Dealers must have a plan to offer the right F&I protection packages to ensure drivers are covered if something goes wrong and repairs need to be made.
The Consumer Electronics Show, or CES, 2024 proved once again that the biggest technology show of the year is also becoming an important automotive show. Currently, some of the biggest trends in automotive technology can be divided into three areas: electrification, mobility options, and the emergence of language-based artificial intelligence on dashboards.
With this new technology, car manufacturers and dealers must also ask the question – what happens if these technologies stop working or need to be repaired? Dealers must have a plan to offer the right F&I protection packages to ensure drivers are covered if something goes wrong and repairs need to be made. While some of the technologies described below have yet to be embedded in vehicles, it‘s important to know what’s on the horizon so dealers can conduct the right research and ensure they offer the right F&I programs to customers.
Technology on Display
Automakers have been incorporating artificial intelligence into cars for over 10 years. Automated-driving technology, for example, is powered by AI. But at CES 2024, advances in AI with natural language models were on display for the dashboard, showing they’re making it easier to talk with the car for voice commands and personal voice assistants.
Volkswagen announced a partnership to bring ChatGPT to its "Hello IDA" personal voice assistant system later this year as a free cloud-based update for drivers of its ID.4 and ID.7 electric vehicles. BMW is partnering with Amazon for its Alexa personal voice assistant. Also, Mercedes-Benz is working with Microsoft’s Azure OpenAI. From component and software suppliers to SoC – System on a Chip – manufacturers, everyone has been talking about AI in vehicles.
Hyundai Mobis, a Hyundai parts supplier, surprised exhibition visitors with its Mobion concept, which dances and spins on an e-Corner steering system. Thanks to the independent steering, which allows a turning angle of up to 90 degrees for all four wheels, the Mobion concept can maneuver laterally in parallel parking spaces, slide diagonally through tight spaces, and turn 360 degrees.
Dealers Know Protective Tech's Importance
A recent study on where dealers prioritize F&I products reveals that vehicle technology is already high on their list.
Comparing F&I product sale activity in 2023 to the previous year, 41.6%
of auto dealers said the sale of F&I products was up about 5% to 10%, according to Protective Asset Protection’s 2023 F&I Dealer Survey. This includes products such as vehicle service contracts, appearance products, tire-and-wheel, prepaid maintenance, GAP, etc. More than a third, 36.7%, said their F&I sales increased by over 10% compared with 2022.
Forty-nine percent of dealers said that covering electrical components was the most frequent reason consumers noted for selecting F&I protection products, followed by 46% who pinpointed covering advanced technology features, and 45% who prioritized the need for emergency roadside services.
By the summer of 2023, the cost of auto repairs had risen nearly 20% compared with the previous year, according to the Consumer Price Index. At the time, this was more than six times the national inflation rate and one of the largest annual price increases for household goods or services. Why the increase? Experts have said it's a combination of multiple factors. Some emerged during the pandemic, while others were long-term trends in the auto market, such as the overall cost of components, parts availability, shortage of labor, and more expensive technology found in today’s vehicles.
F&I Products Drive Customer Confidence
Many common vehicle repairs can cost drivers between $500 to $600 per visit and sometimes more, according to AAA. More advanced vehicle technology is a big reason for higher repair costs. Technology such as advanced driver-assistance systems, automatic emergency braking, lane-keeping assist, and cross-traffic alert systems are quite common in vehicles today. The electronic sensors to facilitate these technologies are found in bumpers, fenders and grilles, which are commonly damaged in accidents. However, even without an accident, technology has been known to stop working without notice, potentially jeopardizing the driver’s safety.
In the constantly changing landscape of vehicle technology, such as those highlighted at this year’s CES, having the right F&I products is not merely a choice but a responsibility. Advanced technology is not a luxury reserved for a select few; it’s the key to ensuring that vehicles stay in proper, safe operating condition. By offering the right F&I products that embrace vehicle innovations, dealers can ensure their customers are navigating the roads with confidence, knowing that their vehicles are not only well-maintained but also equipped with the latest safety features.
The right F&I products covering advanced technology are not just a forward-thinking choice; they are imperative for dealers and their customers looking to maximize the lifespan, performance and safety of their vehicles.
Paul McCarthy is vice president of sales, key accounts for Protective Asset Protection.
EDITOR NOTE: This article was authored and edited according to F&I and Showroom editorial standards and style. Opinions expressed may not reflect that of F&I and Showroom.
