The F&I office has been a dealership profit center for decades, but industry trends such as subscription services, online shopping and electric vehicles could turn the tide on F&I profit, prompting dealerships to restructure the role, F&I and hiring experts say.
The average dealership relies on F&I product penetration for 24 percent of its gross margin, said EFG Cos. CEO John Pappanastos, citing Cox Automotive figures. If industry shifts pull profit from F&I, how do dealerships make up for the loss?
By reducing overhead, said Pappanastos. "They'll have to reduce the amount of people they have."
The F&I manager is the second-highest-paid position in a dealership, according to the National Automobile Dealers Association's 2017 Dealership Workforce Study. The average salary for an F&I producer in 2016 was $138,209, according to the study.
The role is high-earning because it is difficult, Pappanastos said. To succeed in F&I, a manager must build credibility with customers, understand and effectively present the products, maintain compliance and overcome a standard set of recurring objections.
As vehicle sales increasingly move online, dealers are looking for ways to integrate F&I experts into the process. Otherwise, they'll have to count on less profit from product penetration.
The information a manager must collect about a customer before presenting products is difficult to obtain online, said Ellen McGee, EFG brand content manager. Knowledge about a customer's previous vehicle, budgeting plans and anecdotes specific to the customer's driving habits are important before an F&I manager can talk terms and coverage levels.
"You don't really understand the benefits of those products the way you would if someone was explaining it to you," McGee told Automotive News. "If customers don't understand the products, they are not going to self-select as many online."