Tag Archive | "technology"

Mike Burgiss to Discuss ‘Next-Level’ F&I Sales at Agent Summit


LAS VEGAS — Organizers of Agent Summit have announced that MakeMyDeal’s Mike Burgiss will present “Next-Level Product Sales” at the 2016 event, scheduled for May 9–11 at the Venetian Palazzo Las Vegas.

“Those who know Mike Burgiss know he is at the leading edge of F&I product sales,” said David Gesualdo, show chair and publisher of Agent Entrepreneur and F&I and Showroom. “Agents and dealers who fail to stay abreast of the latest advances risk losing opportunities.”

Burgiss’ presentation will focus on protection-product sales in the dealership as well as with customers who wish to complete all or part of the F&I transaction at home or their place of business, online or by phone. He will also discuss new technology designed to maintain or improve production as car buyers’ preferences and demands continue to evolve.

“The opportunity for dealers to build a consumer’s intent to purchase F&I products is greater than it’s ever been, and delivering a modern and efficient experience in the business office is the perfect complement to a strong sales process,” Burgiss said. “Dealers and agents that adopt an online and digital mindset for F&I will continue to grow their businesses faster and stronger than the competition.”

Registration for Agent Summit is now 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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An Interview With Dean Harrison


Dean Harrison is president of Maximus Auto Group, a New Albany, Ind.-based F&I product and training provider with dealer clients throughout the United States. Agent Entrepreneur sat down with Harrison to get an inside look at MyCar Mobile, an app the company developed to help dealers connect with Millennial car buyers and, with time, build the brand loyalty most marketers say is lacking in younger generations.

AE: What’s on your mind as we begin the New Year?

Harrison: I’m very interested in Millennials and how they interact. They are the next generation of car buyers and they’re really starting to come into their own. What can we do as a product administrator to target Millennials so dealers can maintain them as customers down the road? If we can figure out how to treat Millennials, we’re doing a great service to our dealers.

AE: Do you agree with those who say Millennials have less brand loyalty than prior generations?

Harrison: There’s research that says Millennials actually are very brand-loyal. And we all know Millennials like ease and convenience. They want ready access to data and information. I believe we have an opportunity, through online and social media platforms, to provide that. So the question is not whether they have more or less brand loyalty but how dealers can build loyalty in their own brand.

AE: How do they do that?

Harrison: Interact with young people on their level. Eighty-five percent of Millennials have and use smartphones. One in five are using it exclusively for Web browsing. They’ve given up the desktop and the laptop. In response, we developed an app we call MyCar Mobile. When a Millennial buys one of our F&I products, our app makes it easy to learn more and makes the claim process very easy. They’ve got access 24 hours a day, 365 days a year.

Millennials don’t want to pick up the phone and call somebody when they have a problem or a question. They want to get the answer from their smartphone. If they can, they will reward the provider with loyalty. And we custom-brand the app to the dealership. So every time they use it, they think of the dealership, because the dealership’s name and contact information is front and center.

AE: And the app has to work.

Harrison: It has to work and it has to be easy to use. We built MyCar Mobile so that anybody can pick it up and use it. A first-time user can find and hit the “How to File a Claim” button. It knows what products and what coverage each customer has. And not only can they can do everything right on their mobile device, the dealer can use the app to send push notifications back to the customer. As soon as the customer files a claim, they see that their status changes and they know they’ll be continually updated by push notifications.

AE: Are they introduced to the app at the dealership?

Harrison: Ideally, yes. We have to make sure the dealer does a good job of communicating that the app is available to them. They can download it from the Apple or Android app store while they’re still at the dealership. If an F&I manager has time, they can go over it with them.

It’s a very good customer service tool. Some customers still want to make that phone call and talk to a live person. If that’s how they want to interact, that’s fine. They’ll just use the “Customer Service” button. If they want to talk to their dealer, they will see their contact information.

I want to allow customers to interact with us, however they want to do it. And you’re absolutely right. It should be introduced at the store because dealers should want their customers to have the app. Get it installed on their smartphone. Tell them what it can do and how to do it.

AE: Where exactly did the idea for the app come from?

Harrison: It came from my desire to provide the best customer service in the industry. We looked at where customers would be in the future. How can we provide dealers with the right level of service? All the research we’ve done tells us this is where the customer is gravitating. They are moving toward the mobile device.

AE: Do you believe Millennials could ultimately buy more F&I products than older customers?

Harrison: Look, budgeting is a way of life for Millennials. They’re coming out of college with almost $30,000 in debt. They’re forced to budget. They don’t have a lot of discretionary income. They may not be aware of unexpected expenses that can occur. We’ve all had flat tires or lost a set of keys. Today’s keys are expensive, and we are seeing an increase in key claims. Many Millennials don’t realize how expensive these items can be, so we need to focus on how they can budget for these out-of-pocket expenses.

Another area I think is very important to consider is that they are very well-researched. Many of them may be aware of what GAP is, but they may not be aware of how valuable it can be. Credit.com recommends putting 20% down on your new-car purchase because cars typically lose 21% of their value in the first year. However, according to an Edmunds.com survey, the average Millennial is only willing to put $3,000 down on their vehicle purchase. We know that the average new-car transaction is over $33,500, so if Millennials want to stay in line, they would need to put $6,700 down — and that’s before taxes and fees.

