Editor’s note: This story will be part of a special section on ethics in dealerships’ F&I departments, to be published in the Dec. 10 print edition of Automotive News.
When a dealer learned his lucrative finance and insurance department was making some of its cash charging customers $3,000 for a year of free car washes — a cost exorbitantly higher than the $199 retail price — he asked F&I trainer Ron Reahard if that was a problem.
"It's just not ethical," said Reahard, president of F&I training company Reahard & Associates in Soddy Daisy, Tenn. "That's where dealers get themselves in trouble, pressuring too much on 'How do I make more money?,' and focusing on the dollars without paying attention to how those dollars are being made."
F&I personnel are trained about compliance, but what about ethics? While compliance is tied to a hard set of regulations that are enforced, ethics are typically related to values that are declared or at least implied by dealership management to employees, with varying degrees of success.
The relationship between compliance and ethics is especially acute in the F&I department, where regulatory hurdles are abundant but the possibility of making more money is often a focal point.
Reahard said dealers should pay attention to where the money is coming from and limit how much profit is made on F&I product sales and dealer reserve.