How F&I participation can help dealerships survive the next wave of economic impacts. - IMAGE: Pixabay.com

How F&I participation can help dealerships survive the next wave of economic impacts.

IMAGE: Pixabay.com

Inventory and component shortages are top of the news right now. The forecast is for these impacts to continue across the auto industry well into the second half of the year. According to the Cox Automotive March Forecast, inventory levels are tight, having fallen by 20,000 vehicles since mid-March and reached the lowest point since mid-January 2021.

Stockpiles industry-wide are notably down, nearly 21% lower than a year ago. “The production disruptions happening now,” the report notes, “will turn into even lower inventory in the months ahead.” 

Dealers may be wringing their hands at such statistics and justifiably lamenting, “Now what?!” Businesses fought to survive through the pandemic, but will post-pandemic shortages present an insurmountable challenge? The answer to continued resilience lies in F&I — not just in selling products, but in taking steps to command greater control of the capital generated by them.  

Now is the time to take a fresh look at participation and ownership options that can make the ultimate difference in whether a dealership successfully navigates the next round of economic disruption. 

Dealers who flexed their resilience over these past 12 months, pivoting as needed to online retailing and finding creative ways to keep their customers engaged, have virtually no option but to continue doing so. The fact is there is little you can do to avoid the current inventory challenges. What you can, and must, do is explore the options available that give you: 

  • The freedom to make your own decisions regarding the F&I products you participate in. 
  • The ability to choose how you invest your money. 
  • The flexibility to decide how to handle claims. 

These are options that can immediately put you on the path to increasing your revenue, even in the midst of ongoing pandemic impacts like inventory shortfalls and downward pressure on new vehicle sales.  

Start by taking stock of your F&I program, with careful vetting of your provider. Does your current F&I partner, or new prospects you may be considering, offer a full range of participation options? Can they guide you in choosing and establishing the wealth-building structure that’s right for you? Are they able to carefully walk you through all insurance options in order to advocate for your access to capital? Given the intense focus of the CFPB on the industry today, do they have the legal expertise to ensure compliance on your behalf? 

As an industry, we have learned the lesson over and over that the “100-year flood” is now a nearly constant threat. Are you equipped to survive another major challenge? You can be. Now is a great time to consider how simple and lucrative it can be to choose a new path that will allow you to control and use your cash, investments, and F&I products to your advantage. 

Edvie M. Castro, general counsel and COO of DOWC, a service contract provider and administrator, offering customizable F&I products and expertise in compliance, as well as a full suite of technology designed to optimize productivity and expedite claims adjustments, processing, and reporting.  

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