Tag Archive | "Automotive Development Group"

David Hunter joins ADG/EasyCare as an F&I Specialist


Automotive Development Group (ADG)/EasyCare announced that David Hunter has joined the company as an F&I specialist. His duties include in-dealership F&I training and consulting.

“David’s extensive industry experience and academic credentials are a powerful combination,” said Greg English, president of ADG. “We have nothing but the highest expectations for his success, and that of the dealers and F&I professionals with whom he works.”

Hunter earned a master’s degree in business administration from Appalachian State University in Boone, N.C., in September. He plans to apply the skills he acquired in his graduate studies and his experience in every phase of dealership operations to his new position.

“I grew up around the industry, at the dealership, cutting grass and sweeping the lot. I then moved into detail, parts and service, and then sales, and now I’m back on the finance side,” Hunter said. “I knew I wanted to stay in the automotive world. I want to be part of an industry that’s always changing.”

Hunter identified the emergence of new technology and plateauing sales as opportunities for auto dealers to update and strengthen their F&I processes, maximizing productivity and opportunities for fixed ops revenue.

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Agent Summit Advisory Board Announced


LAS VEGAS — Organizers of the annual Agent Summit have released the names of the advisory board for the 2016 event, which is scheduled for May 9–11 at the Venetian Palazzo Las Vegas.

“The board was assembled utilizing the four past Agent Summit Keynoters and two Provider members that are expected to drive some fresh ideas,” said Randy Crisorio, president and CEO of United Development Systems Inc. (UDS), who will serve as advisory board chair for the fourth consecutive year. “When I reflect on what we’ve been able to accomplish in quality and participation, I’m as excited as ever to get Agent Summit VI in the fast lane.”

Crisorio will be joined by John Braganini, principal of Great Lakes Companies; Larry Dorfman, CEO of EasyCare; Eric Fifield, EFG Companies’ vice president of agency services; Joel Kansanback, president of Automotive Development Group (ADG); and Glen Tuscan, president of Dealer Commitment Services Inc.

In the coming weeks, the board will convene to discuss topics of importance to agents and agency heads and craft an agenda for the three-day event.

“In attempting to meet and exceed the quality of agendas past, Randy and his team have their work cut out for them,” said David Gesualdo, show chair and publisher of Agent Entrepreneur and F&I and Showroom magazines. “Luckily for everyone involved, they are perfectly suited to the task.”

Registration for Agent Summit 2016 is open at the event’s website as well as by phone, fax and email. Attendees who register by April 4 will enjoy a $100 discount. To inquire about sponsorship and exhibition opportunities, contact Eric Gesualdo via email hidden; JavaScript is required or call 727-612-8826.

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The Agent’s Guide to Hiring Effective F&I Managers


Among the many facets of the value proposition agents bring to dealers is their ability to help recruit F&I managers. But this is no small task. Real talent is hard to find, and the agent should also therefore ensure that new talent is not wasted or lost by a dealer not having a process in place to train and continually motivate new hires.

To learn more, we turned to the experts. Shelley Boggan-Kirchner of GSFSGroup, Great Lakes Companies’ John Braganini, Brian Crisorio of United Development Systems Inc. (UDS), Harlene Doane of DealerStrong and Automotive Development Group (ADG)’s Bill Kelly all weighed in to help answer three key questions: Where should agents look for candidates, what attributes should they look for, and how can they help put them on the path to success?

1. Where to Look

Most of our experts agreed that although the traditional path from the sales floor to the finance office continues to yield excellent results, agents and dealers would be remiss in failing to expand their search. With that in mind, we discussed a few primary sources to focus on, each with its own pros and cons:

  • Internal candidates: Do not overlook the employees already working in the dealership, particularly especially those who make known their intentions to move to F&I. In fact, this remains one of the best sources to start with, the experts say.

“Top-producing salespeople and sales managers are good candidates,” says Braganini, principal of Portage, Mich.-based Great Lakes.

“We always like to look within the organization first, as there are often a number of qualified candidates itching for their shot at being the almighty F&I Manager,” says Brian Crisorio, vice president of marketing for Clearwater, Fla.-based UDS.

In fact, Crisorio adds that he advises dealers to invest in F&I training for promising salespeople — even before a job becomes available. This strategy demonstrates a commitment to the individual on the dealer’s part, giving them a clear path to advance. It also creates a roster of qualified workers who can step in when needed, be it for a particularly busy afternoon or on a more permanent basis.

  • External candidates: Agents should be constantly on the lookout for experienced F&I managers who may be looking for a change of scenery. One good way to do that is to make sure every dealer client has a career portal on their website. But Shelley Boggan-Kirchner, the executive in charge of the Hiring Winners platform for Houston-based GSFSGroup, says dealers may want to make their intentions known in a number of ways, including asking customers for candidate referrals and conspicuously posting recruiting materials in the store.

“When we go into a dealership, we bring in marketing and recruiting materials,” Boggan-Kirchner says. “We give them signage they can put up — be it at the receptionist desk or customer waiting areas — saying, ‘This is just to inform you we’re always looking for great people. Feel free to visit our career portal.’ We also give it to them electronically. So if they want to take that link and attach it to a community job board, they can market it directly to community colleges and vocational schools.”

This strategy allows the dealership to constantly evaluate and recruit new talent, she adds, so there is never a crisis when someone decides to move on to another opportunity.

  • Outside-the-box candidates: Our experts agreed that smart, ambitious, hard-working professionals in other fields can become effective F&I managers — if you can find them. For all the time and money dealers spend marketing to find new customers, for many, the idea of creating a similar campaign to find outside-the-box candidates remains foreign. For dealers who are focused on the day-to-day operations, taking the time to actively and continuously recruit can be a daunting task. Agents who can weed through and identify the next potential stars — of F&I, sales, customer service or any other part of the dealership — can become invaluable partners. They just have to know where to look.

“Qualified candidates can come from a variety of sources, and those sources often vary from market to market,” stresses Harlene Doane, COO of DealerStrong, based out of Evansville, Ind. She also notes that other sources, such as local job boards, and social media sites like Facebook and LinkedIn are also good places to hunt for candidates.

From traditional sources, such as the local newspaper, to online resources like Monster, CareerBuilder and Indeed, dealers have a number of opportunities to advertise their stores as friendly, productive work environments with the potential for a six-figure income. The downside, of course, is managing a presence on multiple job sites and sifting through the reams of applications that result.

“You will have to look at many more candidates and applications if you’re only recruiting via the Internet than you will if you’re collecting referrals,” Boggan-Kirchner notes.

Agents can help by managing this process on their dealers’ behalf and making sure the ads paint a realistic picture of life in the box, including the long hours and weekend shifts. That description can prove attractive to graduates of colleges and technical schools, who may be willing to sacrifice personal time in order to enter the workforce in a high-paying position.

Of course, like other outside-the-box recruits, recent grads will come in without the benefit of relevant training and experience. That’s where screening for aptitude, ambition and a willingness to learn and follow a process take on added importance.

“What we look for are people that have certain characteristics that we feel will be the most successful,” says Kelly, a partner at Bloomington, Minn.-based ADG. “Oftentimes, they are people with a proven track record, but sometimes we do come across the right individual that we believe we can train on our trademarked Proactive Selling System.”

2. What to Look For

It is not enough to simply look for any candidate that walks through the door. It takes a certain blend of skills and attitude to be a great F&I manager, so agents focused on helping dealerships recruit the right people need to ensure they are identifying certain key traits.

  • Coachability: One of the first traits to look for is a willingness to learn the F&I process and stick to it. Every dealership will have its own set of rules and procedures that F&I managers will be expected to follow. New hires need to be willing to learn and adapt to that process, whether they are green peas or seasoned professionals.

“With all of the compliance laws and moving parts, a business manager has to have structure and be able to work in a very structured environment,” Kelly stresses. “We are not looking for an individual to go out and create their own way. When the proven path is followed, we have the best results.”

