The rapid adoption of digital technologies, coupled with the growing emergence of electric vehicles, are changing the dynamics of the F&I world. Yet some basic principles still apply, such as transparency and educating customers about how to best protect their vehicles. Will digital tools require new employee skills? How do dealerships make the F&I process seamless? And are there new products on the horizon that will further transform the F&I arena? Tony Wanderon, CEO of APCO Holdings, Home of the EasyCare, National Auto Care, and GWC Warranty brands and a leader in delivering tailored F&I products and solutions, sheds some light on these and other looming issues.
Strategies for handling new F&I dynamics
Q: The pandemic obviously accelerated the digital transformation of F&I departments. But what happens now that the pandemic has subsided, if not ended? How do you avoid slipping into old habits?
Tony Wanderon: Who is to say that old habits were bad habits? I think our industry has come a long way and has accelerated digitally. But if you think about it, we have been working toward that for years. Digital is just one component of the process. And digital or not, consumers want to have a positive buying experience. The same is true for the F&I process. So dealers must invest in delivering both experiences, physical and digital. In a report by PricewaterhouseCoopers (PwC), 46 percent of car dealers surveyed said that at least 9 percent of vehicle sales took place online. As for the future, there is a projection that by 2030, online sales will make up 20 to 40 percent of all sales, according to dealers. I would say that digital adoption may subside somewhat if dealers start to get into the price game again. Today, digital is more accepted because inventories are low and pricing negotiations have been nonexistent. Thus, consumers are looking and buying online from dealerships outside of their local areas. While I think this will remain common, dealers who focus on the customer’s experience, both at point of sale and during the ownership period, will come out on top.
Q: F&I staff now are educating consumers, many of whom already have conducted their own research. They also want the process to be fast, maybe not even in person. Technology will assume some of the tasks of the traditional F&I representative. Are the skills required of the new generation of F&I employees and leaders different, and if so, in what ways?
Wanderon: Technology should be there to make the process easier and more informative, both in person and virtually. As for the new generation of F&I employees and leaders, like everything in this world, new ways are built on past successes and challenges. In this case, offering benefits that fit customers’ needs is not new, but sometimes is forgotten. My hope is that more education will be required for each customer-interfacing employee prior to assuming their positions. This education should focus on full disclosure and fair and reasonable markups, but mostly on determining the true needs of the customer.
Q: Customers can shop for F&I in person, online or even a little of both. How do dealerships ensure that the process is as seamless as possible?
Wanderon: Dealerships can achieve this by being upfront and open about what products and services they provide to every customer. That means access to digital information with details about the products the dealership offers and how those products will benefit the customer’s ownership experience. This should include video clips about each product, customer testimonials and why the dealer chose to offer these products. Dealers should follow one simple rule: If you would not buy it, then why sell it?
Q: If it’s true that customers have more control in a more digital F&I sales process, that suggests that the dealership has less. So how must employees adapt?
Wanderon: Control has always been in customers’ hands and access to more information online is a good thing. Let’s be clear — services and products that dealers offer are designed to protect their customers’ investments and their credit. I, for one, am proud of the protection we provide customers.
To take this a bit further, during the past three years, digital has become more prevalent and product penetration has risen. This suggests that being more transparent and more customer-centric provides the opportunity to show that we care about customers and provide them with the opportunity to protect their investments.
Q: A more digital F&I process also suggests new opportunities and products. What new products would you expect to see, say, five years from now?
Wanderon: Clearly, electric vehicles (EVs) are more complex and it will become more expensive to provide coverage. However, according to a study from Consumer Reports, the total ownership savings during the life cycle of an EV are between $6,000 to $10,000 compared to internal combustion engine (ICE) vehicles. With that savings over time, drivers will see value in protecting their investment. It has been said that EVs will require less maintenance, and while that may be true, many of the sophisticated electronics can only be replaced, not repaired. This proves that the value of a vehicle service contract is just as strong for EVs as ICE vehicles.
We need to think of these vehicles as mobile computers that are subject to the same vulnerabilities as our personal computers, such as phishing and hacking. The challenges we face in this connected and electronic environment will open doors for protection products specifically tailored to EVs, but that feature the coverages and benefits that drivers have always enjoyed on their traditional vehicles.
Q: With all this new investment in technology comes more complexity – challenges such as technologies that don’t work well with each other and potentially frustrate customers. What can dealerships do to mitigate this?
Wanderon: Technology is always frustrating in its first stages. I believe education is critical for sales staff and delivery specialists. The best approach would be to determine the comfort level and sophistication of the customer, then focus on the technology that they would use the most. Trying to go over everything in 30 minutes will not work with most customers. The second step should be staff workshops at dealerships, along with online training about all aspects of the vehicle.
Q: It has been said that what’s best for the customer is best for the dealership. Is that actually true?
Wanderon: Well, that’s like saying the customer is always right and we know that’s not true. The customer has many preconceived notions about working with a dealer. We first have to listen, then offer solutions and ideas in a professional way. This will allow customers to realize that we are there to help them, now and into the future.
Q: What happens when customers who want to do everything online suddenly start worrying about privacy and cybersecurity threats to their data?
Wanderon: Protection of customer information is a requirement, not an option. Most customers who buy a vehicle or complete online transactions open themselves up to cybersecurity issues. Making sure that we have systems, processes and rules in place will minimize threats. But it will never eliminate them completely, no matter how secure your process is.
Q: How do you judge when the customer really does know best?
Wanderon: You can acknowledge that the customer knows best while still offering them alternatives. Each customer is different and successful salespeople listen to customers’ unique needs and concerns, then offer suggestions and information that may be relevant for them to make informed decisions. In the end, the customer is making the investment, and they know best what level of risk they’re willing to assume based on their personal needs or feelings.
Q: Given the trends in F&I, what new regulations might the industry confront in an increasingly digital relationship with consumers?
Wanderon: Customer privacy and protecting customers’ personal information is critical. Also, excessive profitability is something that is always an issue; a few bad apples spoil it for the rest. In my more than 35 years in the business, I have never seen dealers so focused on doing what is right and investing in a better and more transparent process as they are today. The days of the old used-car salesperson are gone. Today’s dealers are different and I could not be prouder of how far we have come.
ABOUT THE PANELIST
Chief Executive Officer, APCO Holdings, Home of the EasyCare, National Auto Care and GWC Warranty brands
Tony Wanderon has been a leader in automotive F&I since 1986, pioneering the development of several products. He also has served as president & chief executive officer of National Auto Care since 2013. www.apcoholdings.com