Selling F&I in the Used Market

Recently, Automotive News hosted Dwayne Wiggins, F&I University Trainer at American Financial & Automotive Services Inc., and Jim Maxim, Jr., President & Co-Founder at MaximTrack Technologies, on a Webinar that focused on driving F&I sales in the used vehicle space. The overarching message was that, contrary to popular belief, the used car market brings big opportunities for dealers to sell F&I products.

Why look at this topic now? Wiggins noted that right now the used market is particularly strong. Used vehicle sales at franchised dealerships have grown year-over-year for the past six years running, and in 2015, there were a staggering — and record breaking — 2.5 million sales of certified pre-owned (CPO) vehicles.

Maxim backed that claim, noting that CPO sales accounted for 22.6{137f86425451f0eed4391b215cab1f0aedcc26ced4aeb45d9a5267c3194b8614} of sales at franchised dealers last year, with the average sale growing to more than $19,000.

What is driving that growth? Cheaper credit and longer loan terms are contributing to this market growth, with consumers finding that they can get into a higher-end used vehicle for the same price as a less technology-heavy new car. The used inventories are also fairly young — because of the leasing boom that is also going on, the number of used cars that are three-years-old or younger is incredibly high.

For F&I, this presents a great opportunity. Providers like RoadVantage have responded to this growing market by ensuring F&I managers have solid, attractive products to offer these consumers:

• A larger suite of lease products, including bundled package offerings and an expansion of terms, keeps vehicles in better condition for re-sale.
• More robust, higher mileage used VSC coverage & eligibility products are being offered.
• Protective coating bundles now offer attractive margins and increased value for dealers, including products that cover dents & dings, rips, tears, burns, etc.
• Dealer CPO programs, with lucrative reinsurance profits, allow dealers to certify all used vehicles, expanding the CPO beyond just manufacturer certified vehicles.
• GAP & VSC are still the primary protection products offered, although ancillary products are gaining more real estate on the menu.

Making the Sale

Offering attractive products to customers is great, but F&I Managers need to be able to close the deal as well. Maxim went on to list three rules he believes will help any dealer or F&I manager better approach the sale to a used car consumer.

1. Know Thy Customer. Don’t skirt or ignore the interview process. Take the time to really dig into the needs of each individual customer. A few questions to ask: Why are they buying used? Who will be the primary driver of the vehicle? What is their budget focus—are they stretched or not? How much room is in their monthly income to offset major repairs? Are they a higher mileage driver? What kind of wear & tear do they anticipate putting on the vehicle? What are their vehicle maintenance habits?
2. Make Intelligent Recommendations. While F&I managers should still be practicing the 300{137f86425451f0eed4391b215cab1f0aedcc26ced4aeb45d9a5267c3194b8614} rule on used customers as much as they do new — 100{137f86425451f0eed4391b215cab1f0aedcc26ced4aeb45d9a5267c3194b8614} of the products to 100{137f86425451f0eed4391b215cab1f0aedcc26ced4aeb45d9a5267c3194b8614} of the customers 100{137f86425451f0eed4391b215cab1f0aedcc26ced4aeb45d9a5267c3194b8614} of the time — that doesn’t mean every presentation is identical. Tailor the presentation to their actual needs, and recommend the products that will have the most impact on them, specifically.
3. What is the Vehicle Situation? Obviously, the state of the vehicle itself will also dictate which F&I products are the most appropriate for that customer. Is it a CPO vehicle? Is there factory warranty left? And if there is warranty left, what exactly does it cover? Take the time to ensure the customer really understands what is—and is not—covered, out of the box. And then demonstrate how F&I products can close gaps – again, based on their specific situation, budget, etc. Build value in the remaining warranty, but don’t be afraid to show where holes are, either.

Maxim ended the Webinar by pointing out that the final disclosure is actually a great time to upsell. By going through each coverage and asking the consumer to formally decline it—while pointing out that they are declining specific coverage for often very little added to their monthly bill—it is a final chance to drive home the point that F&I vehicle protection can be obtained by anyone, at any budget.

When it comes to used vehicle sales, F&I is a chance to cover the total cost of ownership, and point out how the maintenance and repair costs can add up more quickly than they might on a brand new car. Service contracts and GAP are the biggest sellers for that very reason, but by taking the time to really learn the individual concerns a customer might have, there is the chance to bundle in other products as well.