As reported in a June 2016 Automotive News article, “Leasing made up an all-time high of 31.1% of new-vehicle transactions — including cash deals — in the quarter, compared with 26.7% a year earlier.” To put that in perspective, in 2009 it was about 12%. That’s great for the leasing office but not so great for the F&I office, as most lease agreements include maintenance coverage.
So how can independent agents and their dealer clients make up that lost revenue? One proven option is to sell appearance protection coverage.
Appearance protection plans have evolved considerably in the past 10 years. Mobilized, consolidated service providers, using specially trained technicians capable of performing multiple types of repairs, offer dealerships new levels of efficiency and capability that translate to more revenue and peace of mind for the dealership, and happier customers.
Today’s tiered appearance plans, including those offered by my company and others, give F&I managers the option to present choices to their customers, bundling different types of appearance repair services. Such plans include paintless dent repair (PDR) at the baseline but also include wheel repair, bumper repair, windshield repair and repairs of interior rips, tears and burns. The dings and dents acquired while parked in a parking lot is a fairly universal risk, so PDR is a starting point. But identifying customers who also, for example, often travel on highways and can benefit from a windshield repair plan coupled with PDR, presents an upselling opportunity that wasn’t available a few years ago.
The selling opportunities for appearance plans span all car sales, not just leasing. For new cars and pre-owned sales, consumers want their vehicles to look great. A great-looking vehicle brings better resale value — a factor critical to both the consumer and dealer. Most plans provide warranty coverage where the factory does not. Kelly Blue Book and NADA guides both address the importance of appearance to resale value. Plus, for pre-owned, some plans feature no age or mileage restrictions.
Yet with all of these great improvements and opportunities for selling appearance plans in the F&I office, penetration rates are only slowly improving year to year. The following tips for selling appearance plans may help you change that:
1. The 100% Rule
The customer often doesn’t see a benefit with many programs, so making a personal connection by communicating typical risk scenarios is important. “Have you ever had a major mechanical breakdown? Had a car stolen? Had a ding, windshield chip or scraped wheel? Lost a set of keys?” By going through the list, you’ll find that 100% of customers will acknowledge a need based on their individual experiences with car ownership, and will know they’ll get a benefit from the plan.
2. Planting the Seed
By using a few good interview questions that target specific coverages of an appearance protection plan, customers will envision scenarios that make a plan favorable. “Isn’t it nice to drive a vehicle that feels showroom-new?” “Do you know what the manufacturer’s warranty is on minor cosmetic damage?” “Have you noticed how parking spaces everywhere seem to be getting smaller?” “Have you ever had a shopping cart or car door ding your vehicle?” “Have you ever caught the curb with your wheel while parallel parking?”
3. Thought Tracks
“Thought tracks,” or visuals and analogies, provide a perspective that may awaken desire in customers. One of the more successful props I use is a light metal water bottle. I hit it against the desk to illustrate how cars today dent more easily because they’re made of thinner steel or aluminum. When discussing vehicle trade-in, reference the KBB/ NADA guide, or use a unique picture of trade-in vehicle with damage. Use a cellphone as an example: Most car buyers have a case to protect their expensive phone from damage.
4. Package Presentation and Increasing Product Penetration
The same customer you’re selling paint and fabric protection to is also likely to buy ding and dent coverage, and maybe more. And the opposite applies — if they buy ding and dent, they’ll likely buy paint and fabric. I’ve seen many examples of an F&I manager having paint and fabric on all five levels of the menu, but they have ding and dent on only two levels. This is a missed opportunity. They should always be offered together because it’s the same customer for each program. It’s in their buying DNA, so to speak.
The current leasing market presents one great opportunity for selling appearance protection. Should that market plateau, new and pre-owned will continue to offer revenue opportunities. Appearance protection can keep your clients’ and your revenue numbers looking flawless.