With the right presentation, Millennials should absolutely be great customers for F&I products. But they want to be educated. They don’t want to be advertised to or marketed to. They want to be educated and make educated decisions.

AE: The app sounds like an expensive project. Why take the risk?

Harrison: Building a full-featured, full-functioned app takes a lot of time, effort and development cost. The decision for me was not so much based on how quickly we would make that money back. I pushed for the app because I knew this is where I wanted our company to be.

I came out of the retail industry. I sold cars and I sat in the F&I office. I know that, if the product doesn’t perform up to the customer’s expectations, it’s a bad deal all around. I never wanted to put one of my dealers in that situation. So, ultimately, moving forward with MyCar Mobile was a pretty easy decision, because it’s the right thing to do for our customers and our dealers.

I’m optimistic that our investment will pay off for everyone involved. In our industry, change is constant. Our customers are always evolving. I want to be able to provide the tools dealers need to keep up.

And let’s face it, many dealers are set in their ways. They can be slow to change. And I think one reason may be that they don’t know how. What is the next step? If I can help a dealer in that regard, if I can make it easier for the dealer to take that next step, that’s what I want to do. We’re going to assist the dealers in this process and help them get back some of the brand loyalty they’ve been missing.

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Industry Trends for 2016


The New Year offers a perfect opportunity to consider anew the driving forces that will set the course for the automotive industry in 2016. Agent Entrepreneur reached out to agents, agency heads and executives from the F&I product provider segment to find out what 2016 will bring for the economy as a whole and the industry in particular, as well as what new trends agents should look for.

The Economy

On Dec. 16, the Federal Reserve announced an increase in short-term interest rates for the first time since 2006. Fed Chairwoman Janet Yellen described the move as a vote of confidence for the ongoing economic recovery and said rates would only continue to rise, gradually, if the economy continues to move in the right direction.

Although the Fed’s announcement came after most of our sources had submitted their responses, interest rates led the discussion of the economy and how it will serve the automotive industry in the year ahead.

  • Interest Rates

William Gorra, president and CEO of Simoniz, listed interest rates among a number or economic indicators, including gas and energy prices, that he expects to remain low in 2016. These factors should help keep new-car sales increasing at the same pace, he said, which means F&I will continue to grow at a steady rate as well. “World events notwithstanding, I expect the economy in 2016 to be very similar to 2015,” he said.

Mark Mishler, CEO of Interstate National Corp., was one of several executives who predicted the interest-rate hike. He expects the trend to continue in 2016. “This could have an impact on consumer credit availability, but it appears that rate increases will be small, so there should be minor disruption to credit availability,” Mishler said. “However, I do believe that this will have a minor impact on retail sales in 2016.”

Glen Tuscan, president of Dealer Commitment Services, noted that, while higher interest rates would increase the cost of doing business, it is unlikely that it would put much of a damper on the recent wave of mergers and acquisitions in the dealer space.

“Auto retailers have been the beneficiaries of the attractive business environment that low rates have been providing these past years,” Tuscan said. “Should the increased cost of doing business look to be less attractive, I believe some large family groups of dealers will seek the 10 times-plus earnings that the acquisition market is offering and exercise the exit strategy they have been looking for.”

  • New-Vehicle Sales

By December, experts were predicting that U.S. dealers would sell 17.3 million new vehicles by the end of 2015, an increase of about 800,000 units over the prior year.

“Last year, the consensus predictions were above 16 million [vehicles sold], but nowhere near the 17.3 million it appears we will hit in 2015,” noted Jim Smith, CEO, SouthwestRe Inc. “Given the low gas prices and continuing favorable loan financing, there is no reason to believe that the number will fall in 2016, therefore we should reach or exceed the 17.3 million number.”

Randy Crisorio, president and CEO of United Development Systems Inc. (UDS), expects 2016 to be a “very good year,” but said dealers should expect competition among manufacturers to heat up in response to increasing sales. “That could have an impact on F&I, considering the tools deployed often concern interest rates, warranties and leasing,” he warned.

Robert Steenbergh, CEO of US Equity Advantage, predicted growth of around 2% to 3% over the 2015 tally. He also predicted that oil prices will remain low, which will keep home heating costs down and, hopefully, allow car buyers to spend more in the spring. He expects the “torrid pace” of sales to keep up and that “the march toward 18 million per year will continue.”

As Steven Rosenvall, Alpha Warranty Services Inc.’s CEO, pointed out, sales haven’t reached that pace since 2007, immediately before the global economic crisis. He also predicted that a widening trade deficit will spur sales even further. “Every time that happens, the dollar gets stronger. Every time the dollar gets stronger, so does household buying power.”

“All the forecasters are predicting an excellent car selling year for 2016, and I tend to agree,” said Steve Amos, president of GSFSGroup. “If we are able to avoid a major event that affects the world economy, we should be good.” Amos also noted that, while falling oil prices benefit car sales and the economy as a whole, cheap gas also brings negative consequences, particularly in his home state. “Here in Texas and in other states across the country, the price of oil affects employment and spending.”

