The evolution of F&I products, and more specifically how they are sold, has been shifted into high gear. - IMAGE: HXDYL via

The evolution of F&I products, and more specifically how they are sold, has been shifted into high gear. 


Over the course of the past 12 months, dealers and F&I managers have altered their processes and operations to keep up with the evolving needs of consumers, as well as the continually changing rules and regulations from city and state officials. As a result, the evolution of F&I products, and more specifically how they are sold, has been shifted into high gear.

So when I think about the industry emerging stronger at the end of the pandemic, it’s because dealers and their staff were so resilient during this period and continued to operate efficiently and effectively. – Cheryl Miller

F&I spoke with executives in the retail space to gauge their predictions on the future evolution of F&I products, how the ways in which products are offered to consumers will continue to change, and why keeping up with trends like digital retailing should be a top priority at every dealership. 

Tim Blochowiak, vice president of dealer sales for Protective Asset Protection, a full-service provider of F&I products and programs; APCO Holdings’ (home to the EasyCare and GWC Warranty Brands) Senior Vice President of Strategy and Planning Scot Eisenfelder; and Cheryl Miller, vice president of operations at Dealertrack F&I, share their thoughts on what to expect in the year ahead when it comes to retail F&I.

The Evolution of F&I Products 

“This year there are two trends we should pay attention to,” says APCO Holdings’ Scot Eisenfelder. “One is covering new risk and the other is meeting customers where they are.”

He notes that when it comes to covering new risk, they’ve seen an explosion of new tech in vehicles, making it even more important to provide coverage for electronics — either in addition to, or separate from, other coverages. Another new risk he brought up is electric vehicles (EVs), and how manufacturers will be offering more EVs and that covering these vehicles is different, with all their technology and componentry. 

“At the 10,000-foot level we know there are fewer parts to break in an EV, but how does that change coverage,” Eisenfelder says. “For example, dealers are struggling with how to deal with batteries. They’re an expensive item, so getting the coverage right is important because the loss could be significant if you don’t. Also, what constitutes failure of the battery versus an aging battery? As we get more experience, we can better answer these questions.” 

Eisenfelder also urges dealers to think about mobility. While mobility hit a pause during the pandemic, this trend is here to stay, he believes, and having the right coverage for different aspects of mobility, whether subscriptions or rideshare or different models, will require different coverage types. 

“On the trend of meeting customers where they are, dealers need to think about how to maintain contact with consumers to evolve the coverage they need throughout the ownership lifecycle,” he says.  Offering the example of how the pandemic has impacted how long some people will own their vehicles, and that maybe consumers are now holding onto the vehicle longer or don’t drive as many miles because they work from home. He wants to ensure that dealers are aware of these changes at an individual level and are able to meet their customers where they are today, versus where they were when they bought the vehicle. 

“We’re keeping an eye on these things,” Eisenfelder adds. “In 2021 dealers will need to update their products to align with the different needs entailed in these trends.” 

Tim Blochowiak of Protective shifted the conversations from EVs and electronics to electric drivetrains. “As vehicles continually evolve with new technology, so will the F&I products that protect them,” he said. Adding that the way consumers shop for, and dealers sell F&I products, will continue to transition to a digital retail environment. 

“As a result,” he says, “more and more information will be readily available to shoppers, so they are prepared to make the most informed decision when they go to purchase their vehicle protection products.”

“I think dealerships have made great progress,” says Dealertrack F&I’s Cheryl Miller. “Consumers have great expectations about being able to do retail online, and the car industry was obviously moving there, but I think now the expectation is even greater.” 

As seen in a recent study from Cox Automotive, 64% of shoppers want to do more of the purchase online now compared to their last purchase, and this is evident of their evolving expectations. Miller believes that as the industry continues to evolve, and the consumer wants to continue to shop online; dealerships and F&I departments specifically, will have to adjust accordingly. 

“Our dealer partners are doing an incredible job of adjusting and adapting, and really trying to get their dealerships to the level that the consumer can apply online and get the process going so they’re limiting the amount of time they may need to spend with the customer when they come to take delivery,” she adds.

From an F&I aftermarket perspective, Miller believes that when customers have the opportunity to self-educate and learn about F&I products on their own, they are opting in more. “About 80% of our franchised dealers said they plan to continue to offer more and more online options and make that continual investment over the next one to two years to improve upon these experiences,” she adds. 

Advancements are Here to Stay

“The pandemic caused many dealers to pivot to a more digital retail environment to reach customers that were uncomfortable coming to the dealership,” says Protective’s Blochowiak. “Frankly, this switch was a long time coming, as many consumers have become accustomed to online shopping.” 

He cautions that dealers do still need to be aware of the importance of understanding each segment of the target audience and catering to their needs. While many web-savvy shoppers will continue to utilize the innovative, new online tools for F&I, there are still many shoppers that prefer traditional marketing literature and information available in-store. 

Eisenfelder of APCO Holdings thinks what’s happened during the pandemic — dealers have gotten used to a process that’s closer to what consumers have wanted, and this puts consumers more in control of the car-buying process. “I think it will be tough to get the genie back into the bottle, once consumers have had that experience,” he says.

The other aspect Eisenfelder is keeping an eye on is the knowledge that many dealers have learned to make more money during this pandemic because they’ve realized the inefficiencies in their previous process. More than likely he believes, these dealers aren’t going to be interested in going back to the way it was done and offers a real-world example: “Having your staff out on the lot, working 12-hour days on Saturday and Sunday as they wait for consumers to come in, is very inefficient. As dealers switch to an appointment-driven process, different activities are spaced throughout the week.” Due to this, salespeople are selling more vehicles per week than they were before, and everyone realizes it’s a much more efficient process. 

