Rick James, national director of business development at the Dealers Resource Center, speaks to the Ethical F&I Managers Conference on April 19, 2022, in Denver.
Stocking vehicle models that might have previously been unthinkable are among strategies which might help dealerships manage a lack of new inventory, according to Rick James, Dealers Resource Center national director of business development.
James said his company, a finance and insurance product provider, had identified multiple opportunities for dealerships. He shared four ideas April 19 at the Ethical F&I Managers Conference in Denver.
One play involved higher-mileage vehicles, according to James, who recalled hearing about a 2019 Jeep Grand Cherokee with 134,000 miles.
"It is amazing," he said, but dealers are selling vehicles with 120,000 to 140,000 miles and retaining "every piece of metal they can keep."
Another strategy entailed what James termed "super high-line vehicles," giving the examples of Jaguar, Land Rover, Mercedes-Benz G-Class and Porsche models.
"Essentially, the vehicles that we used to exclude from our contracts," James said.
Independent dealerships had been "going to town" on that inventory, but now other dealers were keeping it as well, James said. He mentioned Boston was one market where dealers retained high-line vehicles regardless of their stores' actual franchise brands.
"It's a market right now for super high-line vehicles," he said.
F&I products now exist for such models, James said. And those contracts might not be a difficult sell after all. James said one F&I manager told him it's easier to sell an $8,000 to $10,000 vehicle service contract on a $140,000 model than $4,000 coverage on a $25,000 vehicle.
"Stop and think about that," James said.
Dealerships also are stocking more certified pre-owned vehicles, James said. Such vehicles can be packaged with "wraps," vehicle service contracts that provide protection behind the manufacturers' warranties.
James said CPO wraps represented the "fastest-growing area of sales" for Dealers Resource Center.
Finally, hybrid vehicles provide an F&I opportunity, James said.
"Everybody wants the battery covered," he said.
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