Although Garret Lacour, CEO of RoadVantage, predicts economic growth will slow in 2016, he believes factory incentives will continue to drive volume. “There will also be more pressure on new-vehicle sales due to the record number of used vehicles that will be entering the market from lease programs,” he added.

Leasing is of interest to Tuscan as well. He believes the rate of leasing at dealerships will increase from 27 percent in 2015 to 30 percent in 2016. He also noted that dealers should be prepared for a glut of late-model used units as four straight years of growing sales comes full circle.

“I am confident that the industry will see increased pressure on pre-owned vehicle values,” Tuscan said. “The past four years of strong new-vehicle sales will result in increased supply of these vehicles, requiring dealers to prepare for the onslaught.”

  • Unemployment

Agents will keep a close eye on unemployment rates in 2016. More full-time workers means more flexibility in spending and more opportunities to invest in the newer vehicles they want and the F&I products they need to protect them. Dave Duncan, president of Safe-Guard Products International, noted that the employment landscape is improving with every report that comes out, an indication that the economy as a whole is on the right track.

Brett Hutchinson, PermaPlate’s CFO, also sees the continuing decrease of unemployment rates as a good sign for the overall health of the economy for 2016. He noted that a strong workforce, along with low oil prices and interest rates, will push the seasonally adjusted annual sales rate (SAAR) to an all-time high. “We believe that 2016 will also be a great year for the automotive industry,” he said.

  • Presidential Election

“Traditionally, during national election years, the economy has shown a history of growth and promise,” said John Vecchioni, national sales director for United Car Care. “If history holds true, this should be a very good year again for the automotive industry.”

AAGI’s president, Tim Brugh, fears the elections could have the opposite effect. While elections do tend to boost the economy, he pointed out, it is also true that the economy can suffer during the last year of a two-term president’s tenure. 2016 could very much be a rollercoaster ride, he said, noting that he does believe that, when the dust settles, sales will be slightly higher than in 2015.

NAE/NWAN’s president, Kelly Price, agreed with Brugh. And because she believes the presidential election could hurt rather than help the economy in 2016, she believes a flat finish is the best one can hope for.

“Consumers seem to be anxious, and this year’s election will be very intense,” Price said. “I am just looking at it from a forecasting perspective as a flat year, equal to 2015, which would be a win for all of us. A decline would certainly be disappointing and would catch many dealers and administrative partners off-guard.”

Crisorio agreed, saying that “world unrest” and a “crazed political landscape” at home could cause credit availability to tighten, slowing sales of vehicle and F&I products.

“The good news for the automotive industry is that a major driver of the economic growth will be the continued rise in consumer spending,” said Bob Pruitt, president of Cal-Tex Protective Coatings Inc. “The industry should sustain sales levels of 17 million-plus in cars and light trucks for 2016. Bolstering this level of optimism are several factors, including continued lower interest rates, access to credit, gradual increase in employment numbers and steadily lowering of oil prices. All of these factors continue to positively impact consumer confidence.”

The Industry

Within the industry, our experts pointed to an increasingly hostile regulatory climate and the proliferation of new technology as the key drivers of change in 2016.

  • The CFPB

The Consumer Financial Protection Bureau (CFPB) has dominated industry news headlines for the past several years and is not expected to lower its profile in 2016.

“The CFPB will continue to focus on rate and try to minimize the variance from one customer to the next. On the surface, that sounds fair. Of course, it is not that easy,” said Duncan, noting that flat rates will actually end up costing some consumers more: Those with excellent credit will have to pay the same higher rates as those who have had credit challenges. Educating the public and the regulatory agencies on how the system works (and why) will be paramount in 2016.

“I don’t think we’ll see any new rules or regulations within F&I this coming year, but it’s possible we’ll see something related to finance reserve caps, and eventually product markups,” said Lacour. “More immediately, because of the CFPB’s continued presence in the automotive industry, transparency is more crucial than ever, and dealerships that are taking strides to be transparent will ultimately fare better in the long run.” He noted that having a comprehensive compliance program in place is a crucial part of that transparency. Dealers who take steps to protect not only themselves but their customers will fare far better, no matter what direction the regulatory winds blow.

Jimmy Atkinson, COO of AUL Corp., agreed, noting that he has been keeping a close watch on Congress, particularly regarding a recent CFPB restructuring bill that passed the House of Representatives but faces an uphill battle in the Senate and the White House. “It will be interesting to see if the CFPB reform that cleared the House of Representatives recently makes it through the Senate. My thought is that the anticipation of continued penalties from the CFPB will drive the lenders to continue moving toward a flat rather than markup in APR.”

  • Self-Regulation

Atkinson agreed with Lacour that the current environment calls for absolute product compliance and transparency. Gorra added that agents have an opportunity to ward off the “watchful eye” of federal regulators who may wish to establish new rules for the sale of F&I products. “I think it is important that we all ‘self-regulate’ and challenge ourselves and our providers so we can deliver the most credible services to the consumer.”

