Online F&I Depends on Car Dealership Culture Changes; Upgrades

Among discussions about how technology might change the dealership finance and insurance department, little has been mentioned about demands it will place on a store’s infrastructure.

Online F&I will change two essential backbones, IT infrastructure and dealership culture. Some say the latter is the most significant facing dealers.

“(Websites) must appeal to shoppers who never want to step into the dealership –

and to those who do,” says technology consultant Bill Krouse, a former dealership manager and an unabashed proponent of total transparency in the selling process.

For customers who do go to the dealership, “it is then paramount that in-store impression and experience is what they expected from their online experience,” he says.

In 1992, he was the general manager at Polar Chevrolet-Mazda in White Bear Lake, MN, and at his urging, the dealership initiated negotiation-free selling.

To him, it was inequitable that the traditional car-selling process was biased in favor of  salespeople and customers who possessed the skill and demeanor to negotiate.

Dealer cultures must continue to keep pace with process and technology changes to ensure a seamless online-offline experience for customers.

“If your culture is such that pricing is the same online as on the lot, if online trade evaluations match in-store evaluations – understanding customers input may not be entirely correct – then, other than anomalies such as credit issues, that transparency should be delivered,” Krouse says.

“Seventy-five percent of dealers right now should be able to set up online tools to price vehicles, evaluate trades, and handle the online F&I presentation and pricing. You want the public able to receive a presentation about your primary protection products that are good for the consumer and good for the dealer’s bottom line,” he says.

He advocates the industry adopting an open-architecture mentality.

“If that is overcome, so dealers can use online selling tools that fully integrate with the DMS (dealership management system), dealers still must have the open mind to present F&I products online.”

Although their numbers are growing, currently “less than 15% of customers will want to complete the entire car-buying process online,” Krouse says.

He outlines three technology approaches to enable dealerships to capture more opportunities online.

The easiest and most affordable is to improve the existing IT backbone of the dealership. That includes functionality, security and bandwidth.

A more robust approach is to add support tools that enable transactions from within the sales funnel through the dealership website and customer-relationship management systems, including transacting prices, trade evaluations and use of credit tools.

“To compete with the Carvana, EchoPark, and Vrooms of the world, that is a whole other story,” Krouse says of used-car operations that rely heavily on modern Internet technology. “I do not see those models replacing dealerships. The car purchase is still about kicking tires and trying it on.”

Erik Nachbahr, president of Helion Automotive Technologies, agrees that for dealers to offer a fast, seamless and secure online transaction, the majority must make IT upgrades:

Those include:

“The challenge with online vehicle and F&I sales is the need to deal with everyone with integrity,” Krouse says. “You must control your integrity, your culture and your response to the customer. Establishing and maintaining that control is the highest hurdle for dealerships.”

Many older dealers hang on to old “horse-trading methods and look at online only as a way to get a lead in the door where they put old tricks to work,” he says. “The right culture has to be in a dealership to support transparent pricing, trade evaluation and payments. And that includes upfront pricing of all products.”