Dealers must be willing to change to achieve high dollars per retail unit while taking care of customers.

Auto dealers have some very important decisions to make. One of them can be framed as a question: “How do I make more money on the most profitable department in my store — finance and insurance — while I simultaneously take care of my most valuable resource — the customer?”

Without F&I income, new car dealers would have lost $140 per retail unit in 1999 and $168 in 1998, according to industry data.

Dealers must be willing to change to achieve high dollars per retail unit while taking care of customers. We're at a fork in the road. Do we go down the same wrong pathway, or do we take the high road that requires more effort, but reaps more rewards and satisfaction? This high road is The Vision of F&I.

We are in the midst of an F&I revolution. Our industry is changing right before our eyes, and the decisions that we make as it evolves will form the foundation that we work from.

There are differing opinions on the future of F&I. Some advocate that F&I departments are things of the past, that finance managers are the primary reason for customer dissatisfaction.

They have even suggested that we get rid of this function or go back to the old way of having the sales person take care of both functions. They cite industry data that say customers don't like to be turned over to a finance manager. I've heard people suggest that since we sell people products in the F&I department, this somehow sours them of their whole buying experience.

Let's explore this. Should we get rid of this function? The auto dealer has never yearned for a specialized person for F&I more than it does now. The finance and insurance department has such an array of functions that it has to perform and has a bright future ahead of it.

There are more tasks to understand in this department than ever before. Credit scoring will permanently change the way we get applications approved. Lenders have already begun the process of completely mechanizing the loan process. As Internet technology evolves, the F&I department gives the lenders the arena they need to close the automobile loan.

F&I Managers will go on-line and seek out a loan source for their customer anywhere in the country and at a lower cost. Another reason this direction is inevitable, is bank mergers are eliminating branch loan officers. Their lending is already done at a centralized location in most cases.

Just as finance opportunities are flourishing, automobile leasing continues to be widespread. Sub-prime lending is becoming more prevalent. The legal aspects of financing and leasing continue to be updated with changes in laws like regulation Z (truth in lending) and regulation M (truth in leasing).

Our industry is scrutinized federally with accusations of “payment-packing.” Understanding the various products features and benefits that we provide to customers is always changing.

Let me catch my breath, while we try to figure out how you de-specialize this important function and keep abreast of the all aspects of this department. You can't!

Let's turn to selling products to customers. Could offering a customer an opportunity to protect themselves and their investment “in and of itself” have a negative effect on customer satisfaction? That could only hold true if the products aren't of any value to the consumer.

Take the three primary products that are typically sold in a F&I department: service contracts, credit insurance and gap protection.

I would say most of us would agree that a service contract has value. We know that most people say one reason that they buy a new vehicle is because of the warranty that is provided by the manufacturer. They understand that automobiles can break and they don't want to be left holding the bill. What about a pre-owned vehicle that has experienced some wear due to use? Could it breakdown? Of course it could. So is there a need for a service contract? You bet.

Credit life and disability insurance is a state-regulated product. The state insurance department regulates everything about it; price, terms, coverage, under-writing requirements, and claims procedures. Do people die or become disabled everyday? Of course, they do. So is there a benefit to the customer? Yes.

Gap protection is a relatively new product, but is probably the fastest growing product sold in the finance office. There is a reason for that. The customer understands the value. Leasing companies have included GAP as part of their agreement for years. Why? Because they know a customer is not likely to have equity in their leased vehicle until very late in the contract, if at all, and their balance is not likely to be satisfied by the insurance company. The insurance company will only pay fair market value of the vehicle at the time of loss.

If there are obvious needs to the products we offer what's the problem? It can only be that the value of the product is not explained to the customer effectively enough to exceed the price. But should we be surprised? We are constantly trying to develop new ways to camouflage or dumb down our product presentations to trick or manipulate the customer into buying.

There is only one way that works for both high-profits and high-CSI. Proper approach, presentation, handling the customer's concerns, and taking them smoothly through the close with a high level of enthusiasm and with the right attitude. That doesn't mean F&I managers jump up and down emphasizing product value. It means they genuinely believe in their offer and they are able to present that value to the customer efficiently.

Let me let you in on the secret of customer satisfaction for F&I. Customers form their opinion of their F&I experience based on how long they are in the F&I office and how efficient the time was used! They look to the process that they went through.

Ron Martin is the author of the book “The Vision of Finance and Insurance” and a national sales trainer and consultant for automotive dealers. You can learn more about his company, The Vision of F&I, Inc., or order his book by visiting the web site