After his suburban Philadelphia showroom was forced to close during the pandemic, David Kelleher’s dealership team needed to figure out a new way to handle F&I. And fast.
Providing customers opportunities for online browsing, shopping, prequalification and even a digital sale is one thing, he says. F&I is something else.
“As an industry, we weren’t ready to address the situation when the pandemic hit,” says Kelleher, president of David Auto Group in Glen Mills, Pa. “We were managing from a place where there is no guidebook. We had to learn how to deliver F&I remotely.
“In the retail buying experience today, a customer can get most of the way through the process of buying a car without speaking to anyone at all. But when you think about what the F&I presentation is, it’s really a direct consultation between an F&I professional and the client. As an industry, we don’t yet have something built to deliver that kind of F&I experience remotely.”
At David Dodge-Chrysler-Jeep-Ram, Kelleher says, his team has used videoconferencing and other digital tools to formulate a solution “to re-create that personalized experience. We’ve been making it up as we go along.”
Mark Manzo, Ally’s president of insurance, praises that sort of resilience.
“Dealers all have processes that are successful for them,” Manzo says. “What the pandemic did was to kill that traditional F&I process for many dealers.”
Like Kelleher, dealers have learned and adapted, Manzo says. “What we’ve seen is what we always see,” he says. “When dealers are forced into a corner, they get creative.”
Figuring out solutions has been a priority. With F&I representing a growing portion of profits for so many dealers, no one wants to miss an opportunity with a purchaser. According to NADA Data 2019, F&I profits increased to 3% of new-vehicle sales and 4% of used-vehicle sales in 2019.
And many industry experts say room to grow remains. Consider that according to NADA, only about half of customers buy a service contract when purchasing their vehicle. “The average dealer still has upside for better F&I profits,” says Jeremy Alicandri, a former dealer and independent dealership consultant. He points to the F&I gains posted by the large, publicly held dealership groups.