Rising interest rates are driving up monthly payments of new and used vehicles, leaving less room in customers' budgets for the purchase of finance and insurance products. Some dealers are expecting lower F&I sales this year, while others are confident their penetration levels will remain steady.
"There's no doubt affordability is playing a huge role," said Jonathan Jordan, director of retail strategy for F&I provider and consultant JM&A Group of Deerfield Beach, Fla.
Jordan told Automotive News he's seeing the interest rates that customers are getting from dealers up about 2 percent year over year, translating into about $50 more on customers' monthly vehicle payments. That makes consumer budgets more of a concern.
"One thing we're really emphasizing right now is F&I products in general really benefit customers in a lot of ways, even when affordability is a big concern," he said. "Think about a vehicle service contract; in a world where consumers have a really tight budget and have a mechanical breakdown, having a vehicle service contract really helps out to take care of the repair."