  • Professionalism: Even the most knowledgeable F&I manager will struggle if they do not look, walk and talk the part. They need to be able to put consumers at ease and be capable of guiding them through the entire process. If the F&I manager doesn’t inspire trust, they will not get very far.

“We are always looking for someone that not only possesses the general knowledge, but also has the look,” explains Crisorio. “The ideal F&I manager will present himself as a trusted advisor who is qualified and prepared to help the customers navigate the details of a vehicle purchase. They should also demonstrate a team-first attitude and strong leadership qualities.”

  • Intelligence: F&I managers must build a working knowledge of terminology, deal structure and federal, state and local regulations, often in short order. Does your latest recruit have the brainpower to guide customers through the F&I process and keep the dealership out of trouble?
  • Character: F&I managers assume a powerful position in the dealership. They will regularly face situations that will test their ethics, and ensuring their level of morality matches that of the dealership is a key trait. This can be screened for with examples of real-life situations that came up in the hiring dealership, and then having the candidate explain how they would have handled it. This gives a good baseline for how well they will fit into the dealership’s expectations of its F&I managers.

“Some dealers are more comfortable with the gray lines than others, so the character needs to be in the same circle as the dealer’s expectations,” notes Doane. “Character also comes out in reference checks, if conducted properly.”

  • Chemistry: This is perhaps the hardest trait to screen for. The F&I manager will be working with every member of the dealership staff on a daily basis, and it only takes one bad apple to disrupt the entire culture. Agents rarely have the opportunity to work with new personnel on a daily basis, so the dealer’s expectations must be perfectly clear. The dealer principal should have the final say in all new hires, and, assuming the agent has brought them all highly qualified candidates that meet every other criteria, this should be the one trait they focus on the most when making the final decision.

“You want to be sure the person you’re hiring is oriented to the culture,” Boggan-Kirchner says. “You’ll get a lot of information about their character during the due diligence of the hiring process. But once the dealer has made that decision, the work they do needs to be reflective of the culture. I think it’s important that, from the moment people enter into the dealership, it should be emphasized that it’s a career, not just a job.”

One thing all of the experts agreed on was that, while finding someone with previous F&I training is always a good thing, it isn’t necessarily a requirement. Many of them stressed that either going the internal route, hiring experienced sales people who are looking to move ahead at the dealership, or young graduates just out of school who are blank slates, can both be very compelling options. The first comes with knowledge of the industry, the vehicles and the customers that the dealership serves, putting them one step ahead of other candidates. And hiring graduates means not having to undo training or bad habits picked up somewhere else. They can be taught exactly how this dealership does it, right from the start.

“I like both,” says Boggan-Kirchner. “If you hire experienced personnel, that usually means less down time and acquiring a person with a proven track record. Hiring inexperienced requires utilizing broader recruiting methods, having a commitment to training and utilizing performance assessment tools like Hiring Winners.”

Crisorio agrees, noting that an openness to training is, in the long run, more important than previous F&I experience. Although, he says, having automotive experience of some sort can certainly help. “The experienced individual must prove to be coachable in order to adapt to the processes and procedures that a dealer group has in place. Someone new to the F&I office must share the same trait and welcome the guidance that a reputable F&I company and dealership management will provide. That will give them the best chance at a successful career.”

“We all want to think we’ll get the guy who’s going to come out and run $1,200 per copy,” says Boggan-Kirchner. “But what are the characteristics that will make that person able to do it? You want somebody who’s got drive and ambition. You want somebody who’s motivated by their own performance.”

3. How to Prepare for Success

It doesn’t matter if it is the perfect candidate, or whether they are brand new to F&I or seasoned pros, every F&I manager should get the education they need to start strong and commit to regular, ongoing training to ensure they always perform at the top of their game.

Braganini might look for candidates who have a proven track record in either F&I or automotive sales, however, he notes, that doesn’t stop him from training them. “Both [experienced and new hires] need to complete our basic and advanced FSM schools, complete a development specialist assignment with one of our trainers and maintain strict adherence to our sales process and core competency system.”

“An experienced F&I manager must become familiar with the products being offered, as well as the selling system utilized to offer those products, so menu training and product knowledge training is a must,” stresses Crisorio. “Regarding the inexperienced F&I manager, additional training would be necessary in the areas of compliance, lender relations and objection handling, to name a few.”

“You are never too experienced to receive training,” says Kelly. “We emphasize weekly training for everyone. Someone that is newer to the job will require offsite, multiday F&I development training. All of the offsite training is followed up with in store one-on-one and online classes. Every week, the best business managers make time to improve themselves.”

It is important for the dealership to set expectations early in the relationship, and then give the F&I manager the tools and knowledge they need to meet and exceed those goals. It is not, however, enough to simply have a list of vague statements that are only pulled out when it’s time to do the annual evaluation. “Once the expectations are set and goals are formed, a daily action plan needs to be followed and a six-month trend report should be implemented to track the progress,” Kelly says.

“It depends on the store and market, but goals should all be written, tracked and have consequences,” agreed Braganini. “Assigning a development specialist to the store to ensure performance compliance will ensure the candidate can succeed.”

It is important for agents to manage the dealer expectations, as well. No matter how experienced a new F&I manager might have been before joining the team, there will be a learning curve when it comes to the exact processes and products the dealership uses. This is another area where training will make a big difference. If the dealer is willing to let the agent get the new hire all the training they need prior to their first day in the office, the chances of their success — and the dealer’s — goes up exponentially.

“While it may be understood that a learning curve will exist, especially with someone new to F&I, the targets established are, well, the targets,” notes Crisorio. “As the chosen F&I partner to our clients, we accept the challenge to ensure an individual is ready to succeed on day one. Realizing success immediately is certainly not guaranteed, so I would encourage any dealer to lean on their F&I company to provide dedicated support, giving that new manager the best chance at success.”

In fact, Kelly believes agents play a critical role in this entire process. “Be a coach and always have a game plan when working with a finance manager,” he advises. “Set the objectives and always bring something of value to each session. I very much believe that it is an agent’s responsibility to develop the finance managers. Contract count is nice, but PVR is the measuring stick.”

The further an agent is willing to go to help dealers find effective F&I managers, Boggan-Kirchner says, the more valuable they will become.

“I think that it behooves everybody for the agent to be involved in the recruiting, hiring and training process,” she says. “I think agents should act as consultants to the dealer for anything F&I-related. I also think it’s a selling point for the agency to have good F&I manager development. And I think that when you have an agency that does that, it stands out.”

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Agent Summit V Wrap Up


To all who attended – thank you for making Agent Summit V the best yet. Since its inception, the number of attendees has increased with each passing year – and with close to 900 attendees, this year was no exception. Agent Summit was launched in 2010 and was designed to provide Independent Agents, who serve as an extension of F&I product providers, with a forum to come together to network, share and learn. Today, many now regard Agent Summit as the one must-attend industry event of the year. This year’s show highlighted the latest training techniques and addressed the newest trends and most pressing challenges that Agents face as they serve their dealer clients.

Attendees were welcomed to the show’s upscale new location at the Venetian Palazzo. Complete with cobblestone streets, footbridges over canals, blue skies, and gondolas, attendees couldn’t help but feel as if they had just stepped off the plane in Venice, Italy. Jaws dropped as Agents who had taken advantage of the Agent Summit room block entered their stunning suites. Words like “lavish” and “spectacular” were heard describing the Palazzo as Agents arriving on Sunday evening gathered for welcoming cocktails.

Much like the Palazzo’s five star reputation, show sessions featured “five star” industry experts with every detail of the show sessions ultimately spelling “Profit!”

The third annual Reinsurance Symposium once again preceded Agent Summit; this year featuring two expert speakers. Greg Petrowski, senior vice president, GPW and Associates Inc., and a veteran speaker at Agent Summit, returned to the stage, and was followed by Brian Feldman, executive vice president, Spencer Re – a seasoned executive who has been a part of just about every facet of the reinsurance space.

With more than 20 years of industry experience each, Petrowski and Feldman shed light on the often confusing benefits of controlled foreign corporations (CFCs) and non-controlled foreign corporations (NCFCs).

