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F&I’s Role in the New Economy

November 2010, F&I and Showroom - Feature

by Gregory Arroyo and Justina Ly

Unemployment is up. Customers are saving more and spending less. When they do buy, they’re  looking to squeeze as much value and as many miles out of the vehicle as they can. In September, industry experts gathered in Las Vegas at the 2010 F&I Conference and Expo to hammer out a profile of the post-recession customer. Their conclusion? The role of the F&I manager could soon be expanded.

The start of this year’s conference marked the two-year anniversary of the collapse of Lehman Brothers, Fannie Mae and Freddie Mac. The bankruptcy filings of the three companies sent the economy into a credit-induced tailspin that would put more than 3,000 dealers out of business in an 18-month span.

Up until September 2008, anything below 13 million units sold in a year was considered a depressed year. Today, the industry is struggling to return to the 12 million-unit mark as it struggles to find what Stephen Wade, incoming chairman for the National Automobile Dealers Association, called “the new normal.”

“You have heard the new phrase many have coined, ‘the new normal.’ Some of us are still trying to determine what that is,” said Wade, president of Wade Auto Center in St. George, Utah. “The good news is that sales in 2010 are on track to grow by double digits. But because consumers continue to be nervous, I personally am concerned that a full rebound in retail demand is still on the short horizon.”

Dealers have spent the last two years testing strategies — from Internet sales and social media to no-haggle pricing — for attracting skittish customers in a year that’s expected to end in the 11.7 million-unit range. Despite the call for change in the way dealers conduct business, there was a familiar call to arms among retail experts.

Heather Haynes of JM&A Group said the F&I office should get involved early with every type of buyer.

“Get the F&I department involved in the deal early so you can save face for the customer, because they want to make sure they don’t get in a situation where they have to walk out of the dealership without the vehicle,” said Heather Haynes, a sales training manager for JM&A Group. “It should happen in the showroom after they’ve landed on a vehicle. If it’s over the phone, put the F&I manager on the phone with the customer. On the Internet, the online credit application should go directly to the F&I manager, who should pick up the phone and call the customer.”

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