Tag Archive | "F&I Products"

Study: Consumers Want to Buy Big-Ticket Items From Their Smartphones


SAN FRANCISCO — A new study shows that one-third of consumers are open to buying cars from their mobile device. However, the same study showed that 86% of them still want to test-drive the vehicle before purchases.

The study, which surveyed, 1,185 consumers, was conducted by Survata on behalf of Roadster, a three-year-old company that offers that type of service. Using their mobile phone, consumers shop for vehicles on the company’s site, while Roadster brokers the deal with participating dealers once a vehicle is selected. And according to its study, it’s not just shoppers in tech-specific cities who want that type of experience.

“It’s clear from the results of our survey that consumers are open to new ways of shopping for big ticket items,” said Andy Moss, CEO of Roadster. “With Roadster, we have incorporated some of the most cutting-edge ecommerce technologies into car shopping to make car buying as easy as buying anything else online. On Roadster.com and our partner dealer sites, consumers can now find a car they like on their mobile device, purchase it directly with our ecommerce technology, and have it delivered to their doorstep, sometimes even the same day.”

The survey found that men (41%) are more interested in buying cars from their smartphone than women (21%). It also found that consumers with household incomes of more than $150,000 are more likely to transact online.

The survey also showed consumers are willing to buy F&I products from their smartphone, with 31% respondents saying they’d be interested in selecting their “warranty,” and 27% saying they’d be interested in selecting their service plan.

Additionally, 45% of respondents said they wished the auto industry would introduce free delivery. Forty-five percent of respondents said they want free return, while 44% said they wanted fixed pricing.

And consumer who weren’t interested in purchasing big-ticket items from their smartphones said they would reconsider if they knew there were significant savings involved. According to survey results, 43 percent of consumers expected to save $2,000 or more by purchasing a car on their smartphone vs. going to the dealership. Thirty-one percent believed they would asave three to four hours by conducting the transaction online.

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AutoNation’s F&I Operations Posts $1,538 Per-Copy Average for 2015


FORD LAUDERDALE, Fla. – AutoNation’s F&I operations, or what the group refers to as Customer Financial Services, lived above $1,500 in F&I gross profit per vehicle retailed (PVR) in 2015, with the business unit’s full-year revenues rising by $100.5 million from 2014.

The group’s F&I operation’s full-year PVR average was $1,538, up $124 from 2014. For the fourth quarter, the business unit’s PVR average came in at $1,556, up $109 from 2014’s end-of-year quarter.

Total F&I revenue for 2015 increased 13.5% from a year ago to $846.1 million. For the fourth quarter, revenues increased 14.4% from the year-ago period to $210 million.

The nation’s largest dealer group posted full-year revenue of 20.9 million, up 9% from the prior year. Total gross profit was $3.3 billion, up 9% from the year-ago period. Operating income for the full year was $873 million, an increase of 6% over the prior year.

“Our primary assumption for 2016 industry new-vehicle unit sales is above 17 million for the year,” said Mike Jackson, the group’s chairman, CEO and president.

For the fourth quarter 2015, revenues totaled $5.3 billion, up 6% from the year-ago period. Total gross profit was $812 million, up 4% from the year-ago period, while operating income fell 12% to $200 million.

Retail new-vehicle sales for the fourth quarter increased 4% from a year ago to 86,740 units. For the full year, the dealer group bested 2014 sales by more than 21,000 units for a total of 339,080 units sold.

“The fourth quarter industry sales environment was more push than pull, resulting in significant new- and used-vehicle margin declines on a combined basis of $217 per vehicle, which is 11% lower than the fourth quarter of 2014,” Jackson noted. “During the quarter, we experienced particular weakness in premium luxury, which had a significant impact on our fourth quarter financial results.

“We have begun and will continue through the first quarter to take necessary steps to align our cost, inventory and pricing strategy to the current market,” he added.

On a same-store basis, gross profit for variable operations was $450 million in the fourth quarter, down 4% from the year-ago period. Variable gross was $3,350 on a per vehicle retail basis, a decrease of $125 from the prior year, while new and used same-store unit volume was flat compared to the year-ago period.

Additionally, new-vehicle revenue for the fourth quarter was $3 billion, a $61 million increase from a year ago.

Jackson noted that 2015 was a historical year for AutoNation, as the group celebrated the sale of its 10 millionth vehicle. “We implemented our industry-leading recall policy,” he added. “We acquired 51 franchises with approximately $1 billion in annual revenue, and we built our brand and kicked off our drive pink campaign from coast to coast.”