At the conclusion of the half-day Reinsurance Symposium, Randy Crisorio, president and CEO, United Development Systems Inc. (UDS), and returning advisory board chair, got the show underway with the official opening address.

This year’s show focused on four major areas, 1) Selling to dealers; 2) Training; 3) Coaching and development; and 4) Technology. Each topic was explored first in an individual feature presentation, and was then followed by a panel session.

Morning presentations featured strategies for closing more business and practical steps for getting in front of dealers. Jimmy Atkinson, COO, AUL Corp, stated, “You have to look at a dealer’s DNA – ‘Dealership Needs Analysis’ so you can provide them with products and solutions to meet those needs. This requires pre-call planning and a targeted presentation.” His mantra for agents was “Be prepared. Be flexible. Be confident.” AE readers can look forward to Atkinson’s further expansion of this topic in an upcoming issue.

Days one and two closed with a cocktail reception in the Expo Hall. Throughout the show, crowds filled the expansive Expo area as agents took advantage of the buffet of networking opportunities. With more than 75 tabletop exhibitors and just shy of a hundred sponsors, the exhibit hall was full to overflowing. Exquisite breakfasts and lunch were served alongside the Expo Hall, thanks to show sponsors.

Known as the “World Greatest Closer,” keynote George Dans jump-started day two out with a bang. Dans was a whirlwind of energy, as he crossed the stage, leaving a flurry of excitement and emotion in his wake. He shared personal stories of both success and failure. In his fast paced, energetic address, Dans got the audience pumped up with a revitalized enthusiasm for closing every single deal. He encouraged attendees to be at the top of their game, “We become what we think about all day. You need to say to yourself, ‘I’m good. I’m gifted. I’m talented. Fear, doubt and worry are behind me.’” Dans urged attendees to step out of their comfort zone and to change their way of thinking so they could come out not just ahead, but at the front of the pack. After his presentation, Dans signed hundreds of copies of his book, Just Close It… Ask and You Shall Receive, which were available to all attendees.

Day two also featured two sessions on training, which emphasized the foundational importance of establishing good relationships in order to get buy in from all parties. The sessions covered themes, frequency, and the needs of retail personnel in service, sales, desking and F&I management.

“As an agency,” stated Ron Reahard, president, Reahard & Associates Inc., “you have to help your F&I managers address the challenges they face on a daily basis, and give them the skills, the knowledge, and the confidence to be successful… Performance doesn’t improve because you or a dealer demands it, it gets better because you put a plan in place to ensure it happens.”

A panelist urged, “Make sure the dealer and GM see you as a partner, and know that you are there to make them better.”

Joe St. John, director of training, Innovative Aftermarket Systems (IAS), and seasoned academic, delivered the feature presentation on coaching and development titled, “Xs and Os – Brain Science for Better Coaching.” This dynamic presentation was definitely an audience favorite. St. John’s unconventional yet proven approach focused on the “why” that drives a customer’s decision to make a purchase. He used a lively combination of humor, experience, and science to demonstrate how to reframe common scenarios for success and forge a unique roadmap for the road to the sale.

The coaching and development panel session explored topics ranging from dealing with underperforming veteran F&I managers, strategies for facilitating collaboration between the sales department and F&I, and how agents can ensure their efforts are recognized by dealers. ”Communication,” urged panelists, “is key.”

After a lunch that rivaled any Vegas hot spot, names were drawn for two $500 gift cards, courtesy of Old Republic Insured Automotive Services, and two weeklong deep-sea fishing trips, thanks to Performance Automotive Management. The lucky recipients of the gift cards were Glen Tuscan, president, Dealer Commitment Services, and Greg Liverett, vice president of marketing, SGI Services. William Kelly, partner, Automotive Development Group, and Anna McMillan, president, The Milby Group, were thrilled to win the fishing trip prizes.

Jim Maxim Jr., president, MaximTrak, showed agents how to use cutting edge technology to set themselves apart from the competition, increase profits and operate more easily and efficiently. In addition to examining today’s technology landscape in industries across the board, he presented innovative technology solutions for agents and explained how they could be integrated into everyday business.

The technology panel session dissected topics ranging from the impact of compliance on menu usage, to data analytics, and the increasingly popular move towards customer driven presentations in F&I. Panel members were in agreement that in any type of business, you can’t manage what you can’t measure.

The day concluded with a drawing for a Surface Pro 3 sponsored by Endurance Dealer Services. Tom Clark, the owner of Prosperity Dealer Services, was named the prizewinner.

Day three of Agent Summit ushered in the second annual agent principal only session, featuring round table discussions during a sponsored breakfast. The new format was informative and engaging with top agents brainstorming solutions for common issues agents face in their day-to-day business operation. Agents entered the room on high alert as they scanned topics by table to decide which one was most relevant to them. After thoughtful collaboration, each table captain shared their group’s recommendations for making the most of the given challenges. Discussion topics included selling in the service drive, provider relations, dealer expectations, effectively managing a remote sales force, staffing, competition and more. As one table captain took the podium, he pointed out the vast amount of wisdom and experience in the room, stating that his table alone represented more than 81 years of collective industry experience.

Show sponsor, ECP, ended the third day by sending several attendees home with new timepieces. Tension filled the room when names were drawn for the recipients of a Tissot Sailing Touch watch, a Luminox Deep Dive watch, and a Rolex Explorer II. Derek Doberstein, account executive, Back End Builders, took home the Tissot; Brian LoBaugh, partner, Auto Group Services pocketed the Luminox; and Mark Swannie, president, Karbiz took home the grand prize Rolex.

At the end of the show, Crisorio shared his thoughts on Agent Summit V with AE, “The feedback I’ve received is scary. We’ve set the bar so high that future Summit planning will be challenging. Nonetheless, I was told over and over again that Agent Summit V was the best industry event EVER! That says it all and is a credit to the industry professionals that left their knowledge and talent on stage.”

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Making the Most of Time in the F&I Office


The average time consumers spend on purchasing a new vehicle is almost four hours from start to finish – and most customers agree this is way too long. Once the customer has chosen a vehicle and negotiated the sale, they proceed to the F&I office. There, the F&I manager has numerous products to present, and a growing number of forms and disclosures to deal with due to increasing state and federal regulations. Without unnecessarily adding to the total transaction time, F&I managers must go through all the steps from securing financing and presenting products to the signing of paperwork in a very limited amount of time. We spoke to top trainers and agents and asked them how to achieve customer satisfaction while facilitating an efficient and productive transaction.

The Bigger Picture

Tony Dupaquier, director of training for American Financial’s F&I University, says in most cases the problem with the transaction being too lengthy starts well before the business manager is ever involved. He estimates that 80% of the time, required information is left out of the deal when it arrives in the business office. He says the front end – not the back end – is the biggest contributing factor to an excessively lengthy transaction. “The issue is not the time it takes for the F&I manager to complete the transaction, it’s all that leads up to that,” says Dupaquier, “The F&I manager has to spend a lot of time running around getting information and correcting things that are wrong on the paperwork before they can even start their product presentation.” He says this still happens around 20% of the time with some of the best, most well trained sales managers.

Ron Reahard, president, Reahard & Associates, Inc., agrees. He believes the issue is not the time a customer spends in the finance office; it’s the time they spend waiting to get in the finance office that creates customer dissatisfaction. “The other issue is whether or not the customer feels the F&I process is adding value or aggravation to their purchase experience. If the customer feels the F&I person is genuinely trying to help them, they don’t care how long it takes. If the customer feels the F&I person is merely trying to sell them products they don’t want and don’t think they need, ten minutes is too long.”

So what kind of information is it that the business office has to spend time waiting for, looking for, or correcting? An example would be information that was either not obtained or was recorded incorrectly by the sales department, such as copying a customer’s address from their drivers license and failing to ask if they still reside at that address. In this situation, when the customer arrives in the business office, the F&I manager has to reprint and correct all forms that contain the customer’s address – wasting time that could be spent on far more valuable tasks. Other items that are often missing are the new and trade-in vehicles’ mileage, payoff amount, and the loan holder’s information. “So much time in the F&I office is spent correcting inaccuracies coming from the sales department! And it is a problem nationwide,” says Dupaquier.

