Our February issue included “Is the Art of F&I Dead?” by veteran F&I trainer and expert Lloyd Trushel. It’s a terrific read that will surprise those who are new to the industry or don’t know the history of dealer-arranged financing. For veteran F&I professionals, it’s a sad but familiar tale: In dealerships throughout the United States, in the mad rush to reduce transaction times, many sales managers are rehashing deals at the desk and undermining the business office.
They didn’t come up with this idea on their own. As Trushel explains, margin compression is a symptom of the shift in the balance of power in modern banking. For auto finance sources, including but not limited to captives, there is an ongoing campaign to generate “clean business” by only buying the deals that fit their current parameters. Sales and desk managers are complicit in this effort, cutting deals the moment they see a green checkmark and not bothering to rehash and resubmit those that are turned down.
But rehashing is a skill traditionally demanded of F&I professionals. It benefits the dealership and its customers. It builds and solidifies the dealer-finance source relationship. Trushel doesn’t want to see any of that go away, and judging by your comments and emails, nor do many of you. So I asked him how the industry can reverse course, starting at the dealership level.
If you’re an F&I professional who wants back in the game, Trushel says, don’t try to change your dealership’s culture overnight. He suggests starting with a critical analysis.
“Look at your process from start to finish, empathize with what the customer is going through at each stage, and see where small, incremental steps can be taken. I don’t know a general manager who isn’t looking for a better process or a more profitable process. But they have to make good decisions, so you’ll need evidence.”
From the dealer’s perspective, “If you’re happy with the results you’re getting, you don’t have to change anything,” Trushel says. But that is rarely the case, he adds, particularly in dealerships where the desk manager was promoted from sales without ever working in F&I. They feel the urgency from the sales team and their customers, and they’re empowered to submit deals, but their lack of applicable, hands-on experience hurts the dealership and takes opportunities away from F&I, leaving customers vulnerable and, ultimately, hurting service retention and future sales.
“They’ve never done F&I. Some barely know how to read a credit bureau. They don’t know how to unpack why their deal has merit with the lender. They won’t lobby for a customer who has a lower score but a good payment history. … Relationships aren’t being worked. Instead, whoever sends a callback that will deliver the car, they’ll run with it.”
Staunch advocate for F&I though he is, Trushel is surprisingly flexible on the desking process. He acknowledges that well-researched customers who show up with a price and payment in mind must be desked accordingly or you could easily lose a deal. But applying that mindset to every deal will miss some gross on customers who don’t care as much about price as they do about convenience and peace of mind.
Here Trushel invokes the Tao of Jeet Kune Do, a form of martial arts popularized by Bruce Lee: “No way is the way” and “Be like water, able to adapt to any situation” are its central tenets.
“I don’t think you can have a rigid process for your desk. No way is the way. Some customers just have the fever for the car. You may want to desk it differently than you would for the customer who does three weeks of research and shows up with a folder full of printouts.”
Optimizing the way you hang paper is never a wasted effort, Trushel adds, and bringing flexibility to the initial engagement with your customer will do more to offset margin compression than reducing minor expenses ever could.
“A lot of dealers are trying to solve profitability problems by cutting costs. That may get people’s attention, but it’s not going to solve the problem. You must apply a little intellectual rigor.”