The “After the Sale Sales” That Enhance Dealer Profitablility

As dealers continue to see their margins on new and used vehicle sales dwindle, an often underutilized area of profitability is the F&I department.  Making sure the F&I department has a full complement of products, and the training to market and sell these products, will generate additional revenue with only minimal additional costs.

The importance of a skilled F&I manager cannot be overemphasized. That is why a dealer must have the right person in the position and not attempt to fill the role with the dealership’s sales staff.  An analogy can be made that the F&I manager is like a closer in baseball – a specialist with a unique talent.  The unique talent is being able to sell something intangible to the customer.  Commonly, the F&I manager presents the products as enhancements and safeguards to the customer’s new investment.  In that light, the customer believes that the F&I manager is looking out for their best interests.

In almost all cases, the F&I manager is one of the last dealership employees with whom the customer will interact.  The impression he/she leaves can have a dramatic impact on the dealership’s customer satisfaction index.  It is imperative that the members of the F&I department are aware of this and conduct themselves accordingly.  In some instances, the F&I manager can be so focused on the sale of the products that other aspects of the job are ignored.  As “the closer,” he needs to ensure that all paperwork is prepared and completed according to the dealership’s policies and that everything is in order for a smooth delivery to the customer.  In terms of the sales process, this is often the final impression your dealership makes on a customer.  A customer who leaves having a bad experience could not only cost the dealership future vehicle sales, but also the loss of service business.

Since F&I employees are most often paid on commission, they are always confronted with the temptation of selling in what may be perceived as a less than ethical means.  It is essential that all F&I employees are made aware of their responsibility to always act in a lawful, professional and ethical manner.  The dealer must make certain that the F&I department is properly trained in all aspects of their position.  Dealers should inquire of their F&I vendors of any free training they may offer.

The benefits that a capable F&I department provides are numerous.  The dealership will experience an increase in profitability, provide a pleasurable buying experience which can generate future sales and, in the case where the dealer owns a reinsurance company, also generate additional income.

If you have any dealership management questions, please contact Paul McGovern at 800-849-6022 or pmcgovern@downeycocpa.com.