In the next few years, F&I’s pace of change will likely hit the gas pedal.
F&I innovation needs to happen faster than ever to keep up with technology, consumer preferences and state and federal regulations.
There are plenty of unknowns as technology begins to transform the auto industry. But what is known is that as vehicles continue to advance, dealerships likely will need an array of F&I products and services that don’t yet exist to satisfy those cars and drivers. Failure to capitalize on that opportunity would leave a mark on F&I product sales, says John Pappanastos, CEO of EFG Cos.
Changing consumer buying habits also will continue to affect F&I. Most customers prefer online shopping, and many dealerships and product providers are latching onto that. Some now enable customers to view F&I product details online, and with programs such as MakeMyDeal, customers can often factor F&I product prices into their total vehicle transaction cost.
Customers also favor customization, Pappanastos says, so F&I products with adjustable terms and benefits will likely be crucial.
Regulators’ eyes on the auto finance market and F&I product sales also could alter the F&I environment. The Consumer Financial Protection Bureau, Federal Trade Commission, state attorneys general and other regulators will likely continue to examine F&I products and services. Pappanastos says his dealership clients are requesting more compliance tools and training to prepare for it.
Acknowledging the known changes, and anticipating the unknown ones, is essential for F&I innovation. Northwood University and EFG Cos.’ F&I Innovator of the Year competition enables students to invent F&I products, with EFG producing and marketing the winning product. Students who will soon be automotive industry players are already starting to consider how F&I can be transformed.
EFG expects the winning product from last year’s competition to hit the market by the end of this year. If EFG and Northwood continue this contest annually, it will be on track to have products that match the industry as it changes.
The industry is evolving fast. F&I companies would be smart to follow EFG’s lead and position themselves to handle the known and unknown.