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F&I to Go

Sun Toyota’s John Marazzi was already an internet sales evangelist before launching a fully online process in September 2016. In its first month alone, the program delivered 75 closed deals and an F&I per-copy average that was just $45 shy of the in-store average.

February 2017, F&I and Showroom - Cover Story

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un Toyota’s Showroom2Go program combines process with technology. For the latter, the dealership partnered with website provider fusionZONE Automotive to customize the online buying platform. It includes a finance module, trade-in value calculator, and the software that puts it all together: Dealmaker.
un Toyota’s Showroom2Go program combines process with technology. For the latter, the dealership partnered with website provider fusionZONE Automotive to customize the online buying platform. It includes a finance module, trade-in value calculator, and the software that puts it all together: Dealmaker.

Conducting the entire car-buying process online from vehicle selection to financing may have seemed risky just a few years ago. But longtime internet sales advocate John Marazzi, managing partner of Sun Toyota in Holiday, Fla., is proving that there is F&I profit to be made — even when the F&I manager isn’t in front of the customer when he or she buys.

Marazzi first implemented an internet sales process back in 2010 at a Nissan storefront he purchased in Naples, Fla. His first foray into online car sales helped John Marazzi Nissan rank among the Top 10 Nissan stores by volume in the country within a year. Seven years later, Marazzi is back using his Showroom2Go program to drive sales.

“We have everything refined and down to a science,” Marazzi says, who launched the program at Sun Toyota in August, just a little more than six months after buying the store. He also is a partner at Brandon Honda; both dealerships are part of the Tampa-based Morgan Auto Group. “... When [customers navigate] to our website, they select a car as normal, and … they can click on Dealmaker and go through the entire deal.”

In the first month alone, Marazzi’s staff closed 75 deals thanks to Showroom2Go — 51 of which were completed without the customer ever stepping foot in the dealership. And customers coming through the online portal were more than happy to buy an average of two F&I products per deal, a fact Marazzi says he wasn’t surprised by.

From Desktop to Desking

Pictured John Marazzi, who is the managing partner for Morgan Auto Group's Sun Toyota and Brandon Honda. Both dealerships were winners of DealerRater's 2017 Consumer Satisfaction Award.
Pictured John Marazzi, who is the managing partner for Morgan Auto Group's Sun Toyota and Brandon Honda. Both dealerships were winners of DealerRater's 2017 Consumer Satisfaction Award.
The Showroom2Go process is centered around convenience: Interested customers can get a quote on a trade-in vehicle, select their preferred payments, or get preapproved for financing instantly.

Once a customer settles on a vehicle, he or she can request that Sun Toyota deliver it to a home or office for a test drive, along with the necessary paperwork to complete the transaction. The service is free for customers living within an hour and a half of the dealership.

Even so, Marazzi says, 24 of the dealership’s Showroom2Go shoppers in the first month opted to come into the F&I office to sign the final paperwork.

“They knew they weren’t wasting their time, and they felt like the ride wasn’t that bad after all, because we gave them all the information that they wanted. They felt comfortable coming here and doing the paperwork here,” he says.

Sun Toyota’s results represent what major industry players have now been saying about the online buying process for years: It puts car shoppers at ease — and it’s not necessarily a death knell for brick-and-mortar stores. In its 2015 Car Buyer of the Future study, Autotrader concluded that 72% of shoppers want to complete the credit application and deal paperwork online, yet the same percentage said they’d be willing to visit dealerships more often if the buying process was improved.

Marazzi operates under the same assumption. “The customer is so appreciative of the extra service that we’re giving, our ratio of sales to inquiries is tremendous,” he says.

Paired-Down F&I

F&I profit per retail unit on deals coming through the the dealership's Showroom2Go portal stands at $1,310, about $95 shy of what the F&I team averages on traditional deals. The dealership also averages 1.94 products per deal on both Showroom2Go and in-store deliveries
F&I profit per retail unit on deals coming through the the dealership's Showroom2Go portal stands at $1,310, about $95 shy of what the F&I team averages on traditional deals. The dealership also averages 1.94 products per deal on both Showroom2Go and in-store deliveries

The most pervasive argument against the online car-buying process is that it cuts into F&I profits. Industry veterans like the Impact Group’s Mark Thorpe believe that putting products like GAP and tire-and-wheel coverage in front of buyers before they reach the dealership — without an F&I manager to explain the benefits — will cause them to take a hard stance against buying.

“The customer says, ‘You know what? Thanks very much, but I did go online and I did look at everything, and I’ve decided I’m not interested in hearing about any of this,’” Thorpe said during “Presenting F&I Products Online,” a panel discussion held at the P&A Leadership Summit last August, around the same time Marazzi was gearing up the Showroom2Go program. “As a former business manager myself, I’m thinking about how do I overcome that objection.”