To truly promote transparency and production in the finance office, agents and dealers must properly vet potential partners and only do business with those that have track records of proven success, said Bob Corbin, president and CEO of IAS.

“Do they know how to optimize profits without finance reserve? Are they experts at creating multiple streams of income from products and services that provide customers genuine value?” Corbin asked. “The dealers who put their customers’ best interests first are going to be the ones who will come out of an unpredictable 2016 the best.”

Crisorio believes dealers have begun to realize that adapting to a compliant culture is a recipe for increased F&I production. For most dealers, he said, “The ‘Wild West’ era has been over for a long time.”

  • F&I Technology

An increasingly digitized automotive marketplace has brought an influx of new technology to the F&I office, a trend our experts expect will continue into 2016 and beyond.

“The way F&I is being handled in the majority of dealerships is simply outdated and in desperate need of an update,” said Corbin.

“Eventually the automotive world catches up with the real world, and that should really start to escalate in 2016. For F&I, that means doing things online,” said Steenbergh, noting that consumers’ growing reliance on peer reviews and analytical buying suggestions cannot be ignored. “Making the F&I buying process more like what consumers are accustomed to will lead to less friction and more sales.”

Pruitt noted that the increasing access to data, pricing and reviews of products and services sold in the F&I office will give consumers unprecedented bargaining power. Along with the increasing regulatory situation, F&I providers, agents and dealers will need to be able to very clearly articulate the value of these products, and be able to back up their claims — and they will have to do so quickly.

“Consumers increasingly desire a seamless car-buying experience that is faster and more efficient,” Pruitt said. “Innovations in the F&I office and at the supplier level that speed up and streamline the buying transaction will be well-rewarded.”

To that end, Gorra predicted that electronic contracting will play an increasing role, evolving into a complete, intelligence-building platform that will allow consumers to access and sign contracts on tablets and smartphones.

Lacour agreed, noting that “econtracting will continue to gain traction as consumers across all demographics become more comfortable with paperless transactions in their everyday lives.”

“We will continue to see more dealerships switching to econtracting, though we believe the big push is still a few years out,” said Hutchinson.

“I think technology will continue to revolutionize the way that dealers interact with finance companies, the consumer and their product providers. Dealers need to continue to look at ways to streamline their operations with the goal to have a fully automated front to back system in their dealership,” said Mishler. He noted that these systems will need to include everything from the DMS to F&I menus to contracting for the vehicle and every F&I product. It will all continue to move toward a single, unified, seamless system, instead of multiple islands of information that have difficulty sharing data.

New technology can be a rather frightening prospect, noted Brugh, because it represents the unknown, and the idea of abandoning proven processes is an unsettling one. However, he noted, the hesitation is diminishing as more dealerships integrate with more administrators. This makes dealers more likely to look for ways in which technology can augment existing processes, rather than replacing them completely. “In 2016 it will be about educating the dealership’s management team about the overall time saving, and the simplicity of electronic transactions,” he said.

But given all of the changes, Vecchioni noted, F&I professionals shouldn’t lose sight of the real goals. “Technology will continue to drive the retail automotive business. Processes will and should remain the same, they should just be followed much more religiously. The words or questions might change but the discovery and building of value never should.”

“Technology will continue to evolve into 2016, but it does not mean that it requires re-invention of the proven methods that are currently in the marketplace,” agreed Tuscan. “What I do believe it means is a more transparent interactive enhancement even to the best processes in F&I departments today.”

  • The Evolving F&I Process

Duncan believes that another change coming to the F&I office is the introduction of products much earlier in the sales cycle. As of now, F&I is typically broached at the end of the transaction, leaving car buyers with few opportunities to properly digest the information. As consumers continue to make more purchasing decisions online, “They will one day be demanding a finalized pricing exercise before they even come into the store,” Duncan said. “Some are already.”

Eric Fifield, vice president of agency services for EFG Companies, agreed, noting that younger buyers’ purchasing power will continue to increase in 2016. “Dealers are coming to the conclusion that their sales processes need to change, starting with their communication with online consumers,” he said, noting that F&I will need to find a way to provide more details and information to the online consumer. He predicted that will have the added benefit of speeding up the process once they do arrive at the dealership.

“Through online contracting and system integration, we see the F&I industry taking more steps toward a complete, online vehicle purchase experience,” said Matt Croak, president of Wise F&I. He agreed that the F&I portion will need to be moved to much earlier in the process, and will need to be available online. In particular, he agreed with Duncan that consumers will ultimately wish to complete the entire purchase online, and F&I will need to find new ways to present and sell products.

Croak said that, while such a change will require a huge shift, the end result will benefit everyone in the cycle. Consumers will get a faster, more streamlined and more transparent buying process, and dealers and their supporting partners will see greater sales and fewer chargebacks from buyers who later change their minds.

“Clearly F&I processes are evolving and changing, and we embrace the change,” Amos said. “We believe this evolvement of selling and financing is good for our business and the future of the F&I department.” He added that GSFSGroup has “changed and revamped” its approach to F&I training in response to those trends, a sentiment echoed by Crisorio.

