Online F&I Could Come With Risks to Sales

LAS VEGAS – Consumers readily shop for cars online, but will they do so when it comes to dealership F&I products?

That’s the $64,000 question. Actually, it’s a lot more than that because the F&I department represents a big chunk of overall dealership profits, especially as dealers see margins compress in the new-car department.

“F&I is carrying the burden,” Patrick Manzi, chief economist of the National Automobile Dealers Assn., says at the American Financial Services Assn.’s Vehicle Finance Conference held in conjunction with NADA’s annual convention here.

More and more dealer websites show F&I products. The idea today is not necessarily to sell the likes of extended service agreements or wheel and tire protection right there online as much as to familiarize shoppers of those offerings.

The thinking is that it familiarizes shoppers, making them more likely to buy aftermarket products from the F&I manager at the dealership.

But some industry people predict website click-to-buy buttons for F&I products could make the scene. Will those work as well as actual one-one-one F&I presentations at the store?

Jeff Parent is not so sure. He is the president of Gulf States Toyota, a distributorship that supplies about 300,000 vehicles a year to dealers in Texas and abutting states.

The risk of a pivot to online F&I sell (where the customer is on something of a self-journey) away from the traditional sales method at the dealership, is that it “could weaken F&I,” Parent says at the AFSA conference. “But it wouldn’t eliminate it,”

On the other hand, “if F&I is transparent online and creates consumer confidence, you could sell more,” he says. “But I could see a situation in which there are fewer sales, but not catastrophically.”

He recalls when menu selling was first introduced to F&I about 15 years ago. It was met with some initial skepticism. “It was anathema to some F&I managers who thought their golden tongues was the way to sell.”

Today, menus that list and bundle products are a staple of F&I selling.        

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