The Industry's Leading Source For F&I, Sales And Technology

Done Deal

Stick With the Process

August 7, 2013

If you’ve ever submitted an article to this magazine, you know I’m not big on relating sports stories to the F&I office. So forgive me for breaking my rule this month, but a story from a struggling F&I manager reminded me of a lesson I learned as a youngster.

See, in high school, baseball was my sport. And as any ballplayer knows, slumps are part of the game. Well, I could feel one coming on one day while practicing in the batting cages. My dad was with me. He watched as my anger began to boil over. After another ground ball, I slammed my bat on the ground. That’s when he demanded that I exit the cage.

“Get out of there, you’re making things worse,” he said. “The reason you’re not hitting is because you stopped believing in your swing.”

That memory came to mind after reading a thread on a Facebook page dedicated to F&I pros. One of the members was venting that, out of the eight vehicles he delivered that day, only one customer opted for a service contract. The problem was the manufacturer’s zero percent financing offer, which he said was turning qualified customers into cash customers who weren’t interested in what he had to offer. Most of them, he added, were looking to pay off their loan early.

I waited anxiously to see what kind of response his post would get, as I could sympathize with his plight. And that’s when the pros amazed me once again.

The first producer to respond wrote that the complaining F&I manager had the wrong approach. He said customers should be excited about paying zero percent interest on F&I products. I didn’t think about it that way.

But the post that really put things into perspective came from Klay Kelso, a sales trainer with The Plateau Group in Crossville, Tenn. Here’s what he wrote: “You’ve had a bad day for sure, but your post reminded me that we can make or break our day by the way we think about things.”

He then wrote about his first experience with zero percent financing. He was a finance director for a large Ford store, and his team was spooked for the same reasons the troubled F&I manager stated. Kelso wrote that he reminded his producers that there are plenty of people who normally finance a vehicle who would love to get 60 months same as cash.

“I did with them as I did with the customers, showing [them] how much money [a customer would save] on the zero percent versus the best rate at the time … Even with the VSC, the payment was lower than the payment with the best rate possible at the time.”

Kelso said that simple change in mindset pushed his team to a record profit per retail unit (PRU) for the month. His message, much like my dad’s message to me 21 years ago, was believe in the process.

In fact, believing in the process is how AutoNation execs said the group’s F&I operations achieved $1,381 in F&I PRU in the second quarter, a $99 increase from a year ago. Training and rigorous certification were cited, too. As for concerns over the Consumer Financial Protection Bureau (CFPB) possibly eliminating dealer participation, Mike Jackson, AutoNation’s chairman and CEO, said it wouldn’t be an issue.

“If lenders were to transition to some sort of flat fee, I don’t think it would be much of an issue for the big public companies,” he said, adding that F&I product sales account for 66 percent of the company’s F&I revenues, which were up 28.8 percent in the second quarter vs. a year ago. “However, if you’re a retailer where your model is dependent on a wide range of markups, you’re going to struggle.”

AutoNation wasn’t the only publicly traded dealer group living above $1,300. Group 1 posted a per-unit average of $1,351 for the quarter. As for the CFPB, the group had this line in its quarterly presentation:  “Discrimination evidence has yet to be found.” Underneath that the group added: “Area under CFPB discussion represents $425 of $1,335/unit.” Under that line was this: “Flat markup already covers $200.”

I got a kick out of Craig Monaghan’s response to questions about the CFPB during Asbury Automotive’s investor call. The group’s president and CEO confirmed finance sources are in “anticipation mode” regarding the possible loss of dealer reserve, noting some banks are already placing caps on spreads that are even lower than the group’s internal caps. “Spread and yield is like a balloon in our mind,” he said. “You can push in one place and it’ll expand in another place.”

Last year, a reader e-mailed me with a question. He asked if I thought it was a good idea to get into F&I, especially after we had published a few articles that questioned the future of the profession. Well, based on those numbers, I think you have my answer. Swing away.


  1. 1. Dina Wilson [ August 13, 2013 @ 01:59PM ]

    Greg, I appreciated your article. You are dead on - Believe in the process. Everyone has to believe in something and if you don't believe in what you are doing, selling, will NOT succeed. We all have the slumps, but how do we get ourselves out of the slump will speak volumes. I personally will go to a room with a mirror and say, "self, OK - you've had a few south deals with nothing or very little, get in there and do what you do best. You know what to do, you believe in the process, you know it works - so go and Do It!" I call that self-motivation. Thanks for the article.

  2. 2. Jeff White [ August 24, 2013 @ 05:54PM ]

    F&I is a state of mind. If you build value and create a need you will always sell a product. There is such a focus on changing customers' minds in the business office, that people forget to sell what the customer would have bought if you don't spend all your time arguing with them.

    I've raised every F&I average $500 that I've ever touched in my training.

    Regulations, zero percent and cash buyers mean nothing if you're properly trained.

  3. 3. Rebecca Chernek [ August 27, 2013 @ 01:34PM ]

    Great Article! I wanted to mention I will be facilitating a webinar hosted by NCM on September 3rd @1PM Central- I hope you don't mind me sharing. Summary for Transparency Webinar:

    Following the federal laws regarding transparency in car sales is critically important for dealerships that respect customers and want to earn their repeat business. The word “transparency” means different things to different people and situations. Citizens may disagree about how transparent (open) our politicians are about the policies they use in governing our states and country. The word carries another connotation for parents, spouses or business bosses regarding relationships. Sometimes, transparency is viewed as a means to an end, like the transparency of OTC derivative transactions. If your dealership were audited today, what would the paper trail reveal about your sales practices? Does every member of your sales and finance team adhere to the compliance rules and guidelines? Do they even know what they are? Rebecca Chernek will review the most common problematic sales processes still used by many dealerships—including Four-Square, Trade Difference and Box Close—that can end a sale and send a potentially valuable customer to the social media Squawk Box where the grievance goes viral! You can avoid public scrutiny for civil lawsuits and complaints alleging “unfair and deceptive business practices,” if sales and finance personnel know how to use menu selling with complete transparency both online and in the showroom. Transparency is a win-win policy.

    Webinar: September 3, 2013 @ 1:00 p.m. CST

Comment On This Story

Email: (Email will not be displayed.)  
Comment: (Maximum 2000 characters)  
Leave this field empty:
* Please note that comments may be moderated.