“Training will remain critical for those looking to maximize profitability in both sales and F&I while setting the stage for stability in the coming years,” Crisorio said. “We all remain in the people business.”

Smith pointed out that social media has permanently altered individual buying habits, and its appeal is not limited to Millennials. “Social media is a focus that all companies with a consumer presence, or even companies once removed from consumers, should understand and emphasize.”

The way the dealership and F&I follow up with leads is also going to be affected more and more by technology. Atkinson noted that outdated technology can be overlooked if the office is following up using text messaging and email, and providing information to consumers on their smartphones when and where they want it. “With customers utilizing smartphones to gather information, responsiveness with transparent, accurate information is paramount,” he stressed.

Finally, Price predicted the evolution of the hybrid sales and F&I manager will continue into 2016, although, she noted, that is not a change that will happen overnight, or even within the next 12 months. However, she does believe that, with the pace at which technology is evolving, within the next five years, providers, agents and dealers should be prepared for that shift.

“Although I don’t have a formal opinion on which process is better or worse, it will be interesting to see how it affects F&I penetrations in general,” Price said.

Trends to Look for

So with all of the above taken into account, which trends will our experts be keeping their eyes on in 2016? Their answers ran the gamut from leasing to new products to the dealership experience.

  • Leasing

Gorra noted that increasing numbers of off-lease vehicles will offer “a whole new challenge and a whole new opportunity for F&I professionals.” Vecchioni agreed, saying that he suspects leasing incentives will continue to play a much greater role in 2016 as OEMs continue to court customers who find that a lease structure is far more attractive than financing.

“Leasing has grown quite a bit in the automotive industry over the last three years, so I will be watching for the effect of lease returns on the used-car market,” said Brugh. The increase of leasing — and of used lease vehicles flooding the market — will continue to put pressure on used car prices, which will make it harder for F&I to secure consumer loans that include product sales.

Adding to the pressure, consumers trading in leases will bring little to no equity to their next transaction, which means F&I professionals will have to work harder on every level. This will also snowball into products like GAP, which, Brugh noted, will be directly affected in terms of both losses and by the lower prices and longer loan terms needed to get consumers approved.

  • Consolidation

Steenbergh predicted that the recent trend toward consolidation will continue in the New Year, and not just among dealerships. DMS and other software providers could be affected as well. “There is a lot of private equity money looking at deals on both sides, and I expect that a couple of big ones will occur next year,” Steenbergh said.

Smith said the purchase of the Van Tuyl Group by Berkshire Hathaway, which was finalized in early 2015, could prove to be a major turning point. “They have the ability to transcend all revenue-producing facets of car sales, especially in the F&I area,” he said. “This includes all F&I revenue streams, from the dealer’s F&I income to the insurance company income and everything in between, including the agent, the trainers, the administrators and peripheral service providers.

“It will be interesting to see how this plays out not only from their organizational structure, but for other organizations that might consider expansion into other revenue-producing areas.”

  • The Customer Experience

The time customers spend at the dealership and the level of service they receive is another area our experts believe will require close consideration in 2016.

“The changing face of retail will require a shift in dealer priorities,” Corbin said, adding that dealers will need to invest in technologies that make the entire car-buying process faster. He noted that consumers will demand a more seamless, streamlined experience that extends from the initial agreement to buy to the F&I product presentation.

To rise to that challenge, Corbin said, F&I will need to evolve. The change will come both in the form of new technologies designed to speed up the process and make it more transparent to the end consumer, but it will also involve investing in more training to help F&I managers adapt their skills to the needs of the modern consumer.

“Proper disclosure, answering all consumer questions as well as a respectful attitude has been and will always be the road to follow,” said Amos. He and his colleagues believe strongly in the value of their products, he said, adding, “They just need to be sold.”

  • Customer Retention

Fifield agreed, noting that customer retention and brand enhancement will be critical for dealers who want to maintain market share in 2016. Dealers will increasingly look to third-party agencies to help them increase their opportunities and improve their processes, including helping them implement more comprehensive retention marketing campaigns and develop and better advertise their points of differentiation in their markets.

Dan Brancaccio, national sales manager for NitroFill, predicted that more dealers will invest in well-designed, well-executed service retention programs.

“With vehicles requiring less scheduled maintenance and warranty work at an all-time low, service drive traffic will continue to become a focus and key growth opportunity,” Brancaccio said, listing prepaid maintenance and “tires for life” as examples of programs that could become more popular in 2016.

  • Transparency

It is impossible to look at the big-picture trends without touching on the CFPB and the increasing need for transparency across every department in the dealership. Price said she will be closely watching to see what steps the CFPB takes in the new year, but she also cautioned that the industry needs to pay attention to regulations in general, and not just on the CFPB.

“This is an area that I would hesitate to comment on, as the CFPB and attorneys general seem to be enamored with the F&I space in general,” Price said. “It is hard to predict the changes, but be sure of this: There will be some!”

