Host Emma Hancock dives into the transformative impact of electric vehicles on F&I with Patrick Hennessey, Senior Director, Insurance Sales, F&I at Ally Financial. Unraveling the complexities of EVs in the automotive market, Patrick highlights the importance of redefined F&I processes, educational initiatives, and evolving product offerings to meet the unique needs of customers delving into the world of EVs.
Advertisement: With nearly 5000 specialists dedicated to supporting dealer financial services, Ally has the expertise to help you with your retail finance, F&I and remarketing needs. We're all better off with an ally. Contact your local Ally account executive to get started today. Ally do it right.
Emma Hancock: Hi, everyone. Welcome back to the All Ears podcast. I'm Emma Hancock, host and strategist at Automotive News. This podcast is sponsored by Ally Financial and produced by the Automotive News Content Studio. In each episode, we explore topics that are important to leaders in automotive retailing. Our guests include experts in their field from Ally plus dealers from around the country, and we cover tips and explore insights that can help dealerships to successfully navigate the transformational changes taking place in our industry. Today, we catch up with Patrick Hennessey, senior director, Insurance Sales, F&I at Ally Financial. We're going to be discussing future EVs and the impacts on F&I. Hi, Patrick. Thanks so much for taking the time.
Patrick Hennessey, Sr: Thank you. Glad to be here.
Emma Hancock: Great to have you here. So, Patrick, EV numbers are on the rise and dealers are expanding their operations to accommodate them. How do you think this might have an impact on F&I?
Patrick Hennessey, Sr: Yeah, I mean, EV has been heavily in the press for some time now with all of the outside pressures pushing dealers to amass resources behind EVs. The F&I office is not left outside from that initiative. And I think that in many cases what we've experienced through our clients is that many of the buyers are very similar in behavior to what they're accustomed to and meaning that from many perspectives, the most important thing is to follow a process. However, you know, it is impacting many aspects of that process as a general rule. What products are presented. How we engage the customer when we engage the customer. What are we covering often? What kind of education needs to be provided so that an informed decision can be made and that trickles through to the producers or the F&I managers that are engaging those particular clients. It is a little bit of a more complicated, perhaps step to the sale because you've got consumers that are perhaps buying their first EV product. So, they're not even sure in many cases, perhaps, what it is they should be asking about or what concerns they might have if they're going to own that vehicle for three, four or five years. So, it really begins with a step back and an understanding of what that customer journey looks like and what that individual customer might be experiencing as they're going through that process. And then in turn, providing the information that's important to them to make an informed decision. But again, like I mentioned, following a set process, that consistent process is what's critical in long term success that is repeatable and consistent.
Emma Hancock: And it sounds like a process that's being really rethought and really sort of a fresh new process. What are some of the more popular types of F&I products and services you're seeing dealers offer their customers?
Patrick Hennessey, Sr: So I like that question and it's one that I think we've field often in hopes of finding that secret path to finding additional penetration or profit margin on these customers where an assumption is being made that because of their electric vehicles, they're not going to experience the mechanical breakdowns or various other items that trigger a need for some type of an insurance product through the lifetime of owning that particular vehicle. But I think that as we analyze those transactions over the course of time, what we find is that most reputable insurance companies, insurance products have already introduced some type of VSC product or vehicle service contract product that is built or equipped to focus specifically on the EV product. Ally, of course, offers their Major Guard EV coverage. Speaking directly to a couple of the primary concerns, I think in the early EV lifecycle, from my perspective, there are some concerns around what if my battery runs out while I'm on the road? How much is the battery going to be to replace when it depletes itself? And many of those VSC products in this case do offer some type of a rapid charging solution and/or battery replacement. There's all types of fine print around what that looks like, but that's step one so that there's a differentiated VSC product that is tailored directly to those particular types of buyers. But outside of the VSC product, all other products are really in play. Whether that's gap or the multitude of ancillary products, I think of tire and wheel. All of those products are still in play and should be disclosed and presented appropriately to the EV buyer. So, we're not seeing any particular difference in what is being presented and what the take rate looks like. However, I think in some cases we've got to be mindful that we don't want to make decisions on customer's behalf. Like I mentioned in the prior question, the main thing I think a producer needs to be thinking of as they greet a consumer that's buying any vehicle. One, it might be their first time buying an EV, or they may have some background education, but we should not make any assumptions. So, ensure that there are no open ended questions. Make sure that they understand the warranties that come with the vehicle from the OEM. And then following that, go through the presentation of the various products based on what your understanding.