In addition, if a customer simply has not been made aware of the required paperwork that they must provide – such as title, registration and proof of insurance – having to obtain it when they arrive in the F&I office adds significant time to the deal.

Putting the customer in the right car from the start – one that fits with the amount they wish to pay monthly – can also save an hour or two of what Dupaquier feels is often unnecessary negotiation. “Say the customer says they want to spend $400 dollars a month but the sales department puts them in a car that will cost $550 dollars. Then they begin negotiating the deal and it takes an hour and a half to do this. It drives me crazy!”

At a one-price dealership, with fully transparent pricing, the transaction time is significantly less than at a traditional dealership where price negotiating is the norm. According to Dupaquier, at a one-price dealership, the entire transaction could be done in the amount of time it takes to print out the paperwork!

Planning and Managing the Time Spent in F&I

Before the customer arrives in the F&I office, Steve Pearl, president, The Oak Group, says there are a number of time-saving maneuvers that the business manager can and should engage in. “The deal should be input to the computer for one thing. Another is the F&I manager needs to have a conversation with the salesperson and sales manager about how the transition was structured. The customer needs to be briefed ahead of time on what forms they need to provide, such as title and registration. Finally, the F&I manager needs to ensure the car is being prepared for delivery.”

Bill Kelly, partner/owner, Automotive Development Group (ADG), added that ideally, though it is not always possible, the F&I manager should be prepared with a structured, approved deal and a complete menu. “Title paperwork and other forms that don’t affect the numbers can be pre-printed prior to the customer arriving in F&I, so that the time spent in the office is used most efficiently.”

“It’s not secret agent spy stuff we are doing in the F&I office,” says Reahard, “The customer needs to ‘see’ what that F&I manager is doing – that he or she is preparing their paperwork as quickly as possible. The F&I manager needs to have time to discover the customer’s needs by asking questions as the paperwork is being prepared.” Reahard says the F&I process has to be totally transparent. “The F&I process should be viewed by the customer as expediting the delivery process, not prolonging it, and this requires F&I professionals to have the ability to multitask.”

The actual appearance of the F&I manager’s office is not something to be overlooked pointed out Gerry Gould, director of training, United Development Systems, Inc. (UDS). “Many F&I managers don’t get their office ready for business and it is in disarray when the customer enters it.” A clean, comfortable office environment sets the tone for a smooth, relaxed conversation with the customer. A chaotic office does not lend itself to making customers feel at ease.

Pearl believes that 45 minutes should be the typical time a customer spends in the F&I office. However if the customer has already been held up for a significant amount of time prior to arriving in F&I, he says it is the responsibility of the F&I manager to complete the transaction more quickly.

Menu Presentations

Presenting products using a menu offers numerous advantages. According to Pearl, Menu selling is a must – and not the old fashion paper menu. “With all the quality menus on the market, it not only makes the sale less confrontational but it also increases the speed.”

Kelly points out that the menu is just a tool; proper use of the menu is what makes it work. During their menu presentation, Kelly says the F&I manager should review the deal structure and then present up to eight products.

Kelly says that ADG has developed a two-step method to present up to eight products and deliver a complete menu presentation in five to seven minutes. If a customer has concerns or objections, he trains F&I managers to address those concerns in an additional five to ten minutes. Based on customer surveys, Kelly reports that some manufacturers are guiding dealers towards a 50-minute total transaction – this is from the moment the customer says “yes” to the sales person until the moment they leave the F&I office. However, once a transaction reaches F&I, he thinks the transaction can be completed in even less time. This includes all the necessary steps from credit approval, menu presentation and product sales to the completion of paperwork.

Reahard also believes that the proper use of a menu is key to a well given, succinct presentation. “A menu allows an F&I manager to present multiple products in a brief amount of time, and makes it easier for a customer to buy more products. The fact is, in the F&I office you can only sell two or three products before the customer has had enough, but a customer can buy six or seven products if they’re in a package on a menu. That’s why the manufacturers offer option packages, and McDonald’s has value meals.  Grouping products into a package makes it easier for a customer to see the value of buying a package.”

John Braganini, principal, Great Lakes Companies, says trying to present too many products to a customer can take up too much time if not done properly. Ideally, he says four to seven products should be presented using a personal, pre-printed menu.

Keeping the F&I presentation to 45 minutes or less is what Gould recommends as a best practice. He describes step-by-step how to deliver a presentation in just more than a half hour: “First, review each DMS screen in front of the customer. It should take no more than three to five-minutes to verify and gather information from the customer. Printing paperwork should take no more than eight to ten-minutes. A product disclosure/menu presentation should be no more than three minutes. This should be precise and to the point – no selling or lengthy descriptions. Handling customers concerns over purchasing products should be less than ten minutes. Finally, signing the paperwork should take no more than eight minutes.”

Gould emphasizes the importance of delivering a feature presentation without including the benefits statements. He says an initial focus on selling, rather that telling adds unnecessarily to the time spent in F&I and wears the customer out. Developing a presentation that presents each column of the menu as one complete option narrows the customer’s choices and allows the presentation to be done more swiftly. “Each product should be described in no more than two or three sentences and the description should only point out what the product does. For example, to describe a tire and wheel product, you would tell the customer, ‘Tire and wheel coverage pays to replace or repair tires damaged by a road hazard for the next five years. A road hazard is anything that’s not supposed to be in the road.’” A simple, yet concise explanation of coverage works best.

Advice from the Experts

The most often repeated advice Braganini gives to F&I managers is: “personalize everything and project confidence.” He emphasizes good presentation skills, having a prepared menu and loading the deal in the DMS before the customer’s arrival. By doing all of these things, you will be ready for an effective conversation with the customer.

There are several sayings that Pearl has used many times through the years.

  • “No one has the right to say no for a customer. Be sure the customer is presented all the products available.”
  • “If a customer says no the answer should be ‘ok’. This totally diffuses the customer’s barriers. You can then circle back at a later point.”

And this leads to his last piece of advice…

  • “Conversation not confrontation.” Be able to discuss the pros and cons rationally and logically without putting it in the customer’s face.

Gould says rather than waiting on a customer to be dropped off in the F&I office, F&I managers should be proactive. “Get off your axle and meet the customer in the showroom!” Then, when giving the presentation, he advises F&I managers to “tell” initially and “sell” once you have the customer’s attention.

Take it from the pros – incorporate these tips and time saving tricks, and you will find a great starting point for improving efficiency, and streamlining transactions. The result? Satisfied customers and profitability in the F&I office.

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The Trends for 2014


There is no such thing as a crystal ball that allows people to see into the future, but that does not mean we are completely in the dark about what could, and probably will happen, especially in the business world. We talked to 17 of the industry’s top executives to get an idea of where they see the automotive industry as a whole, and F&I in particular, heading in 2014. They gave us their top issues, the technologies and products they are watching, and what their predictions are for the next 12 months. It might not be a crystal ball, but it is certainly the next best thing.

The Economy
Our executives had similar thoughts about where the economy would go – in a positive direction. For the most part, our group was optimistic – although some of them cautiously so – about the fact that the economy will grow in 2014. No one expects significant growth, but they do agree that profits and the number of units sold will continue the year-over-year increases they have enjoyed the last several years.

“I think the auto industry is part of the reason the economy is doing better,” said Bob Corbin, president and CEO, IAS. “I don’t think the economy is driving automotive as much as automotive is helping the economy. Our industry affects one in five Americans in some way, shape or form, and we think everything is very positive. Cars were are up about 8.5% for 2013 year-over-year, and we see that trend continuing, to somewhere north of 16 million new car units sold in 2014.”

