Online F&I Presents Risks, Opportunities for Car Dealers

Much talk today centers on the prospects of F&I becoming more active on dealership websites. That would come with obstacles. And opportunities.

Three of four polled drivers would consider conducting the entire car-buying process online, accounting to an Accenture survey. An Autotrader survey indicates much the same thing.

Whether dealers like this trend or not, consumer power ultimately is expected to take some F&I control from dealers.

Consumers increasingly visit websites to research and select inventory, figure trade values, price vehicles, get credit approval, submit finance and lease applications and buy service contracts. 

Good for consumers, but many say these online services, mostly provided by third parties, drain dealership revenue.

Within five years, the potential for a full F&I presentation and aftermarket product sale will be online, according to some predictions.

A new Cox Automotive venture, MakeMyDeal.com, says dealers marketing online F&I product information and pricing improve the customer experience and help shoppers realize the value of products.

But many auto retailing veterans say the best way to sell F&I is during one-on-one presentations.    

It remains to be seen whether all the parts, pieces, and add-ons of a deal can be rolled into online finance or lease contracts. Some say that won’t be easy.

“The change in F&I will only happen with a lot of people kicking and screaming,” says Dino Constantine, chief operating officer for Holler Classic Automotive Group, which operates six dealerships in metro Orlando. “For a number of dealers, F&I is the critical lynchpin to profitability.”

By moving F&I services online, dealers can reduce costs, a critical issue in this era of compressed margins, Constantine says in a new book on the future of the industry. Steve Greenfield of Carlingo.com wrote it.

“Going forward, dealers who don’t provide F&I features, benefits and pricing online will be excluded from consideration by consumers who are looking for all sorts of purchase information online,” says Brian Reed, president and CEO of F&I Express.  

He adds: “We’ve found that consumers, No.1, want information about the F&I products sold in the dealership earlier in the process.

“No.2, they would more likely buy these products once at the dealership if they had this information earlier versus waiting for it to be presented.” 

The struggle will be whether those who operate well-established F&I processes in person will cede some control to the Internet.

There’s room for both ways, Reed says. “The F&I manager who closes the deal adds a lot of value.” But he adds, “When more information about the F&I function is available to consumers online it reduces the dealership’s reliance on this individual.”

It will evolve but “F&I is very complicated,” says Jim Maxim, Jr. of MaximTrak Technologies. “We’re not talking about just products, but the F&I transaction process.

“With online F&I, everything must come through that virtual portal into the dealership. It is hard to automate many of these processes, like electronic vehicle registration for example, when the solution at the other end, state DMVs, is now very paper intensive.

“You can’t just turn a switch and expect the states to comply with the system you want to roll out.”

He notes, “These are big legislative and systems issues that will only allow technology to go so far right now.”