The inventory shortage on new and used vehicles prompted by the microchip shortage is changing finance-and-insurance conversations in dealerships, experts say, as consumers consider their purchase more valuable.
Auto dealerships report increased ease in generating profits in the finance-and-insurance office, from dealer reserves rising alongside vehicle transaction prices to an increased appreciation for protection products.
Jason Garner, senior vice president of strategic product development at AUL Corp., said the dearth of new-vehicle inventory is driving up used-car pricing to astonishing heights — so much so that some used cars may be sell for more than their new counterparts. Lenders are cautious when underwriting loans at inflated levels, he said, which can benefit dealers.
"Lenders are giving a lot of leeway and giving more room for aftermarket products to allow the dealers to make money," Garner said.
Customers are more excited when entering the F&I office these days for having secured a vehicle amid such sparse conditions, according to Jon Briggs, CFO at Cavender Auto Family in San Antonio, Texas.
"[Guaranteed asset protection] is really important right now as used-car values have increased," Briggs said. "We highlight that a little more now."
As the chip shortage shows little sign of abating in the near future, dealerships should focus on consistent processes in the dealership and energizing customers in the F&I office about protecting their investment.