Dealers have moved toward embracing online vehicle shopping, electronic negotiation and even virtual test drives. But completely digital F&I experiences? Not so much.
Automakers' captives and other companies are stepping up their digital immersion. For example, in January, Ford Motor Credit Co. partnered with AutoFi, which automates online vehicle sales and financing, to enable car buyers to complete the entire transaction online except for signing the paperwork. And Mercedes-Benz Financial Services and luxury-car dealership Fletcher Jones Motorcars are working on branded apps with AutoGravity, which matches customers with dealerships and offers up to four lenders through a mobile app or website.
Many dealers see such moves as innovative measures that may work for some retailers but aren't right for all.
"I just don't think F&I is there yet," said William Feinstein, president of Planet Honda in Union, N.J. "The question is: What do consumers want? I have yet to see a customer satisfaction survey or even consumer comments that say consumers want to discuss F&I while sitting on their couches, at least right now."
Dealer Bill Wallace, of Wallace Auto Group in Stuart, Fla., agrees. Online F&I sales could boost the number of overall F&I sales a dealer could make, but Wallace is concerned customers would make purchase decisions based on an incomplete understanding of those products.
"From a practical standpoint, we have not seen much consumer desire to pursue that type of a transaction except for the rare occasion where the people are not geographically convenient," Wallace said. "Most people look forward to taking delivery of their new cars, and with the technology that is ever changing in these products, it is crucial that the customer spends 30 minutes or so" at the dealership understanding the intricacies of their vehicles and how to best protect them, he said.
A 2015 finance and insurance study from Cox Automotive's MakeMyDeal reported that dealerships that don't introduce F&I products to customers before meeting them in the showroom could lose F&I sales. But some dealership executives question whether car buyers truly want a fully online experience.
Among them is Planet Honda's Feinstein, whose store retailed more than 7,300 new Honda and used vehicles in 2016, ranking it among American Honda's top 10 sellers of new and certified-used Hondas for the year.
"Certainly, the way transactions are conducted will evolve over time," Feinstein said. "But I think it's important to remember that what consumers say they want -- say, for example, no-haggle pricing -- and what they really want are often different.
"Frankly, it goes across all ages, from millennials to boomers. So while I think there are geographic areas and demographic segments that may want a more progressive model, right now, the majority of consumers still want to do business face to face."
Bruce Schindler, owner of Bob Davidson Ford-Lincoln in Baltimore, believes migrating F&I online could negatively impact consumers in various ways.
"Online transactions don't give us the opportunity to present the products," Schindler said. "That harms the consumer because many of them have preconceived notions about F&I products, many of which are not valid. When a customer comes in, I have an opportunity" to build my case.
Another downside to consumers completing their F&I purchases online is that it could make them vulnerable to fraud and identity theft, said Tyler Corder, CFO of Findlay Automotive Group in Henderson, Nev.
"Dealerships have an obligation to our lenders and our customers to verify the accuracy of the information provided and to verify that the customer is in fact who they say they are," Corder said. "In most transactions, we want to sit in front of the customer and verify that their ID matches the individual buying the car.
"The dealer's responsibility to comply with the FTC's Red Flags Rule [to combat identity theft] is much more difficult in a completely digital transaction. Until we can solve the issue of fraud prevention, I don't believe that completely digital F&I transactions will be fully embraced by dealers."
Rather than rushing toward fully digital auto sales, Schindler said, a dealer's time is better spent streamlining the in-store F&I sales process that consumers have traditionally said takes too much time.
"Having enough properly trained staff, conducting preliminary interviews and understanding the customers' priorities and background," Schindler said, combine to cut down the amount of time spent on F&I and boost customer satisfaction.