“Things don’t change because the calendar flips to 2016. This is a long process,” added Duncan, who predicts that econtracting and transparent menu presentations will continue to gain ground in 2016 and beyond. “Customers today are well-informed, short on time and patience, and seek significant value not only in the vehicle they choose, but also in the store they select,” he said.

That much is evident in the fact that, today, the average consumer only visits one dealership before making a purchase decision, compared to as many as five 20 years ago. Consumers are walking onto the lots already knowing everything they need to about the dealership itself, the vehicle they want to purchase and the experience they want to have.

“It’s no longer about just meeting their expectations,” Duncan said. “That was 10 years ago. Today, it is all about getting a ‘Wow!’”

Lacour agreed, noting that consumers have made it very clear that they want to fully understand the value of the F&I products they are purchasing. They don’t just want a slick presentation, they want to understand exactly what the product is, how it works and how it would apply to them specifically. He said that F&I menu presentations, for that reason, will only continue to gain in popularity, and he also believes more dealers will begin to feature F&I products and their benefits on their websites, so consumers have a chance to understand their value propositions before walking through the door.

These presentations won’t replace F&I managers, Lacour stressed, but they will help to take down the wall that goes up when consumers feel like they’re being taken by surprise with items they weren’t expecting, making F&I product sales a smoother and faster process.

“Dealers, on the whole, are embracing a move toward transparency across the dealership,” said Atkinson. “That is beginning to happen in F&I, as you see dealer websites adapting to present F&I products in an inviting way by utilizing video as well as providing basic information.”

  • F&I Products

We asked our experts to predict which F&I products will be the biggest sellers in 2016. First on the list for many were protection products, which “will always be the biggest opportunity to help customers,” according to Vecchioni.

“Since the length of time a consumer keeps his or her new vehicle continues to rise, F&I products that protect the consumer’s investment will increase in popularity,” Pruitt said.

Corbin noted that, because of those factors, maintenance protection plans and wear-and-tear coverage — for finance and lease deals, respectively — will be hot sellers in 2016. He also noted that F&I products focused on the increasing technology in vehicles will continue to do very well as consumers look to protect themselves from the wide range of glitches that could happen in those systems.

As leasing continues to expand, Duncan said, F&I product sales will follow. “The focus will be on tire-and-wheel, excess wear and tear, planned maintenance, paintless dent repair, precision care and others.”

“Many F&I managers have looked at [protection products] as a one-or-the-other type of sale. I see them as a combo sale, so the customer is protected both during the leasing term and at lease turn-in,” Brugh said. “Remember that the customer doesn’t usually get a bill for excess wear and tear until they have already leased their next car.”

Amos predicted that higher loan-to-value ratios and a slight drop in used-car sales will boost GAP sales. He also believes prepaid maintenance will continue to penetrate at higher rates as dealers realize how effective they are at retaining service business.

But vehicle service contracts will still be the leader in the F&I office for the foreseeable future, Duncan said, despite the fact that the combination of 36-month leases and four-year factory warranties make VSCs a hard sell. “Used vehicles will offer a great opportunity to make up for any loss of VSC sales on new vehicles. We will see a tremendous influx of off-lease inventory that will fall into a sweet spot for VSC sales.”

Tuscan predicted that pre-owned vehicle service contracts will be the biggest sellers in 2016. Atkinson pointed out that “Service contracts continue to have the highest profitability in the product space and are recognized as high value for the consumer,” adding that the VSC market will have to adapt as more car buyers invest in hybrid and fully electric vehicles.

Another factor driving VSC sales, said Price, is the number of recalls and other troubles manufacturers faced in 2015, and which are still fresh in the minds of consumers going into 2016. “With the many TSBs, recalls and mechanical issues the manufacturers are dealing with, VSC penetrations are higher than they have been in the past, and we see that continuing.”

“I am a firm believer that extended service contracts will continue to be the main product sold in the F&I department,” said Mishler. “Peace of mind for the consumer will always be the main focus and having the contracts financed in the loan makes it affordable.”

Prepaid maintenance is another product that will do well in both the finance and lease deals. Fifield reiterated that customer retention is key here: The goal for F&I will be to sell products that keep consumers returning multiple times throughout their ownership cycle. “Prepaid maintenance plans that offer consumers a large discount on maintenance up front will be in high demand, as well as updated debt-protection programs that are more aligned with consumer needs.”

“Dealers continue to try to differentiate themselves from other dealers, and loyalty programs and products are a definite ingredient for differentiation,” Smith added. To that end, he expects more requests for private-labeled products that will help to reinforce the dealership’s brand, rather than that of the product provider.

Finally, Lacour said, bundled products could gain in popularity as more dealers realize the competitive advantage that comes with selling value. “These products will be successful because they offer a distinct, robust value proposition,” noted Lacour.

Steenbergh agreed, noting, “I think the trend toward bundled products and services will continue as providers look to strengthen their value propositions.”

Considering all the driving forces at work in the automotive industry, it’s clear agents will have numerous opportunities to do just that in the year ahead. Sales are on the incline, but neither regulatory threats nor the pressure to digitize the buying process and demonstrate the value of dealer-arranged financing and F&I products are likely to abate anytime soon. The ability to shepherd dealers through a series of sweeping changes to the way they do business will undoubtedly separate the good agents from the great ones in 2016 and beyond.