Asked if the auto finance environment will remain a key driver of sales — particularly with a million more off-lease vehicle returning to the market — Jackson responded, “I see absolutely no sign of difficulties in auto finance.”

“I first think on the consumers’ commitment to pay for the car loans, whether it’s lease or finance,” he added. “It’s unwavering. So no alarm bells there.”

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EFG Named to Dallas Morning News’ ‘Top 100 Places to Work’ List


DALLAS — F&I product provider EFG Companies was named to the Dallas Morning News’ list of Top 100 Places to Work, marking the ninth national award the company has earned this year for excellence and customer service.

“EFG’s awards and certifications reflect our intense focus on operating in our clients’ best interest at all times. You don’t always see that in our industry,” said John Pappanastos, president and CEO of EFG Companies. “EFG’s most powerful asset is its client engagement model that requires uniquely qualified and motivated professionals. Our values drive us, and we welcome and expect measurement of our impact on our clients’ profitability and success.”

According to company officials, a recent Troubadour Research and Consulting client satisfaction survey showed EFG’s net promoter score ranked higher than Southwest Airlines, USAA Banking and Insurance, and Nordstrom.

In addition to being named a Top 100 Places to Work, EFG Companies’ other notable recognitions and awards this year include:

  • F&I and Showroom magazine’s F&I Dealer of the Year Award for EFG client, Davis-Moore Automotive
  • First product provider certified as a Center of Excellence by Benchmark Portal
  • First product provider awarded the National ASE Blue Seal of Excellence
  • One of the first hundred companies in the US to achieve Consumer Credit Compliance Certification from the National Association of Automotive Finance
  • Three Stevie Awards for Top Field Sales Team, Contact Center of the Year, and Business Development Achievement of the Year
  • Powersports Business Nifty 50 Product Award winner
  • SubPrime Auto Finance News Top 125 Most Influential Firms

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MakeMyDeal Rolling Out F&I Connect Tool


ATLANTA — MakeMyDeal, Cox Automotive’s online marketplace, has begun rolling out its new F&I Connect, a tool the company bills as a product designed to bring the F&I process into the Digital Age.

Powered by F&I Express, F&I Connect allows dealers to promote their F&I products and prices in a controlled online environment while giving consumers the opportunity to learn about F&I program options before finalizing their deal.

“Our research shows that there is an opportunity within the current F&I process to better educate consumers about the value of F&I products, reduce the time they spend in the F&I office and improve their satisfaction with the overall buying process,” said Mike Burgiss, vice president and general manager of MakeMyDeal.

A 2015 study commissioned by MakeMyDeal revealed that most vehicle purchasers felt they knew what F&I products were. But when asked to define F&I products and services, many could not. That same study, however, also revealed that that gap in knowledge did not mean customers lacked interest in F&I products.

Of the 500 respondents, 83% of said they were interested in learning about F&I products and 63% said they would be more likely to buy F&I products if they could learn about them on their own time before finalizing their vehicle purchase.

“By bringing F&I information and pricing online, we are able to give consumers a better understanding of their options, which can ultimately have positive effects for the dealership in terms of satisfaction and sales,” Burgiss said.

MakeMyDeal’s new tool, which was tested at select dealerships this past June, was launched in select markets this week, a company spokesperson said.

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GWC Warranty Earns Two 2015 Automotive Communication Awards


WILKES-BARRE, Pa. — F&I product provider GWC Warranty was awarded two 2015 Automotive Communication Awards at Tuesday’s Women’s Board Reception during Automotive Aftermarket Industry Week in Las Vegas.

GWC’s company blog, Accelerate, took top honors in the business-to-business blog category, while the company’s “Behind the Wheel” dealer story series won in the in business-to-business “Business Use of a YouTube Video” category.

“To be honored by peers within the automotive community for the content we provide dealers is a true testament to GWC Warranty’s commitment to be the industry’s best-in-class provider of used vehicle service contracts,” said GWC CEO and President Rob Glander. “We are proud to accept these awards and will strive to continue to provide dealers with timely, helpful, informative and engaging communications.”

GWC Warranty’s Accelerate blog was launched in March of 2015. It was designed to provide used-car dealers with the news and know-how to be more successful. Accelerate features helpful best practices, news, trends and more to help dealers stay on the forefront of the used-car industry and better serve their customers.