“The economy still has some bumps in it,” said Charlie Robinson, president and COO, Resource Automotive Group. “We all read the papers and get mixed signals. But the automotive industry is robust, and the general feeling is optimistic for 2014; and the general feeling is that it will continue in that direction. I believe we will continue at the same pace as the preceding few years. If you listen to the pundits, we will see a 4% increase in SAAR for 2014, versus 6-7% increase for 2013. So everyone is expecting another two or three solid years in the auto industry before we look for a downturn.”

“From my perspective, I am cautiously optimistic,” said David Pryor, CMO, Safe-Guard Products International LLC. “We had that government shutdown in 2013 which caused a blip in the automotive industry, and we did see some softness in the last few months. However, all of the indications we’ve had are that we’re getting back to a slow rate of growth. The automotive industry is forecast to come in at about 15.5 million or so once the final 2013 numbers come in. How much further can we go in 2014? We think there’s room to grow – we think we could get close to 16 million next year. There are still many factors in our favor, such as the fact that the average age of vehicles on the road is still the highest seen in a long time. There is pent up demand there. “

“I guess I’m fairly optimistic about the economy,” said Jimmy Atkinson, COO, AUL Corp. “All the signs are that new and used car sales will be strong next year, and there is nothing really on the horizon that could damage that too much, although you never know for sure. But on the whole, I’m pretty optimistic. The biggest thing that drives car sales is lending and credit, and in the last couple of years, subprime credit has been very strong; we’re seeing that more prime lenders are dipping a little deeper as well. So there is a lot of competition and a lot of money out there to loan for cars, which bodes well for next year.”

“I would expect that the first half of 2014 will look a little like 2013,” noted Joel Kansanback, president, Automotive Development Group. “In our market, car sales have been strong, credit has been loose and dealers have been profitable, but I would expect the results for lenders will deteriorate at some point, in probably the second quarter, and we’ll begin to see tighter credit in dealerships in the third quarter. Dealerships will have difficulty getting their customers loans, and there will be a big impact on special finance departments. In concert with that, the theme for 2014 will be that the sales will continue to be strong, and F&I will continue to be strong. The wild card, however, is if the major lenders follow direction of CFPB and put restrictions on finance reserve; if that happens, we could have a major shift fast, and that could happen as early as the first quarter.”

“There are certainly plenty of differing opinions about the U.S. economy going into 2014, but when you look at most of the major economic indicators, continued, modest growth for the U.S. economy as a whole seems likely,” said Scott Karchunas, president, Protective Life Asset Protection Division. “The consensus appears to be between 2-3% real GDP growth for the US. In terms of the automotive industry, 2014 looks like it will continue its upward trend, although at a slower pace. We are expecting new car sales to be above 16 million, which is essentially on par with sales dating back to 2006. However, it’s important for all of us to keep in mind we’re looking at the lowest year-over-year new car sales growth since 2009. Much of the rebound in the automotive industry that we have seen over the past few years can be attributed to two main factors: pent-up demand and credit availability. Dealers have done a great job of meeting this demand; yet we still have younger buyers, lower income segments and small businesses that are not reentering the market as consistently as other demographic segments. It will be important for the automotive industry to find ways to better engage these segments with products and technology that meet their needs.”

“It’s a great time to be in our industry,” said Steve Amos, president and CEO, GSFS Group. “We’re going through changes that are occurring once in 15 years, so it is pretty neat out there I think. Obviously the economy directly influences consumer behavior and confidence, that’s critical to buying cars. And, certainly, buying cars is motivated by desire, but also by need, and as we’ve seen the last four years, consumers who are keeping their cars longer, have pushed the need back. The economy has everything to do with that. As they gain more confidence, they’ll start replacing those cars. OEMs haven’t necessarily built better automobiles, they are just hitting home runs with what they’re doing right now and consumer confidence is there – so it is a very good time for our industry. I think, barring some unforeseen disaster, the economy will continue to improve. I feel good about what’s going to happen.”

“I really don’t see the economy changing a whole lot either way, up or down; I think it’s stabilized as much as it can right now,” said Tim Brugh, president, American Auto Guardian Inc. “Car sales are going to grow, however. Dealerships, especially in the F&I and sales departments, should be in a good position in 2014. I am anticipating another growth year for us, and the automotive industry as a whole.”

“I think it looks like everything has stabilized to a large degree,” noted Tony Wanderon, CEO, NAC and Family First Dealer Services. “Lending has opened up, and customers can come into the dealership and buy cars and we have seen the increase in volume to prove it. I believe we will get into normalized purchase times; there were a lot of customers in 2013 who needed vehicles and that helped us out, but I believe 2014 will be more of a normalized year than the past several. I don’t’ see a lot of things that will jump up and catch us – no major elections, no financial crisis at this point, and everyone has strong balance sheets. I think the economy looks pretty good.”

“I have to say that I would think the economy will stay pretty level,” said Brent Allen, president, StoneEagle. “There is some interesting legislation coming out that could impact it, but for the automotive industry, it is not so heavy. My personal perspective is that it should stay pretty steady, and be a pretty good year. We’ll see continued good sales of cars, and good product sales – investment capital companies are banking on that. They are buying up pieces of this business as fast as they can, and I do see that continuing as well.”

But while the overall economy looks to improve in 2014, a few of our executives did note that political or regulatory issues that started last year – such as the ongoing issues with the Consumer Financial Protection Bureau (CFPB) – could impact the automotive industry, although no one is positive about what those impacts will be, or how they will, ultimately, play out.

“I think the economy will continue to grow, but slowly,” noted Michael Tuno, president, World Class Dealer Services Inc. “It won’t be much different from 2013 – we will still have the same challenges. The only major difference in 2014 from 2013 is a certain political event in November that will certainly have some bearing on the macro environment we all live in. Everyone will still be looking to keep his or her turf safe, and I say that because the automotive industry is cyclical insofar as affordability issues impact it. I still see us having to wrestle with issues such as the debt ceiling, healthcare, etc., so there will be a robust election environment in the fall. So I believe we will have slow growth, and I believe the automotive industry will closely mirror the national U.S. economy. The only footnote is that 2013 has been a pretty robust volume year, but that has been done at great pains for the future of retailers, such as longer loan terms – it speaks to what people can afford, and what can they afford for other major items such as healthcare, etc. The mass market that buys cars, in that 16 million number, will still face those same challenges, and we’ll eventually have to deal with the issue, but I don’t think it will be in 2014.”

“The economy could be unpredictable because of the impact government legislation will have on individuals and companies with the Affordable Care Act,” said John Vecchioni, director of business development, United Car Care Inc. “The industry has benefitted from the down market only because of the limited sales production of the past. People have had to come out and replace vehicles as a result of the 2008 economic calamity. Leasing should become more predominate in 2014 as a result of economics.”

“I see some stress in the economy,” said Glen Tuscan, president, Dealer Commitment Services Inc. “And I see those pressures coming from a variety of different areas. The political environment is stressful on consumers right now, and although the stock exchange is hitting record levels, I believe it’s falsely inflated due to the Federal Reserve. As a result, I think the economic outlook will really show it’s face in the last quarter of 2014. I don’t think there will be a lot of movement – I look at it as an ice cube in Washington – there is some dripping, but no thawing. The elections are affecting a lot of stalemates and because of that there is slow growth. The consumer is under pressure, and we’ll see more of it once those elections are done. I do see a change in interest rates and a change in the economic environment, but for the first half, and even into the third quarter, I don’t see it thawing as much.”

“I think it is going to be an interesting year,” said Kelly Price, president, National Automotive Experts. “I would be surprised if we continue to see the growth that we have seen in auto sales, however. With the CFPB possibly affecting reserves and pricing of products, as well as marketing, it will be interesting to see how this will impact dealers.”

Products and Technology in 2014
Perhaps unsurprisingly, there is more than one product and technology our executives are watching.

eContracting and eSignatures
By far, this was the product category most of our executives touched on, even just in passing. While the rise of the technology for eContracting and eSignatures has been happening for the past several years, many of them believe 2014 is going to see a surge in their adoption. Providers are pushing for the technology, lenders are starting to take a closer look at it, and dealers are beginning to make plans as to how it could fit into their operations.

