational approach has brought measurable results. The finance department's revenue in 2009 grew by 40 percent in 2010 and from there, more than doubled in 2014.

F&I products and the ways dealerships present and sell them are evolving based on customer need and aided by technology, say dealers and F&I experts.

"Our stores really took off and grew by changing our mindset," said Vandenbark, who is business manager in charge of F&I for Germain Mercedes-Benz, Cadillac and Infiniti dealerships. "We did have some staff changes, but the process aided it as well. There is a psychology to that approach." The vehicle sales volume for the stores was roughly the same, he added.

Germain Motor ranks No. 78 on the Automotive News list of the top 150 dealership groups based in the U.S., with new-vehicle retail sales of 11,661 units across 12 dealerships in 2014.

Bundling F&I products into packages is becoming popular. That makes the products easier for F&I professionals to present without seeming to bombard customers with a laundry list of a dozen or so separate products.

Arzu Algan is the dean of education at the Automotive Dealership Institute in Scottsdale, Ariz., which trains dealership F&I professionals. She said wheel-and-tire protection and key replacement are separate products that are growing in popularity and increasingly sold together. Add prepaid maintenance and paint and fabric protection, and you've presented the customer with "full protection," she said.

"If it's packaged, it's a better value, it's full protection, and it's easier to present," she said.

An unscientific, online survey of dealers, F&I professionals and others interested in F&I, conducted by Automotive News, shows that many dealership F&I departments still use paper menus. But that's changing.

One that doesn't is Mercedes-Benz of Coral Gables, near Miami.

In June 2012, the store switched from using paper menus to present its F&I products to using iPads under a then-pilot program created by Dealertrack Technologies Inc. in cooperation with Mercedes-Benz Financial Services, said Scott Cooper, the dealership's financial services director.

The dealership saw an almost immediate difference in customer engagement of the products, he said. People like using touch screens to navigate through the graphics and video product presentations.

The department's average profitability per vehicle retailed and number of F&I products sold per retail sale both increased roughly 10 to 15 percent soon after the dealership made the switch, Cooper said. It also helped improve the store's overall customer satisfaction numbers, he said.

The increases were "consistent and solid, not up and down all the time," he added.

On the other hand, Phil Johnson, F&I consultant at Ramsey Mazda in Urbandale, Iowa, near Des Moines, said paper menus work just fine at his dealership. He said he can make product adjustments and draw graphs, if necessary, to get his point across to customers.

He said his dealership offers about four levels of coverage. They range from basic, which is a service contract, to platinum, which includes virtually every product the dealership offers. But the majority of his customers buy the products individually, he said, adding that the proliferation of potholes around Des Moines, coupled with the expense of replacing tires and wheels, has made wheel-and-tire replacement a popular product.

According to the company that provides the coverage, he said, "98 percent of the people who have tire-and-wheel file a claim."