Shared commission boosts F&I efforts

At Feldman Automotive Group, a lucrative finance and insurance operation comes down to splitting the task and sharing the wealth. F&I is a team effort at the group, with the sales team receiving commission on product sales.

The process has led to a more collaborative work environment and salespeople taking a greater interest in the back end of the business, according to Dave Katarski, COO of Feldman Automotive, in New Hudson, Mich.

"It helps when they're much more supportive," he said. "We certainly have all of our sales associates that are very familiar with the F&I products, very supportive of the F&I process and very supportive of making finance and insurance income because it's just as good to them as front-end gross profit."

Feldman started the shared commission structure at least three years ago, Katarski said. Today, it's part of the strategy at Feldman's 11 franchised dealerships and six used-vehicle stores in Michigan and Ohio. Feldman Automotive ranks No. 74 on Automotive News' list of the top 150 dealership groups based in the U.S., with retail sales of 13,712 new vehicles in 2018.

The company saw immediate growth in its F&I business as a result of the joint commission.

"We knew in order to keep our sales associates incentivized and compensated, we needed to adjust," Katarski said. "We certainly saw immediate improvement. You now had 100 percent of our sales staff supportive of all the value-added F&I products we offer to all of our customers."

Feldman Automotive's unique pay structure comes as F&I manager compensation rises by thousands of dollars on average each year, according to National Automobile Dealers Association data obtained this year by Automotive News.

It's among several emerging solutions as sales slow and F&I profit grows for dealerships across the country. The programs aim to continue rewarding F&I managers while better recognizing and compensating the work of salespeople, many of whom spend hours, days or even years developing relationships with customers and gaining their trust.

"It's amazing how often a customer might go back to a salesperson and ask them about an extended service contract or something," Katarski said.

"If you've got them trained and fully on board in making sure they understand the value, it certainly helps."

Thomas Rollison, a sales associate with Feldman Chevrolet of New Hudson, described the pay plan as "very rewarding" for both new- and used-car sales.

"You can set yourself up for success," he said.

Feldman Automotive's F&I business has grown in line with that of other large dealership groups, according to Katarski. He declined to discuss specific revenue growth or the amount F&I now contributes to the bottom line.

"When you look at the whole round deal, we're really no further backward than we are traditionally. It's just coming from a different area," he said. "Obviously, your F&I income is making up a larger percentage of that than it ever has before."

In addition to the shared commission, Katarski says Feldman Automotive prides itself on its consistent and transparent process of moving customers from sales to F&I.

That includes supplying incentives on its website and conducting a good "customer interview" to find out individual needs to determine the right services to offer.

"We believe in full transparency from the sales side through the F&I side," Katarski said. "We understand that the customer is educated, and we want to treat them accordingly."