It will not happen overnight, but this is a product category that all agents should be taking a hard look at. It is also the time to educate dealers on all the benefits; some will be harder to convince than others, and it will take time, but those who start integrating technologies into their dealerships will be in a much better position for growth in the years to come.

“The consolidation of ancillary products (combo products) has grown in acceptance and should continue to grow in popularity in 2014,” said Matt Croak, president, Wise F&I. “Expanded financing options will continue to make loan and lease centered products valuable to the consumer. eContracting of F&I products as a percentage of overall contracts written will also continue its upward surge, as experienced over the past two years. Utilization of third party F&I product platforms, as well as provider integrated solutions will aid in this effort.”

“eContracting is one topic a lot of people will talk about,” said Allen. “And there are all kinds of perspectives on that. A lot of people say it’s stagnant, and some are successful and some are not, but OEMs are pushing it very hard. They are getting the loans in that format, so they are successfully moving that needle forward; I know of one that is pushing 80% eSignatures on the finance side. What we’re seeing is, because of that, the finance side is starting to reach out to get a seamless deal jacket. We have, however, seen a lot more success on eContracting than on eSignatures. There is quite a bit of success on the data, but the signature is the hook. It is the one piece that, for the most part, is not electronic today. Once you can capture that properly, the whole deal can be electronic. It is the lynchpin, and I think that will grow a lot in 2014. There are still things to overcome – how many signatures do you need for example. Can you do it once and apply to all documents? Probably not today; step one would be great if we could figure out how to get all the forms together so they can be delivered from there, so it is a single experience.”

“I see the product offerings as more evolution than revolution,” said Atkinson. “The way products are presented will change more than the products themselves. Customers will be able to interact with products through tablets or enhanced software at the dealership. I certainly think things on that front are getting faster, but there are still some challenges there. For example, I recently bought a car, and it was going to be a paperless transaction – and it was in that I signed a touchpad. But then there was the biggest printer I’d ever seen, and they printed out reams of paper, so I am laughing at the idea of paperless. We really do still have a ways to go on disclosures and legalities to where it’s truly paperless. But I do see the trend to move in that direction accelerating.”

“With the numerous recalls and quality issues of many manufacturers, I believe that we will continue to see growth in the VSC arena,” said Price. “It is getting harder and harder for people to say ‘It’s a Honda/Toyota/etc. and it won’t break’ – especially with all of the electronics comprised in a car these days. But I do see eBusiness solutions as definitely taking hold. We are seeing more and more of our business processed electronically. eSignatures are going to be more of an issue with each state, and whether they are an acceptable form of signature; we will be ready when they are.”

“All of our customers are eContracting at one level or another,” said David Trinder, CEO, F&I Administration Solutions LLC. “Some are receiving well above 90% of their contracts electronically, while others are still at the 30% level. It has all been a matter of effort. The more providers push agents to push dealers to eContract, the more successful they have been. It is also interesting that the providers pushing eContracting the most have also seen the greatest sales volume growth. What I am certain of is that in 2014 most providers will feel more push from the other side – the dealers and agents will be insisting on eContracting, so the percentage of eContracting should show a healthy increase in 2014. eSignature is another matter. The requests for it have increased significantly in the past few months, but the demand is not there yet. I expect use of eSignature will grow in 2014, but it will not be mainstream for a year or two at least.”

Appearance Protection
Appearance protection products have been around for years now, and in 2013, we started to see a real increase in consumer interest for these types of products. Our executives see that trend continuing. In fact, after the product mainstays (VSC and GAP), the appearance protection category is the one our executives predict will be the next biggest seller in the F&I office.

“The big three products are always vehicle service contracts (VSC), then GAP, then tire and wheel. I see appearance protection products being resurgent in 2014 however,” said Corbin. “They are a great value for a consumer – consumers don’t go to Best Buy to take pictures of their new fridge, but they do take pictures of their new car. They love their cars, depend on them, and want to have a good-looking car, and that is what providers who provide protection are giving them. I see a resurgence in that product in dealerships in terms of penetration.”

Mobile Technologies
Another big trend our experts see continuing is the push toward mobile technology in a wide variety of ways. From the technology found in the cars themselves to the way F&I is presented and sold, mobile is still in the “early days”. While there are dealerships that have embraced it and had a great deal of success, those stories are in the minority. There are far more that either have not seen the success they had hoped for, or who have not looked at the technology at all. Our executives believe that, as with appearance protection products, this will not be a new trend, but it will be one that will continue well into 2014 and beyond. And agents need to make sure they are educating themselves and their dealers so that it does not catch them by surprise.

“It is too early in the game with tablets and mobile devices, but I strongly believe that they will be the trend over the next three years,” said Kaizer Siraj, CIO, Safe-Guard Products International LLC. “You can think in terms of point-of-sale – how do you make products more visible? Mobile would allow consumers to evaluate the products, and there is very neat opportunity across the board for that. The second area mobile will impact is the service drive. Take a step back and think about it: the customer comes in with a problem, and we want to make the experience compelling and smooth. Mobile devices and tablets integrate with other back office systems to make that happen. Mobile will play a key role in the future, but the enablers will be about integrating with multiple lenders and multiple partners. So the mobile tablet is in the early stages, but I see that as the direction the industry will ultimately head in.”

End-to-End Solutions, Pricing Options and Lease Products
These three trends are also continuing from 2013, but fewer of our executives see them as being major ones to watch – although they are important.

End-to-end solutions refers to the software technologies that track a customer from when they drive onto the lot until they take delivery. These systems tie together every process in the dealership for a seamless customer experience. They have been around for a while now, but as with mobile technologies, they are still maturing; however, our executives do believe they have started to hit a point where there are solid, reliable solutions that will start to take hold. This is probably not going to be a major trend to watch in 2014, but smart agents will be keeping abreast of the providers and the technologies they are working on for the years ahead.

“I think we’ll see the emergence of more desking tools in 2014,” said Robinson. “They are out there now, but I believe they will continue to gain popularity. They will put F&I and the front sales team more in concert; the dealership wants to watch how deals are negotiated, to make sure they’re done correctly. Some of them will print out reports that will show managers the deals, so desking tools that track the way sales are negotiated will become more popular as time goes on. This is all part of an end-to-end solution. Everyone has been promising products for 10-15 years that allow the CRM to feed into a desking tool, to feed into the back office, etc. I think the industry has been struggling for those seamless systems to evolve and work as they should, and I think we’re finally starting to see them take center stage.”

The emergence of pricing options such as bi-weekly payments was a major trend when the economy and industry were down. Now that things are picking back up, consumers are more easily able to afford traditional payment methods, but while the economy has improved and continues to do so, there are still many consumers with cash or credit problems who still need to purchase vehicles. Our executives believe that the trend for dealerships to have those options available will continue to grow. This is a category agents should be looking to add to every dealership portfolio. It gives the dealers more options to get into cars, and lets them be heroes, which in turn increases customer retention.

“I think you’re going to see increased interest in biweekly products,” said Tuno. “It means the buyer is able to take those longer loan terms and afford a purchase, but be able to pay it off and get back into the trade cycle in a shorter period of time. There is a growing awareness of that product; the seven-year loans rampant in our industry are detrimental to the dealer in getting the customer able to trade their vehicle and get them into another car in a reasonable period of time. Biweekly products both ensure the dealers’ and consumers’ interests are best served.”

Leasing is another product category that many of our executives touched on. Leasing tends to occur in cycles, and we are well into an “up” cycle at the moment and providers have risen to the challenge with more products designed specifically for lease customers. This is where appearance protection will also see a surge, since it is, by far, the biggest product category for lease customers. Wear and tear is the second biggest, giving consumers piece of mind for when they turn in their lease, and if dealerships are not pushing F&I products to every lease customer, then they should be trained on how to sell to that segment.

“Lease products are going to keep increasing penetration,” noted Brugh. “Things like ding and dent, or excess wear and tear. We have seen some nice maintenance programs with a little service contract tied to them. I really think the lease products have seen a lot of growth over the last two years through both OEMs and dealerships. They give the customer a lot of good coverage, so I believe those products will surge forward in the leasing market.”

