As the automotive industry settles into a new normal, dealerships are fast realizing the long-term effects of how they conduct business. This is especially true for your finance and insurance (F&I) department. One thing you should expect is that customers are going to want to purchase more things related to their vehicle.
Further opportunities for success exist for dealerships in the future, including in the F&I office. You must position your dealership to exploit these F&I trends to survive.
3 F&I Trends Shaping the Automotive Finance Industry
Marketplace fluctuations make it difficult to predict the exact future of automotive sales and financing. However, there is plenty of data and forward-facing trends that are invaluable for the proactive dealership looking to cement its future success. Here are three trends you should know.
1. The New Car Buyer is Coming Back
Many buyers are delaying their plans to purchase a new car – not canceling the plans completely. Manufacturer incentives such as 0% financing are now incredibly popular with customers. An impressive 90% of new car buyers believe this is the best time to get a deal on a vehicle.
Introducing aggressive manufacturer incentives helps offset the impact that COVID-19 has had. Plus, it helps the U.S. automotive finance market move customers away from leases and toward loans. The number of customers likely to return to the market and get an automotive loan has increased to 33%.
Unfortunately, the new vehicle inventory is limited, so dealerships have to come up with attractive automobile financing options. Stay ahead of the competition by engaging with customers through firm financing offers on all your new vehicle sales. This means your sales, F&I, and marketing teams have to work together directly.
2. F&I Sales Numbers are Rising Too
The average F&I profit per vehicle is $400 higher than it was in 2019, according to the largest U.S. dealership groups. Customers today are purchasing more coverage than ever before. They have a low risk tolerance and want to make sure they are in an excellent position when the unexpected happens.
One thing that contributes to increased F&I sales is increased training. Dealerships have realized they may not have as many opportunities to sell F&I products. Maximizing profitability now means putting a focus on improving F&I managerial skills.
3. Integrating Online and Offline Channels
Most customers carry out their research online before they visit your dealership. It is now common for the customers to find the information they want online, and even shop digitally.
Position your dealership for success by utilizing both online and offline channels to offer customers a comprehensive experience. The segments of car buying that customers want to do online instead of in-person include:
- Searching for a car
- Determining the final price
- Scheduling appointments to receive the car
- Valuation of cars for trade-in
- Carrying out credit checks and financing
- Reviewing and purchasing insurance or extended warranty products
Offering these tools will provide your customers more time to explore their options before stepping foot into your dealership.
Auto Financing is Easy with Vantage Financing
Working with a financing company specializing in dealerships is key to leveraging these F&I trends and the “new” normal in auto finance. Vantage Financing works with auto dealership transactions every day and can anticipate the challenges you may face, while adding value to your sales.
Is your dealership equipped to maximize F&I profitability? Contact us at Vantage Finance today!
