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Exposing the Exposé

October 2008, F&I and Showroom - Feature

by Gregory Arroyo - Also by this author

Boy did’s latest exposé, “Confessions of an Auto Finance Manager,” ruffle some feathers.

One member of our F&I forum was so angry it took him 10 minutes to calm himself down. Another member called the article garbage, while another said he couldn’t read past the third paragraph.

My biggest question about the article was, why publish it now? Why go after the department that’s keeping dealers afloat when profits are disappearing at the same rate as lenders?

I decided to check out the story for myself. I wasn’t too jazzed about the teaser on the homepage, which read, “The new exposé reveals numerous auto finance strategies that can rob consumers and drive up dealership profits.”

The intro to the four-part article was pretty much the same, with gems like, “You just got hit by the F&I man.” The first part introduces the source of the story, a man named Nick James. He talked about his transition from selling vacuum cleaners to cars, and described colorful characters he’d met along the way, such as a guy nicknamed the “Shredder” and a sales team made up of ex-cons.

James described the F&I sales process as a psychological game aimed at breaking down customers. Come on, what profession doesn’t employ some type of psychology?

There was a bit about padding interest rates, packing payments, and the dangers of spot delivery. If the article can curb those practices, I guess I don’t have a problem with it.

James also described a tip for selling service contracts he picked up from an “F&I magazine.” Basically, he would tell his customers that today’s vehicles contain more computer chips than the first spaceship that went to the moon. I swear I searched back issues for that line, but I couldn’t find it. I guess that line still works, as one forum member said he used that word-track to sell a platinum package to one of his customers.

I became unglued when James said consumers should avoid the F&I menu at all cost. He said the beauty of the menu is it allowed him to sell more products, and forced his customers to make a decision.

Don’t regulations mandate that we offer customers every product on the menu? Yes, some believe the menu is a substitute for the assumptive close, but I still think the menu has fostered a more compliant way of doing business.

I’ll probably get butchered for this, but I do think 90 percent of what was written still exists today in some form or another. But there are good people out there, as the author Philip Reed admitted by the end of the article. I just wanted to know why he couldn’t have said that at the beginning.

“The opening, I’ll say, was bordering on sensationalistic to capture the attention of the readers,” Reed told me.

It certainly achieved that. Reed is no stranger to the F&I process, having purchased about 50 vehicles for’s long-time testing fleet. “I’ve been through the F&I process myself and I’m surprised by the level of professionalism by some of the people I’ve dealt with … and efficiency, because efficiency is really an underrated virtue,” he said.

So why couldn’t he interview one of those guys instead of James? “His intention was definitely not to make F&I guys look bad,” said Reed. “In fact, he was pretty nervous about it because he’s got a lot of friends who are still in the business.”

As it turned out, Reed had written a watered down version of the story, but his colleagues felt the story lost its purpose with that approach. “People said, ‘What’s the purpose of this, is this good or bad?’ So I painted it black and white, but I hope by the time you get to the fourth part of it, you say the story is balanced.”

So what wasn’t in the published article that was in the original draft?

“(James) liked working with people, being an advisor, and he liked being in a position of authority,” Reed recalled. “But he was unwilling to say, ‘I did this and I realize in retrospect it was wrong.’ I really don’t think he believes anything he did was wrong, but it was easy for him to talk about the abuses other people did.”

I asked Randy Hartis, a 20-year veteran F&I manager from Hendersonville, N.C., what he thought about the article. “I thought the guy was dead on,” he said. “The people who are taking this article personally are the ones who think articles like this will cost them a dollar or two.”

Reed figured as much. “It’s hard for people to see things clearly when their jobs depend on it. I sympathize. People aren’t going to believe that, but I do,” he said. “However, I also sympathize with the person who is not making a lot of money and spends a couple of thousand dollars extra unnecessarily.”

And that’s why I wouldn’t be afraid of this article. In fact, I’d make this article part of your new-hire training, as it’s time to rid this industry of those gimmick techniques.

“Hey, anyone can make money in a lay down, there’s no talent involved in that,” argued Hartis, who said pay plans are the reason why these techniques persist. “Try closing a deal on a unit that’s been there for 180 days and only losing $500. Now that takes talent.”

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