Page 42 - GIADA-Jan-2018-Final

DEALERSHIP TRENDS

Auto Dealership

F&I Trends to

Watch in 2018

By Steve Finlay, WardsAuto

Among its list of predictions for 2018, “In this same vein of consumer auto lending marketing spend. They’ll also
F&I provider EFG Companies foresees an communication, we’re seeing more dealers shore up their dealership relationships by
increased focus on dealerships’ F&I and becoming open to listing F&I product buying more aggressively when possible,
service departments. benefits online as a way to speed up the scheduling ongoing in-dealership meetings
F&I process, increase consumer interest at least once a week and reviewing profit
“The challenges and opportunities ahead in available benefits and increase product metrics with dealership leadership once a
will largely revolve around customer penetration rates,” he says. quarter.”
retention, building up the service bay and
leveraging changing consumer trends to “The challenges and This year, Hurricanes Harvey, Irma and
foster market differentiation,” says EFG opportunities ahead will Maria, along with the California fires, have
President and CEO John Pappanastos. taken a toll on dealer reinsurance positions,
largely revolve around says Rick Christensen, EFG vice president-
EFG’s forecasts are based on thousands of customer retention, building product development.
conversations with dealership principals up the service bay and
and lenders. Dealers still are working to understand
leveraging changing consumer how much these catastrophic events
Combined with manufacturer incentives, trends to foster market undermined their positions, he says. “In
dealer front-end margins will continue differentiation,” says EFG’s 2018, they will need to apply the lessons
to be strained, says John Stephens, EFG’s learned from 2017 to rebuild and better
executive vice president-dealer services. John Pappanastos. insulate their positions for the future.”
“As such, dealers will increase their focus on
their F&I operations from both an up-front Even with rising delinquencies and flat A 2017 take-away is that when dealers
profit and a customer retention standpoint. vehicle sales, economic indicators continue decide to take part in a reinsurance position,
to be strong, says Brien Joyce, EFG’s vice they act as an insurance provider, he says,
“Expect dealers to retool their product president-specialty services. “As more adding that the key word in reinsurance is
menus and F&I pay plans based on consumers delayed making their next insurance.
products that encourage consumers to vehicle purchase in 2017, the pent-up
return for service,” he says, predicting demand will begin to unfurl in 2018 – Dealers need to be prepared to take losses,
dealers will put an even greater emphasis especially as SUVs hit the market.” including catastrophic losses, based on the
on their service drive to better utilize their makeup of their portfolio, he says. “With
time with the customer and enhance their Consequently there is growth potential for reinsurance, dealers are insuring that they
ongoing communication. auto lending in 2018, he says. “We’ll see will cover the risk of an adverse event.” n
lenders increasing their direct-to-consumer

40 | GIADA Independent Auto Dealer JANUARY 2018