Marazzi doesn’t disagree that the F&I profit on online deals is lower than in typical transactions, but he’s also not concerned about the disparity. In fact, Sun Toyota doesn’t even offer its entire suite of F&I products through Showroom2Go. Shoppers only have the ability to choose from four core products — GAP, vehicle service contracts, maintenance, and road hazard coverage — through the online portal. Marazzi says this keeps the process “a little less complicated.”

“It’s funny, everybody worries that if you change the way that they buy, the consumer is not going to want to buy products to protect themselves,” he says. “... We are able to offer our four core products with the correct pricing and allow [customers] to add those products into their lease calculation and finance calculation.

“When you give the customer the option to protect their investment within five percentage points, they do,” he adds.

So far, F&I profit per retail unit on deals coming from the online program stands at $1,310, not a far cry from the average $1,405 PRU the dealership’s F&I team averages on traditional deals. And the number of products per deal — 1.94, on average — is the same both in-store and online.

Behind the Scenes
The success of Showroom2Go stems from a combination of technology and process. Marazzi partnered with dealer website solution provider fusionZONE Automotive to build out the program just how he wants it. That includes a financing module, trade-in value calculator, and the software that puts it all together: Dealmaker.

Once a shopper hits submit, the dealership’s custom-built tool sends a copy of the submission to the shopper and a copy to Sun Toyota’s internet department. On a typical morning, Marazzi says, his 28-person team comes into the office to two to three complete transactions sitting in their inbox.

“It’s a great feeling when somebody was up at three in the morning doing all the research and submitting a car purchase,” he laughs.

Three internet directors and Marazzi receive the submissions in real time, but because the first contact they make with the customer is over the phone — not via email — they wait until regular business hours to verify the information submitted.

“At that point, our internet team confirms everything, makes sure everything is correct, and then our finance department prints up the paperwork, puts the file together and we drive to the customer’s house,” Marazzi says.

All vehicle deliveries are conducted by the internet team. To keep spirits up, internet salespeople are spiffed $50 for delivering a vehicle, whether or not the customer signs on the dotted line. But the program has been working so well, Marazzi says they don’t really need the extra incentive. In fact, 592 customers made inquiries through the portal between August and Dec. 31, 2016, and 284 opted to buy — a 48% closing rate. And only two customers have taken advantage of the dealer’s three-day exchange or cancellation policy.

In its previous iterations at past Marazzi stores, Showroom2Go required a lot more legwork. F&I products were pitched over the phone because the capabilities to add F&I products into the payment online weren’t available. But now that technology has caught up with Marazzi’s vision, he’s happy to let his website do the talking.

“Who knows what’s going to happen in the future or what additional technology we’re going to be able to have,” he says. “But for right now, [Showroom2Go] gives the customer exactly what they’re looking for. It’s fast, convenient, upfront transparency, and — more importantly — the ability to do it on their own time.”

Relationships First
The Showroom2Go concept was born out of Marazzi’s desire to stay in touch with buyers from other areas. He worked at a Toyota store in Fort Myers, Fla., for 19 years before purchasing what became John Marazzi Nissan in Naples, and his loyal customers were still clamoring to buy from him.

Pictured is Ferris Hamdan, general sales manager of Sun Toyota. Out of the 592 customer inquiries submitted through the portal since August, 285 opted to buy for a closing ratio of 48%. F&I profit per retail unit on deals coming through the portal stands at $1,310, about $95 shy of what the F&I team averages on traditional deals. The dealership also averages 1.94 products per deal on both Showroom2Go and in-store deliveries. 
Pictured is Ferris Hamdan, general sales manager of Sun Toyota. Out of the 592 customer inquiries submitted through the portal since August, 285 opted to buy for a closing ratio of 48%. F&I profit per retail unit on deals coming through the portal stands at $1,310, about $95 shy of what the F&I team averages on traditional deals. The dealership also averages 1.94 products per deal on both Showroom2Go and in-store deliveries. 

“When I took over the Nissan store, I realized that so many people wanted to buy a car from me — but they didn’t want to drive an hour and fifteen minutes south. So, I came up with the concept,” he explains.

But the unifying trait among Showroom2Go shoppers isn’t distance from the dealership, Marazzi discovered. It’s where they are in the car-buying funnel. Nearly all of them are ready to make a purchase, and they have the means to do it.

“They tend to value their time, and they’re very serious about buying a car,” he notes, adding that these types of shoppers also have higher credit scores and more income overall.

So with the new online component adding “a true 60 to 70 deals per month” to the dealership’s 600-unit monthly sales average in its first four months, primarily from highly qualified buyers, Marazzi sees little risk in putting the entire process online.
“There’s really no downside,” he quips.

Brittany-Marie Swanson is the former senior editor for F&I and Showroom magazine. Email her at [email protected]

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