The finance and insurance (F&I) department is one of the most important parts of a dealership. It can drastically improve the health of the business and add significant revenue during the lean months when unit sales go into hibernation. It also serves as a useful, valuable resource for customers who wish to finance their acquisition and protect that investment over the course of ownership.
Somewhat surprisingly, there are still many RV dealerships that don’t pay much attention to their F&I offerings. Instead, some dealers outsource this function to a professional F&I company, choose to sell only one item or simply neglect it altogether.
On the other end of the spectrum, some dealers are offering a variety of revenue-generating products in their F&I department, and some have even integrated their F&I offerings with those of the service department to maximize their revenue opportunities and deliver better peace of mind to customers.
F&I Offerings: Increasingly Critical to the Dealer
Auto dealers have long recognized the importance of aftermarket offerings to their success. With new car sales margins becoming even thinner, dealerships have begun to cast about for new revenue streams.
The service bay is one key contributor in this area, but the F&I office has also grown in importance. Altogether, aftermarket offerings may now account for up to 50 percent of auto dealers’ revenues.
The RV industry faces challenges that make enhancing revenue streams even more critical. RV dealers have much smaller annual sales volumes than auto dealers, and RV dealers see greater sales variability from month to month.
F&I offerings can help by producing returning revenue streams at extremely low acquisition costs. Dealers can also increase their average gross revenue per vehicle sale simply by having a robust set of F&I products available for sale, and by being prepared to market and support them effectively.
For any dealer looking to improve the bottom line, advantages like these are hard to ignore.
Types of F&I Offerings to Consider
The range of F&I offerings that can deliver value, both to dealers and customers, is widely varied. They include services and products that dealers can create and offer themselves, as well as third-party services and products for which the dealer is simply facilitating the transaction.
Among the services and products that dealers can create and market themselves in the F&I department are pre-paid services, such as oil changes and other routine maintenance, winterizing packages and similar offerings.
Products that dealers may wish to procure from third-party providers range from extended service contracts to protect customers against the rising costs of repairs, roadside assistance coverage, guaranteed asset protection (GAP) and credit insurance, to paint and fabric protection, protection against tire and wheel damage, and protection against dents or other road hazards.
Such services and products appeal to buyers across the spectrum, from the infrequent RV user to RV owners who live in their vehicles full time. Along the same lines, these services and products can benefit buyers from the low end to the high end. At the low end, the typical buyer wants to protect his or her investment, and to ensure that the unit retains its value and repair costs or other unanticipated expenses don’t ruin the owner’s enjoyment of the RV. At the high end, you’re talking about a substantial investment that the typical buyer will want to protect, often at just a marginal additional cost.
The F&I department should also consider pairing up with your dealership’s parts and service departments, to make sure the F&I team knows what accessories are available to sell. Failing to do so can be a missed revenue opportunity, as the customer is looking to customize the vehicle to his or her particular needs.
Regardless of which F&I products you choose to offer, there are many resources available to help you market and leverage those products, seamlessly incorporating them into your customer service offerings:
- Talk to other dealers. Other dealers can be your best resource for adding or enhancing your F&I department’s offerings. Find out what’s working well for them and what isn’t. Ask how they bundle and market their F&I offerings and how they compensate their F&I manager.
- Call your buying group. Seek guidance from peer dealerships in your buying group, particularly those with similar characteristics to your dealership.
- Call your agent. Your rep for service contracts, if you have one, can also be an excellent resource.
- Contact third-party providers of F&I products and services. Evaluate product providers carefully and choose one with a demonstrated track record of responsiveness, financial stability and a deep familiarity with the industry and customers’ needs. Most importantly, be sure they provide support to you as a dealer in all aspects of your business.
- Adopt an e-savvy approach to F&I product sales. Third-party products and product suites can now be bundled into the F&I module of your dealership management software. This makes it possible to review and select add-on options from those providers at the point of sale without having to exit your familiar desktop environment and visit the provider’s website.
- Align your F&I team with the sales department. F&I managers should be involved in training and educating the sales team. Compensation strategies should also reflect the importance of F&I product sales, and the effect sales managers have on the F&I revenue stream.
- Don’t forget that training is essential. The Consumer Financial Protection Bureau (CFPB) is looking more closely than ever at F&I products. In light of this, dealers – along with lenders and F&I administrators –know proper training is the best protection against potential CFPB and other regulatory problems down the road.
The Bottom Line
F&I product sales can dramatically impact a business’s overall health. Accomplishing this requires committing yourself as a dealer to sales of these products, making that commitment clear to all of your employees, and seeking the support you need – both from internal and external sources – to execute on your F&I vision. The good news is that many dealers are already doing this successfully.
Isn’t it time you did so too?