Customer Retention and Data
Customer retention was a big topic in 2013, as many started to realize that the age-old idea that it is easier to keep a customer than earn a new one applies to the automotive industry as much as any other. That, our executives firmly believe, will continue well into 2014 and beyond. This is where F&I plays a huge roll – products such as pre-paid maintenance are tools to help get consumers back in the dealership, and keep that dealership at the top of their mind, so when it is time to purchase a new car, they are far more likely to return.

Related to that, selling products in the service drive started to see more dealers showing interest toward the end of 2013, and that will continue into 2014. There is still a great deal of resistance by service managers to selling products, but this is where a good agent comes in. Agents can help the sales and service departments, as well as F&I, because they uniquely understand the importance of the products and how they impact everyone.

“We’ve had conversations with many partners, and one of the trends they are all seeing is the idea of customer retention,” said Pryor. “It is becoming an increasing focus in terms of products in the marketplace. Dealers are looking at providers with higher frequency and opportunity to use F&I products to build relationships with their customers. Thinking about that, it kind of sets it up for things like prepaid maintenance, tire and wheel and service contracts. Things that keep that customer coming back – the ultimate goal is selling them another vehicle when they’re ready to trade it in.”

“I think there’s an evolution of products right now,” noted Tuscan. “But any dealer not doing their own maintenance plan is missing an opportunity. They are designed for dealers to bring customers back, and then to take that customer and turn them into a client. If dealers are not using something like this, they will always be buying customer business instead of earning it, and planned maintenance is truly one of the best products for building that relationship. And that will help the dealer through the coming year, because now he’s got customers committed to his business instead of defecting elsewhere. That, to me, is the number one staple product. That is, essentially, building two departments: the dealer is capturing business in F&I, and then turning them into a customer in the service department. That will reap benefits years down the road.”

“I think dealers have to accept that the second the customer leaves their dealership after purchasing a new car, the dealer is immediately competing for their maintenance business with at least 40 or 50 other businesses,” said Kansanback. “So anything they can do to try to control the customer coming back for the maintenance at the time of sale will be critical. When I’m here and buying a car, you can sell me a package, set appointments, do all kinds of things, but the second I leave with the car, you’re just mailing me coupons, and that won’t drive my behavior because consumers today still perceive the dealer to be expensive and slow.”

“Dealers are reaching out to get customers back in the dealership with maintenance agreements,” said Wanderon. “Service agreements are still the number one product in our marketplace but it can be any product that keeps the customer both dealer and brand committed. And the dealer/provider is giving the customer something to minimize their risk of some catastrophe that might affect them such as theft, loss or loss of value, so it’s a win for everyone. I see those products maintaining their continued increase.”

Broader Offerings
Finally, many of our executives touched on the fact that while the top selling products will remain the same, that doesn’t mean there are not other ways to approach them. Combo products – or bundling several products together – are a hot topic, and our executives believe this trend will continue to gain steam in 2014. The practice of bundling multiple products together has gotten scrutiny from many of the top providers, and agents should expect to see more of those bundles coming out in the coming months. Not only does it allow the dealer to get more products on the menu without making it overwhelming, but it also streamlines the process for the consumer, and often comes with a slight discount, making it even more attractive.

“The menu is pretty full right now,” noted Amos. “all of the insurers out there are looking for the next new product we can put in play and gain a lot of revenue, but right now we have to consider menu – it can’t get too big. I think a lot of the jostling for positions is really falling into place; VSC and GAP are big, and the big riser for us in 2013 was prepaid maintenance. I see tire and wheel as a solid product, continuing to increase year after year, and I believe we will see more bundled products next year a well – bundles will be combined with windshield, paintless dent or tire and wheel, all sold in one package at a reduced price. I think in 2014 we will see that become more prevalent, as it has really become mainstream now. Ancillary products have also become more acceptable, with providers more comfortable with their risk, but as far as what’s new, nothing will go on the menu unless it’s a product that will replace something already there.”

“The type of F&I products the average car buyer responds to look, on the surface, much the same as what has been offered in the past,” said Karchunas. “Service contracts and GAP will remain cornerstones of the F&I product offering, but consumers are better informed than ever before and expect greater value from a simplified product. The typical car buyer wants a protection plan that is both easy to understand and reliable. The cars that both domestic and foreign manufacturers are producing now and into the future are being driven for much longer time periods. These same vehicles are also utilizing more technology than ever before. The consumer is often open to purchasing F&I products that provide the reassurance that they are protected against potential problems with the technology as well as the mechanical components. This is why it’s more important than ever to rise up to the challenge of providing a protection plan that is easy to understand, yet provides coverage for increasingly complex vehicles.”

Predicting the Future
What do our executives see for F&I and the automotive industry in the coming months? They let us know their predictions about what will be important, what will change and what will stay the course.

Continued consolidation – both of providers and dealers – was a major issue many of them touched on. They see the trend continuing, and it will get harder for smaller providers and dealers to compete. That trend also applies to agents – the trend is toward agencies with multiple agents. Not to say the independent agent cannot continue to compete, but it will only get more difficult as time goes on, and will require, our executives said, those agents to focus on more than just products. Training, being involved in the staffing of the entire dealership and finding new ways to increase revenue, such as service drive sales, will all be crucial skills agents will need in the years to come.

The increasing influence of the Internet is another major trend our executives are watching closely. The younger generations that grew up in a connected world are beginning to reach an age where they are purchasing cars. The experience they are looking for is vastly different from that of their parents – and dealers need to be adapting. Again, this is where agents can and should be stepping in – educate your dealers on what the new generations are looking for, from mobile apps to a more complete online buying experience, and then help them find and implement the right solutions to reach those buyers. This is another trend that won’t happen overnight, but savvy dealers and agents are trying different solutions to work out the bugs while the percentage of the buying population looking for this type of experience is still fairly low. It will only get more critical as the years go by.

Our executives also called out the increasing emergence of hybrid and electric vehicles. They have been on the market for a number of years now, but as the technology has improved and the cost has come down, more consumers are seriously looking at these vehicles as an option. And F&I will need to adapt. There are many products out there that apply equally to these types of vehicles as traditional cars, but there is an opportunity, both for providers and agents, to create or find products or packages geared specifically for these vehicles.

“The trend I see for the automotive industry as a whole is really continued consolidation,” said Wanderon. “Increased technology will allow providers to offer more of a solution, so you can price your products based on each customer’s driving habits and risk, rather than on vehicle models. It is difficult to price products based solely on a particular vehicle, so you end up with more of a blended rate – I think it is going to get more granular in 2014 and beyond. So someone who drives better and who maintains their car at a higher level will be provided something at a lower cost than someone who drives harder and doesn’t maintain as diligently. For F&I, really the only trend that’s out there right now is focused on the regulatory side and where that’s heading. There doesn’t seem to be anything on the horizon that’s game changing other than that, although there has been a lot of consolidation in our business. A lot of the major players have either been acquired or purchased others, and dealerships are doing the same thing, so I see that leading to a continuing process of centralizing the F&I office.”

“I don’t know if it’s a trend or not, but while we’ve had technology forever, it’s been rough getting everyone acclimated to using it,” said Brugh. “The younger generations are used to not touching a piece of paper, they either have everything on computer, or on their phone or iPad. But my generation still likes to touch the paper. We’re still trying to get people to accept that change, but once you get dealers and providers past that, we will see them doing everything online. It will get there, it’s just a slow process. One of the problems is that a lot of dealerships still don’t even have the infrastructure to house the technology in the first place. They don’t have fast enough lines, or computers with memory or hard drives to get them where they need to go. It is all part of an education process – it is already changing, and we will see more changes coming, but at the end of the day, it all depends on how much a dealership wants to embrace the change.”

