The automotive industry has gone through a major market transformation over the last two years that’s highlighted the importance of robust, compliant F&I teams. This year’s NADA Show is a great opportunity to collaborate with partners and learn how to best support your team.
1. Updates to the GLBA Safeguard Rule
The new rule impacts the auto industry directly in various ways. First, the rule expands the definition of “financial institutions” to include entities that unite buyers and sellers – including dealerships. It requires written risk assessment and mandates a “qualified individual” to oversee the organization’s information security program.
While the new rule will change the way many dealerships’ sales, finance, and IT teams operate, not all dealerships are impacted. The small business exemption excuses businesses with fewer than five thousand customers from some of the updates, like requiring written risk and incident assessments and continuous vulnerability testing.
For dealerships that are impacted, though, staying compliant will be a huge undertaking. Many of the requirements may be outside of the scope of existing IT departments.
If that’s your situation, a compliance software partner may be your best bet. The NADA show presents a great opportunity to explore partners and attend workshop sessions about the guidelines.
Two to consider:
- Federal and State Privacy and Data Security Update: What Dealer Vendors and OEMs Need to Know, Thursday at 10:00 a.m.
- Complying with the Amended Safeguard Rule – What Dealers and Their Vendors Must Know, Thursday at 4:00 p.m.
2. The Great Resignation
You’ve probably seen employee turnover firsthand over the last year. You’re not alone. In fact, 72 percent of franchise dealers struggled to find and hire the right employees in 2021. Unfortunately, the Great Resignation will continue to affect your team.
High turnover on the F&I team not only affects your business processes but also creates room for liability. When onboarding new employees, rely on hiring and employee retention software to provide thorough, company-specific training.
In order to combat turnover and support your current team, offer continuing education programs. Mobile-accessible training software means your employees can easily complete modules, saving you the time and money more traditional training workshops require.
(Related: Attract Top Talent in a Post-Pandemic Labor Market, Thursday at 2:30 p.m.)
3. Exponential EV Growth
Now, industry leaders are making significant investments in EV manufacturing. By 2030, EVs will make up 40 percentof Ford’s production, and the EPA’s latest pollution regulations could prompt more customers to explore EVs.
All this to say: it’s time for dealers to prepare their teams for a long-term increase in EV sales. To do this, educate your sales and F&I teams to make sure they’re prepared to sell the ins and outs of an EV: mileage range, charging options, warranties, available services, and add-ons.
(Related: Plugging into What's Possible: Inside the EV Opportunity for Dealers, Thursday at 12:15 p.m. and Win in the EV Market, Thursday at 1:00 p.m.)
4. Supply Shortages Mean Increased Emphasis on Fair Lending
Besides the Great Resignation, the pandemic caused another hurdle for the auto industry: a global chip shortage. Manufacturing closures at the beginning of the pandemic caused $210 billion in lost revenue in 2021 alone. Supply chain issues are expected to last through 2022 and possibly into next year.
Now that new cars are hard to come by, about 82 percent of customers are paying above MSRP as of January (up from just 2.8 percent a year ago).
Because shortages and supply chain issues have increased dealer markups, providing transparent and compliant financing options will be especially important.
One way to ensure everyone on your F&I team is following fair lending laws: invest in partnering with a non-biased compliance auditing service that includes compliance software. Look for a provider with a range of capabilities (collision and service, RV, motor home, trucks, power sports) to ensure your team is prepared for whatever comes their way.
See You at NADA
Whether you’ll be in Las Vegas or not, these trends will shape the F&I space in the coming year.
The best way to prepare for future changes is to be proactive. If you haven’t updated your compliance training in a while, now is a good time to rethink how you’re preparing your F&I team to adapt to changes that can help drive revenue through 2022 and beyond.
Aaron Hartshorn is a district manager, F&I and compliance, at KPA, an Environment, Health & Safety (EHS) and workforce compliance software and services provider for mid-sized businesses. Its all-in-one EHS and workforce compliance software platform, Vera Suite, helps organizations maintain worker safety, streamline workplace compliance operations, and manage risk. KPA’s consulting field team is located throughout the U.S. and performs over 20,000 onsite audits annually across all 50 States, Puerto Rico, and Canada.