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5 Trends Every American Small Business Owner Needs to Watch in 2016


Heading into an election year means many of the big influences on the US small business market will come from macro-economic conditions and technological changes being implemented in the sector, reports Entrepreneur.

Here are a few trends that bear watching over the next 12 months:

The on-demand economy is changing our labor force. 

At a time when the level of self employment is rising, small businesses in America are contributing less to the nation’s GDP. Between 2002 and 2012, small businesses’ contribution to GDP fell from 48.3 percent to 44.6 percent. At the same time, the number of self-employed contractors grew to more than 14 percent of the labor market.

Driving this dynamic is the rise of the freelancing workforce fueled by a plethora of platforms connecting people with work, be it having someone design a logo for you, deliver ice cream, drive you down the street or clean your house. The on-demand economy is thriving.

The labor force has significantly changed. As an example, three years ago independent contracting site Upwork had 1.5 million freelancers registered, now they’re upwards of 10 million. With those demographic changes, there is now more competition for employees and it’s driving a conversation around minimum wages, paid time off and overtime rules which will all be key election issues. We’re going to hear a lot of discussion around these topics.

Over the next 12 months we’ll see technology help to streamline the freelancing marketplace, which should help boost productivity in this sector.

Not a lot is going to happen policy-wise.

Entering an election year means whatever fear you have about what policies may change in the government can likely be set aside. That means anything that’s going on with tax reform or ObamaCare, for example, isn’t likely to change in the near term as election years tend to be dead policy years. Everyone will be trying to steady the ship so their candidate is elected.

The Inauguration is Jan. 20, 2017, which is when you’ll see policy changes, if a Republican comes into office. The elections are up in the air right now. It’s way too early to predict what is going to happen. It’s fascinating to watch.

Funds are tightening. 

There aren’t a lot of major moves made in US financial markets during presidential election years. Access to capital doesn’t look like it’s going to get easier for small businesses, while the high cost of healthcare and employee wages will continue to weigh on the sector.

The big question is will the Fed raise rates more? If they do, access to capital will tighten, borrowing will become more expensive and the economy will probably soften.

If interest rates go up, there are going to be other investments which will be more attractive than the stock market. That’s important for business owners, as many have savings invested in the stock market. It also means now is a good time to borrow, while interest rates are low.

With no significant legislation expected to come out of Washington this year, there’s an expectation that the economy will continue to grow at a moderate pace in 2016 of between 2 percent to 3 percent. The biggest issue out of Washington is the government’s ability to repay its debt which has now been kicked back to March 2017.

This lack of movement locally drives home the idea that macro-economic forces will have a bigger impact on the US economy this year.

The falling cost of technology is making life easier. 

Previously, businesses had to pay a lot of money for data and analytics. Automation platforms were tools only big enterprise could afford. However, as the cost of tech falls small businesses have gained access to data, analytics and automation platforms once only affordable for big business.

Today, a small business can tell where their interest is coming from and answer queries which could only be executed using millions of dollars worth of infrastructure.

The power of the cloud is finally being realized. 

Technology is getting stronger, faster and cheaper each year. In the US, we’ve talked about cloud for a long time but 2016 will be the final realization of cloud technology. We’ll be heavier into the main adoption curve, which means more companies will be able to take advantage of the agility the technology provides.

As new generations come up through the ranks, more companies are moving to cloud technologies. We’ll also see more integrations between software players. Many applications which are currently separate, for example collaboration tools or accounting platforms, will start to build deeper links. Slowly but surely the march to cloud is inevitable. It’s a big country and a big market but what’s going to drive this trend is the younger generation and their push for innovation.

The opportunities for small business and the convergence of technology makes it easier to open and run a business. The cloud, mobile and ubiquitous internet blurs national and state barriers, opening up global opportunities never before available to small businesses.

It’s estimated that about 70 percent of the 28 million US small businesses that could be using an accounting platform, don’t. But this is starting to change, especially as we see more millennials enter the workforce. The more small businesses use technology to streamline their operations, the more productive they become.

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MaximTrak Launches New Website and Content Initiative for Learning Dealerships


WAYNE, Penn.As dealerships continue to modernize and position their F&I services to deliver a more engaging and compliant customer experience in less time, their need for timely information, best practices, and how-to tips is increasing.

In response, MaximTrak Technologies, a leading F&I technologies platform and services provider, launched today a new interactive technology website and content-rich learning initiative for auto, powersports and RV dealerships.

“We recreated our digital face to better deliver answers to the questions dealer principals and general managers ask about resources that can help their F&I departments adjust to the changing rules, practices and consumer behaviors radically altering F&I,” said Jim Maxim, Jr. president, MaximTrak.

Maxim was recently named a “40 Under 40” nominee by Agent Entrepreneur magazine, which recognized Maxim among other “young executives making impact in the agency, dealer services and F&I products space.” In April, CIO Review magazine recognized MaximTrak as a leading automotive technology solutions provider offering digital F&I technologies dealers increasingly view as critical.