“I don’t think F&I has changed much in the last 25 years to be honest,” said Amos. “The trends we look for are more from the compliance and disclosure perspective of the transaction the dealers are doing when selling our products. That is something we constantly are watching, and we are very proactive in our relationships with our dealers. But at the end of the day, F&I is very basic when it comes to offering products: price them correctly and the consumer wants to buy them. Transparency and disclosure are the dealer’s friend. Once they do that, then it is just a matter of watching the processes. For the greater automotive industry, I think hybrid technology will take off big time. We insure a lot of Toyota business, and I think they are going to be making hybrids out of everything. It is solid technology and very effective – other brands like GM and Ford also have hybrids, and we even see hybrid trucks coming out. That is one thing we’re going to see surge in 2014. ”

“At Protective, we are keeping an eye on similar trends that we have been monitoring for the past few years, such as the steady growth of alternative power systems (like hybrids), technology and connectivity,” said Karchunas. “Consumers are bombarded with new forms of technology and their desire for more efficient vehicles is growing at a steady rate. We are working hard to stay ahead of these trends to develop F&I products that meet these evolving needs both today and well into the future. For F&I specifically, for the past year and a half, we have been keeping an eye on the developments with the CFPB. Even though most auto dealers are not directly subject to CFPB regulation, this has obviously become a hot topic for the auto industry. Over the course of the next year it will be interesting to see how the industry adjusts processes to meet the potential impact of CFPB guidance. At the end of the day, the need to support F&I operations with reliable products, training and administration remains intact, regardless of whether the CFPB takes further action affecting auto sales and financing. Dealers and their F&I staff need products that provide value to their customers and they need to know these products are backed by a financially stable organization that is interested in helping protect their reputation. “

“I think menus will continue to be critical part of the transaction in F&I, and that F&I managers will be much more engaged in the sales process, not just focused on what is happening in F&I,” noted Tuno. “It is siloed right now, but I think there will be more integration between the consumer buying the vehicle and everything that happens up until they get it delivered. All that technology is there today, it just isn’t too far along in its maturity, but I think there will be a push for an end-to-end solution. The technology will drive a more lean and efficient process, and retailers that have it down are the ones that can eke out the margins. The most efficient might see 5% return as a percentage of gross revenues, but most are going to operate at 2-3%; the 5% are the ones who have the process down from the front door to delivery of the vehicle. Technology will create a much more conducive solution, especially for the younger generation, which is used to communicating less with people in face-to-face environments. There is the whole idea of Internet, and millennials, gen x and ys – they all use it. Even baby boomers like me use the Internet a number of ways when purchasing a vehicle. This generation wants to show up at the dealership much further along in the transaction than in the past, and they don’t want to spend more time than necessary in the dealership itself. We already have the groundwork for that kind of business model, and I think we will see more of it in 2014.”

“It is imperative that lenders, providers and dealers alike focus on compliance not just on the state level, but also on the federal level,” said Croak. “This is evident by the growth in membership of such F&I-related trade associations as GAPA, SCIC and MVAPA. I also think that changes in the vehicles themselves may require a thoughtful look at the benefit coverage options in the F&I products so that they align more closely with the underlying vehicle.”

“We are watching how consumers will feel about and utilize the online buying choices being offered by manufacturer’s like GM,” said Price. “I also believe this coming year will be an interesting one with how banks handle the compensation of financing reserve. It’s a ‘hold your breath, close your eyes and hope for the best’ situation. The only suggestion we are making to dealers is they better learn to rely on product sales! For those dealers earning more than 30% of their income from reserve, they will be taking the biggest hit. Product sales should encompass at least 70% of the profits in F&I.”

“For the automotive industry, I think the IPO offering from Chrysler will reveal how strong their production in North America and abroad is, and that is something we are watching,” said Vecchioni. “The retirement intention of the Ford CEO Allen Mullaly and the future of Ford abroad are also major issues that could impact the industry. I think that leasing with amicable numbers that make sense can and will drive new sales, as well as replenish the pre-owned inventory, and the Affordable Care Act will dictate manufacturing levels throughout the United States. If the employment numbers, with good wages, goes up, the industry will also see more sales. I think the mid-term elections will determine quite a lot in the minds and comfort of most Americans, and that will impact our industry either up or down.”

“I think expectations will continue to go up,” said Kansanback. “The margins are still compressed on the sale of vehicles, and dealers are not going to tolerate underperforming F&I departments. It is not always going to be us, but dealers need to partner with someone who has the resources to help them – it is not practical for them to be an expert in every department. Another macro trend is that dealers are having trouble hiring people with good experience; training is always important, but when you’re having to go with the less experienced, incomplete resume candidate, training is that much more important. I think that if interest rates stay low, unemployment should go down, and if we had trouble in the depths of recession hiring good people, as that number goes down, it will just get harder.”

“I believe the key thing for the industry is where vehicle sales ended up in 2013 and what they are projected to be for 2014,” said Atkinson. “The credit environment for lending and the CFPB and what they’re bringing to the table is going to be crucial. We are seeing the government getting more active in the regulatory sense, and a lot of companies like AUL are members of organizations that are becoming very active federally, and more active in state legislatures as well. We have got to get more informed across the country; groups like NADA are getting much more aggressive working to educate people on what’s going on, and educate the CFPB on what goes on in a dealership, to show them the domino effect from their decisions. But there has to be more advocacy and industry awareness – we can’t sit back, we have to be proactive, and that means getting dealers, agents and providers involved in the conversation.”

“I see a change in consumer interaction in a couple areas,” noted Tuscan. “I think internet sales are going to change – that is slowly changing now. The customer wants to be more involved before he or she enters the dealership; they want to have almost everything done before they even walk in the door. There is a race for gen y and millennial customers right now, and they are totally different from you and I. This 21/22/23 year old buyer doesn’t want to enter the brick and mortar atmosphere, they want to do a lot more buying before they walk in. I believe that is a major trend happening right now. The challenge for F&I is that we need to be part of that conversation. We need to find a way to communicate our products and opportunities to those consumers. It is all about time to them – they are so used to the smart phone atmosphere and instant responses, that it feels too slow to move the traditional way. I’m not saying every transaction will happen that way, it will take some time to get to that point, but I see that trend happening now. I don’t, however, ever see us removing F&I out of the process completely, it will just be a more interactive process.”

“I think the big question on a lot of minds is the impact of CFPB, and I think we’re all watching to see where that goes,” said Pryor. “I know there is a lot of debate on Capital Hill, and among the OEMs and retailers as to what this will mean; I think as we get more clarity, you’ll see some shifts in how the F&I office is going to market, in both the product mix and in greater transparency for consumers, as well as more education as to value of the products. That is the overriding goal – to make sure consumers are receiving a fair value for what they’re paying. As long as we as an industry can justify that, it will put us in a better position moving forward.”

“I don’t think we’ll see much of a change overall in 2014,” noted Robinson. “VSC will still be number one, GAP will be number two and some combo that includes tire and wheel will be number three in the F&I department. Those will be the big three, and I don’t see that changing. The thing we really watch is the manufacturer’s underlying warranties, and how they change their coverages. The trend has been for the factory to go with longer underlying warranties, so we are watching that closely. Other than that, I think it will be emergence of electric cars and their impact on our market that will have an effect, but even then, there is nothing earthshattering, other than CFPB and the impact they’ll have on lenders. We will be watching that very closely.”

“I think everyone is watching CFPB in 2014,” noted Corbin. “Are they going to try to extend reach past lenders and lending practices and into automotive dealer F&I department operations? We are all watching that, the trade associations are monitoring that, and as an industry we need to take some leadership roles with the CFPB. We need to educate them as to what the benefits of a fair market process in the F&I department are to consumers. That’s one that could be potentially negative that we’re watching. We also continue to have dealers who want to partner with us to experience the use of menus on mobile devices; to untether themselves from the F&I desk. They want to be out in the showroom and more interactive with consumers, putting them more at ease about finance, protection and payment options. We will continue to use tablet technology in our SmartDealerProducts division and to partner with dealers on new techniques, all of which will result in higher consumer satisfaction scores and higher results.”

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