Emma Hancock: Great point and really, if this is a customer's first EV that leads to a completely new experience. So, in what ways, Patrick, could the F&I experience be different for customers? Do you have any indication of unique questions, concerns or opportunities the dealers have shared that are related to the newness of the product?
Patrick Hennessey, Sr: I’ll put up maybe an asterisk on this and state that I in many cases, even in the traditional combustion engine customer channel, I would share some level of this same insight from my perspective. And it's that consumers are demanding more information upfront in the sales process than maybe what we traditionally have done within the industry. A lot of these transactions are taking place online, a lot of research being done trying to make an informed purchase decision before they walk into a dealership if they ever walk into the dealership. Like I said, this doesn't differ from the digital buyer on gas vehicles, but in the EV channel it is more likely that that research is done upfront and it's really critical that we get F&I product information earlier into the process. They do not want to complete all of that research, make their buying decision, coming to the dealership for a traditional turnover and then get sideswiped by a presentation on a number of products that they hadn't formally considered. So number one is how do we get information about those products to be presented earlier in the process, whether that's, I've been speaking digitally, whether that's online in some capacity or if they are in the store, how do we equip our sales consultants to understand what those concerns might be and how to get that information into their hands earlier so that they can make a better decision and not find that trap moment where they're in a finance office and they hadn't yet considered those products. That's probably the most important piece. And the other thing is that I think as we study it more and more, these buyers are behaving perhaps a little differently than what the traditional processes look like. They've got different concerns like I talked about earlier. They may not even know what to be concerned about. So, incorporating some type of an educational aspect to what the lifetime ownership experience might look like with an EV product, what they can anticipate from a maintenance perspective, and then just a general education around the additional ancillary products, like I mentioned, tire wheel appearance protection, those are all things that still matter to buyers, whether that's battery, electric vehicles or otherwise. Don't skip that step. I think that education still needs to take place so that we can garner the results of a customer making an informed decision.
Emma Hancock: think those are great points Patrick. Earlier educational and often or more often it's going to be someone's first EV and ideally, they would welcome that information during the F&I process. So, with dealers offering two distinct types of vehicles for those with combustion engines and those with electric motors, are there any particular F&I products that, in your opinion, could come up in the future? Kind of a crystal ball question.
Patrick Hennessey, Sr: Everything is in play at present. When I think of these electric vehicles and the technology that is loaded into them. These are essentially very fast moving computers. And I don't mean fast like processing power. I mean that they drive fast, but the computers that are rolling down our roads these days bring a whole multitude of new potential challenges. And I think down the road for when a customer is ready to get out of their first EV, there is a multitude of on-board data that is inside of that vehicle. So, cybersecurity becomes an interesting talking point when we're talking about a vehicle. What are we going to do to ensure that the vehicles are properly purged of all of that extremely personal data when a trade in comes in? So, there's a lot of conversation around how do we set that up so that everything is appropriately secured both for the driver, the consumer, but also for the dealer. You think about the extension from that EV product into the home and the home charging system, what kind of capabilities are out there for us to get engaged and help ensure that that charging platform is going to be available when needed and reliable. Outside of that, as EVs continue to proliferate and take on a larger share of the overall marketplace, I'm quite sure that we will need to match the pace of technology's evolution. I mean the compounds, it's moving faster. I think the right word is it's exponential as more and more data come in. We're all learning so what are the challenges that an ownership lifecycle experiences when you have an EV vehicle? Those are the questions that we're sitting around and asking dealers, customers, to ensure that we're appropriately planning for what those obstacles might be when they come.
Emma Hancock: Those are really great points. And you're right, it's still relatively new territory. It's still evolving, and we're going to be learning every time an EV comes back. It's been great talking to you, Patrick today. Thank you so much. You've given us some great information. That is it for this episode of the All Ears podcast. I hope everyone found this helpful. I certainly did. On behalf of Ally Financial and the Automotive News Content Studio, thanks for listening and bye for now.
Advertisement: For over 100 years, Ally has helped dealers like you serve your customers by providing the best in class products and services you need and by remaining true to the automotive passion we share. Your dedicated Ally account executive will work hand-in-hand with you to help you gain efficiencies, increase your product offerings and work to improve per vehicle revenue. Because we care about your business as much as you do. We're all better off with an ally. Contact your local Ally account executive to get started today. Ally do it right.