Maxim said the company’s new website continues to address client feedback. “Dealers, GMs and F&I staff who now view maximtrak.com can shop the latest digital F&I tools and view and download educational whitepapers, videos, e-books and other learning resources that can help them be more successful – for themselves, their employers and their customers.

“Our goal is make our clients’ F&I processes more profitable and compliant while moving their customers through the process in less time, which multiple consumer surveys confirm contribute to customer satisfaction,” Maxim said.

As part of CIO review’s recognition of MaximTrak, it pointed out that dealerships using MaximTrak report an average 33% increase in service contract penetration and over $500 per car higher PVR (Per Vehicle Retailed). For Chrysler Mopar and its private labeled solution called MenuConnect, MaximTrak helped boost average dealer increases of over $535 per vehicle. A 2015 re-examination of this original study and involving more dealerships shows these dealers now achieving even greater PVR results.

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J.D. Power: Tech-Focused Car Buyers Consume Media at High Rates


WESTLAKE VILLAGE, Calif. — Consumers who shop for and purchase a vehicle based on its in-vehicle technology consume media — Internet, television and magazines — at high rates, according to the summer edition of J.D. Power 2015 U.S. Automotive Media and Marketing Report.

The report provides a comprehensive view on the factors that influence consumers’ new-vehicle purchases, as well as attitudinal, lifestyle, recreational and media consumption behaviors.

More than four in 10 (43%) premium brand drivers and 28% of non-premium brand drivers cite their vehicle’s latest technology features as one of the reasons they purchased their vehicle. These new-vehicle drivers embrace technology not only in their vehicles, but also as part of their lifestyle. More new-vehicle drivers who purchase based on technological features access the Internet on tablets (54%) and smartphones (69%) than those who don’t buy for advanced technology (46% and 63%, respectively).

New-vehicle drivers who seek technology also consume media at high rates, spending more time on the Internet for personal use, watch more television and read more magazines than those who don’t seek technology. In fact, technology-seeking drivers are more likely to read a magazine through an app than those who don’t buy for advanced technology (33% vs. 27%, respectively).

“It’s important that auto manufacturers promote the technological virtues of their vehicles to consumers via the media they consume,” said Arianne Walker, senior director, automotive media and marketing at J.D. Power. “Targeting these technology seekers with the right messaging is critical to using marketing dollars efficiently to reach consumers who will actually buy new vehicles because of new technology.”

In-vehicle technology has become the new battleground for attracting, satisfying and retaining customers. While advanced technology in vehicles is often thought of in terms of smartphone connectivity, voice commands and navigation, many recent technological innovations help improve vehicle fuel economy, driving assistance, collision avoidance and safety.

The report finds that vehicles with advanced technology features are purchased at similar rates across gender and age demographics. By gender, 31% of men and 28% of women indicate one of the reasons they purchased their new vehicle was because it had the latest technology features. New-vehicle drivers who purchase based on the latest technology are also similar across age groups: 34 years and younger (31%); 35 to 54 years old (28%); and 55 years and older (31%). Notably, technology is now incorporated in so many aspects of a vehicle that it appeals not only to premium brand drivers or males, but also to the entire spectrum of new-vehicle buyers; therefore demographics are not sufficient to target technology seeking buyers.

Among premium brands, Lincoln, Infiniti, Cadillac and Audi have the highest proportions of buyers who cite “latest technology features” as a reason for purchasing their vehicle. As for non-premium brands, Mazda, Buick and Chrysler have the highest rates of buyers who purchase for the latest technology.

The study also found that drivers who cited advanced technology as a purchase reason spend an average of 33 hours a week watching television and list “The Walking Dead,” “The Big Bang Theory” and “The Voice” among their favorite shows. Younger new-vehicle drivers watch less television than older drivers on a weekly basis: buyers 34 years and younger (20 hours); 35 to 54 years old (24 hours); and 55 years and older (35 hours). Boomers (born 1946 to 1964) spend 32 hours weekly, on average, watching TV, and account for a large portion of the automotive market. Favored cable channels among Boomers (listed in alphabetical order) are the Golf Channel, Hallmark Channel, Oxygen, Syfy and TV Land.

Technology-seeking drivers also read an average of nine magazines, with high rates of reading magazines focused on wealth, science/technology and travel. Magazine readership has increased year over year, as new-vehicle buyers read an average of eight magazines in 2015 vs. seven in 2014. But the greatest increase in magazine readership year over year is for titles with content related to business/personal finance; wealth; men’s lifestyle/fitness/outdoor; travel; and women’s lifestyle.

J.D. Power also looked at drivers’ social media habits. Nearly 70% of new-vehicle drivers access social media websites or apps. Facebook is the most popular social media site accessed by new-vehicle drivers, followed by LinkedIn and Pinterest.

The 2015 U.S. Automotive Media and Marketing Report—Summer is based on a nationwide survey of 28,983 principal drivers of recently purchased or leased new vehicles. The report is based on drivers who acquired their vehicle between November 2013 and October 2014.

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