Behind The Wheel was introduced in August of 2015 with the story of Zimmerman’s Automotive, a 20-year GWC dealer partner. The story center’s on the 50-year operation’s story of the community involvement and customer service. Behind The Wheel pulls back the curtain to unveil the people and communities that make independent dealers successful, officials said. Each story also delves into how GWC Warranty’s service, products, training and technology align with independent dealers’ missions to operate reputable, successful businesses.

The annual Automotive Communication Awards are sponsored by the Car Care Council Women’s Board and the Automotive Communication Council. The awards recognize companies and agencies that provide automotive information to consumers and the trade professionals who interact with them on a daily basis. All entries consisted of automotive advertising, marketing, merchandising and/or PR efforts targeting consumers or the trade between January 2014 and November 2015.

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U.S. Bank Monitoring F&I Product Pricing


MINNEAPOLIS — Dealers signed up with U.S. Bank received a notice this week containing the bank’s policy in regards to fair and responsible lending. Also detailed was the bank’s dealer monitoring program, which, according to the notice, isn’t just focused on how dealers mark up interest rates on finance contracts.

Obtained by F&I and Showroom, the notice was similar to ones distributed by other finance sources, explaining that regulators like the Consumer Financial Protection Bureau (CFPB) have interpreted fair lending laws to prohibit not only intentional discrimination, but also “certain neutral practices that have an adverse discriminatory impact on a prohibited basis (i.e., disparate impact).” But in explaining its monitoring program, the bank didn’t focus on rate markups; it focused on how F&I products are priced and sold.

“If this monitoring program finds unexplained differences in pricing or excessive add-on product financing on a prohibited basis, then we will notify you,” the notice read, in part. “We will ask you to provide any additional information that you believe we should consider regarding the matter. If you are unable to provide an explanation for the identified differences, or if the unexplained differences persist, we will consider taking further action.”

Since the CFPB issued its March 2013 guidance on dealer participation — which warned finance sources that they’d be held liable for the way dealers mark up interest rates — finance sources have warned dealers that they are monitoring their rate markup practices. But the U.S. Bank notice could be the first to add F&I product sales to those efforts.

The question is: Does the CFPB have jurisdiction over the sale of F&I products? It’s a question that has been debated during F&I and Showroom’s annual conference for the past two years.

During a panel discussion at Industry Summit 2013, Nikki Munro, a partner with Hudson Cook LLP, said she didn’t believe the bureau had jurisdiction over the F&I industry. She noted that the CFPB-creating Dodd-Frank Act contains a catch-all provision that raises more questions than it answers.

“There’s a lot of gray area there,” she said at the time. “With aftermarket products that are financial in nature — and the easiest one to refer to is GAP — we think the CFPB can exercise jurisdiction over those types of products, because they are related to the extension of credit — they pay off the extension of credit if there’s a total loss.

“With nonfinancial products like vehicle service contracts, tire-and-wheel, paintless dent repair … we’re just not sure,” she added. “The CFPB will probably take the position that those types of products offered in connection with the loan gives them jurisdiction.”

At Industry Summit 2014, Rick Hackett, a former CFPB official who now serves as a partner at Hudson Cook LLP, confirmed the bureau’s interest in how F&I products are priced and sold, saying that the regulator can’t connect how dealers price F&I protections with the value they provide consumers.

“If I found out that Walmart set the price [of their products at different levels], and they were all the same products, and they were just hoping I would buy one for $20.95 because I was a particularly gullible consumer, I’d be grumpy,” he said. “That’s the bureau’s perspective of variable pricing of ancillary products.”

Hackett offered several scenarios as to how the bureau might proceed. One of them involved the data the bureau has collected from the tens of millions of transactions it reviewed during its investigation of dealer participation. If the bureau comes up with its own determination on how F&I protections should be priced, it could say that anything above that price is a finance charge. The bureau could then say a finance source provided “reckless substantial assistance” for financing a product with an artificially inflated price, Hackett noted.

“So there’s the question,” he said. “Will the bureau try to make finance companies a cop for dealers’ pricing of ancillary products?”

U.S. Bank’s dealer notice points to a “Yes,” although a spokesperson for the bank played down its significance. “We regularly distribute updated policy notifications to our dealers across our footprint,” read a statement the bank issued to F&I and Showroom. “We have and continue to work closely with our dealership partners on changing guidance and regulation in our industry to provide the best service for our clients.”

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