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Talk to Me

The editor finds himself in an objection-handling exercise when co-workers reveal their deepest fears about the F&I office.

February 5, 2013

Around the office, I’m known as the car-buying expert, among other things. I guess that’s somewhat true, given that I oversee two automotive retail magazines. But I’ve only purchased one vehicle from a dealer. It was five years old, and that was 11 years ago.

Yeah, I’m the guy responsible for the record age of vehicles on the road. But I think that’s what makes me an expert on today’s car buyer. Like most consumers today, it’s going to take something major for me to pull the trigger.

Well, there’s been a baby boom at my office, so a lot of my colleagues are looking for family cars. And that means they’re coming to me with questions like: “How do I keep from getting screwed over by the dealer?”

When a counseling session starts that way, I usually spend 15 minutes explaining the importance of repeat customers in our business. I also tell them what kind of margins you guys and gals are making on the sale of a new car or truck — which sat below 5 percent from 2007 to 2011, according to the National Automobile Dealers Association.

Once I get the “Really?” response, I tell them the best way to not get screwed is to get educated. So, I tell them to review their own credit report and to call their bank or credit union to find out what kind of rate they can get. But I also tell them to use that information to get the F&I manager to work for them. “If they can get you a better rate, give them the business,” I tell them.

They also want tips on how to negotiate. But what they really want to know is how they can hold their head up high when they show off their new car at work. So, I give them a list of sites to check, and tell them to figure out the approximate price range for their vehicle. And when it comes time to negotiate, I tell them to do so minus the value of their trade-in and any discount or rebate. I also warn them against negotiating the monthly payment. “It’s fool’s gold,” I tell them.

I also remind them they have to give something to get something, and explain to them the strategy my publisher used to get a dealer to lower the price of the vehicle he purchased. See, to get the dealer to bring down the price, he told the salesperson he’d be a willing buyer of F&I products if they’d sacrifice a little front-end gross.

That’s when I usually explain that one of the main goals of F&I is to maintain deal profitability. My colleagues usually give me a look as though I’ve revealed a dirty little secret. See, they think our products don’t do anything other than pad the dealer’s bottom line. That’s when I tell them how regulations in New York prohibit dealers from making any profit on GAP. Then I close with this: “But I guess they see some value in that product, because dealers are required to offer it to all of their customers.”

I then reiterate how important repeat customers are to dealers, and how these products help drive them back to the sales and service department. “Oh, so that’s the trick,” they say.  

I usually respond with this: “Yes, they believe that a customer who purchases a protection product will be more satisfied with the ownership experience because the customer has essentially budgeted for any future issues he or she may have with the vehicle.”

That always gets them thinking. See, they’re so afraid of what they’ve heard about our products that they’ve never really considered exactly what they do. And when the light bulb goes on, I’ll add that by buying the service contract or prepaid maintenance program, they’re locking in labor rates for something they hope doesn’t happen.

See, protecting against the “what ifs” is huge for people in my profession. We don’t have a pay plan we can work like you F&I pros do. We get paid to produce a magazine, nothing more. So we have to think about the “what ifs,” because a new set of tires can put a serious dent in an editor’s household budget.

Listen, I know a string of “Nos” can make you doubt the products you sell, but don’t. Because it wasn’t long ago when I was forced to cross my fingers and hope my four balding, metal-showing tires could get me through another month.

Heck, I remember when I thought it made good financial sense to get a credit card specifically to pay for car repairs. I figured I could build my credit by putting all my repairs on the card, then paying it in full at the end of the month. Unfortunately, I was in my early 20s, and I always found a reason to not stick to the plan. Your next customer may be doing the same, so don’t ever assume they don’t need your products.

Comments

  1. 1. Joan Shamel [ February 26, 2013 @ 12:36PM ]

    What a great way to explain F&I products in a layman's terms. Thanks.

  2. 2. David Ruggles [ February 26, 2013 @ 02:16PM ]

    Doesn't it all depend on how one defines "screwed by the dealer?"

    Greg: Explain, David. I want to reply, but I want to make sure I'm understanding the question correctly. If you're talking about perception vs. reality, I agree that my colleagues' perception of what goes on inside a dealership doesn't match reality.

    By the way, I've been very nervous about putting this out there. The column was one of those that I wished I had more time to think about. I guess I wasn't sure if my message was right.

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