“I think we’re still learning how to optimize this new model and make money as it continues to evolve into a more transparent, consumer-driven process,” he adds.

When Dealertrack F&I’s Miller thinks about the pandemic and what has taken place over the past 12 months, she focuses on the acceleration of the digital experience for the consumer and dealers in general. In other words, the industry was moving in a very positive manner towards digitization of the industry, and when the pandemic hit, it accelerated the digital retail shopping experience. 

“I think as we emerge on the other side of this, the industry has learned a lot of great lessons and very quickly adapted to the changing environment,” she adds. “So when I think about the industry emerging stronger at the end of the pandemic, it’s because dealers and their staff were so resilient during this period and continued to operate efficiently and effectively.”

Miller knows there’s no doubt about it — consumers have been wanting to get more online and we were already seeing that consumers wanted to spend less time in the dealership to finish their paperwork. “They are doing more online shopping, and one of our recent studies shows that 84% of our franchised dealers actually agree that their customers expect to complete more online now than before.”

The Digital F&I Environment 

This digital shift is not just about selling online either – it’s about creating greater transparency and better informing the buyer using digital tools. – Tim Blochowiak

APCO recently did a survey of all the digital retail platforms out there, looking at how they present F&I products and how far into the F&I transaction consumers can get. What they found is that it’s a wide spectrum, but in general it lags behind the overall purchase of the vehicle and there’s still a lot of room to evolve. 

“F&I products and options on products are very complex, and they’re not terribly well understood by consumers,” says Scot Eisenfelder. “When you go from an in-person sales process to a digital process, there needs to be a lot of simplification, because you’re going from the F&I expert driving the process to the consumer driving the process.” He recommends dealers simplify the needs analysis and figure out how to better link the needs to the products, so that consumers can take control and drive the F&I process themselves.

“I think that with what we’re seeing with the consumer wanting to do more and more online, there is a real need to continue the evolution of the digital experience,” says Cheryl Miller. “Allowing the consumer to actually shop online, take remote deliveries, sign all of the necessary paperwork remotely — all of these things have been evolving, and they are doing so more quickly now.” 

She then brought up Cox Auto’s commitment to focusing on the continuation of evolving those tools and helping dealers to be successful in this endeavor in order to sell vehicles.

Returning to an earlier detail, Protective’s Blochowiak says that shoppers have been asking for a shift to a more digital retail environment in the automotive space for years. “As a result, going forward, we anticipate a continuation of the growth we saw in 2020 for both vehicles and F&I products,” he says. “This digital shift is not just about selling online either — it’s about creating greater transparency and better informing the buyer using digital tools.” 

Adding that consumers just expect this type of approach when they turn to online channels for information, and as such, dealers and F&I managers must make sure they are meeting their needs. 

Trends Worth Watching 

Over the last few years, used inventory has been in higher demand because many of the vehicles coming off lease offer the same technology and convenience features as the latest models at a more economical price. As more and more customers gravitate towards used inventory, the industry and Protective specifically is keeping an eye on the surge in vehicle service contracts, certified programs, ancillary programs, and GAP.

“While GAP is not a new product, it has grown in popularity over the last few years,” says Blochowiak. “This is, in part, a result of a rise in claims, which is attributed to an increase in accidents since there are more cars on the road.” Adding to that, insurance companies are more likely to total vehicles due to the rising cost and complexity of replacement parts and falling residual values (particularly for cars over SUVs/crossovers and trucks). 

“Finally, more impactful weather events are responsible for driving up claims payouts in recent years. As a result, at Protective, we see GAP continuing to play a role in the F&I offerings for many dealers.”

Eisenfelder believes the big question on everyone’s minds is economic resilience, and wonders as we emerge from the pandemic, how much damage has been done to the economic foundation of the country. “We have fellow citizens who have not only lost their jobs, but they’ve lost their businesses and their livelihoods. How quickly do we bounce back?”

He knows it’s not just a question of unemployment, many people have lost their economic foundation. Government stimuli may help with the ability to bounce back, but it’s really about the risk people are willing to take. “After losing everything, are small business owners willing to take that risk again? Are they willing to invest again and become that engine of growth that’s so important to our economy,” questions Eisenfelder.

“The stimulus will help short term, in the first two quarters. After that, we need to see that flywheel start again,” he adds. “When a restaurant closes at the local strip mall, is another one coming in to take its place? Will these hundreds of thousands of small businesses continue to operate and thrive?” As an industry, Eisenfelder wants to see evidence of that before we declare economic recovery. 

Moving Forward

In the long run you have to take what you’ve learned and focus on the positive to be successful. – Scot Eisenfelder

Blochowiak knows a robust F&I product mix is a great way to add value for your customers, generate revenue, and increase repeat business. But cautions that F&I products are only part of the equation for dealers or dealer group management teams. 

“We’ve all lived through a difficult year, and through any challenging time, it’s always nice to pause and reflect upon what you’ve learned,” Eisenfelder of APCO says. “Whenever you have to reflect in hard times you come out a lot smarter. The important thing is to solidify those learnings.” 

Sifting through the many lessons learned over the past 12 months, he called specific attention to what has been learned about our business and what needs to be focused on in order to remain successful. “We’ve learned we don’t have to fly around the country to meet in person. We’ve learned how to be more productive in the way we do trainings, and how to deliver value remotely. In the long run you have to take what you’ve learned and focus on the positive to be successful.”

READ: Reframing F&I