A used car built in 2010 and a new car built in 2020 sit on the same dealership lot. And since the two vehicles are completely different, it’s up to a dealership finance manager to figure out which finance and insurance products pair best with each.
Companies that offer F&I training to dealerships say it’s crucial for employees to know how to sell products for each type of vehicle. For instance, an older-model car with several previous owners listed in its CarFax report requires a different type of maintenance plan than a vehicle that has just rolled off an assembly line.
Core F&I training is often agnostic to vehicle type, according to Chris May, director of JM&A Group’s Performance Development Center. JM&A Group is one of the largest independent providers of F&I products to the automotive industry.
“Whether you are primarily a used-car or a new-car F&I manager, you’re going to go through the same exact training,” May told Automotive News. “However, there are some nuanced differences when you are actually selling those.”
A new-car shopper is getting scratch-free rims and brand-new tires, whereas someone buying a pre-owned car might get older tires with worn treads and a not-perfect vehicle body, May said.
F&I managers also will sometimes pitch products regardless of whether a customer is likely to buy them. “New-car buyers are more likely to pick maintenance plans, but we’re going to pitch it to both no matter what,” May said.
It’s important for F&I managers to “interview” customers and consider their vehicle preferences, financial situations and buying journeys, he said. The goal is to avoid bad product fits — such as someone who plans to own a vehicle for five years being sold a seven-year service contract.
“What we really train on is [knowing] our products inside and out. Then we have to understand our customers inside and out,” May said.
That methodology rings true for other companies that offer training guidance, too, which say it wouldn’t make sense to offer lessons on selling F&I products for just new cars or solely used cars.
F&I managers are going to want to learn how to sell both types of vehicles and, subsequently, know which of the smorgasbord of F&I products are best suited for each, said Ash Bauer, senior vice president of Assurant Global Automotive, which is part of Assurant Inc., another top F&I provider.
Bauer said F&I managers should take into account one defining characteristic of used-car buyers: They tend to be budget-minded.
That’s not to say new-vehicle buyers aren’t fiscally responsible, too. Many are, given that they are making what could be the second-largest personal investment in their life. But a customer set on a pre-owned vehicle might not have a lot of cash to use as a down payment, nor the ability to commit to heftier monthly payments associated with new cars.
F&I managers also need to recognize that used-car buyers closely examine a vehicle’s ownership records. They typically want to know how many people owned the car, for how long, whether it was regularly maintained, where it was driven and if it was involved in any collisions.
“Ultimately, that used-car buyer is asking those questions to try to quantify the quality, because that’s what they’re a little concerned about,” Bauer said.
Some training elements remain consistent, Bauer said. For instance, F&I managers should learn to be visual with their presentations and transparent on vehicle pricing. It’s also sensible for an F&I manager to be prepared to listen to customer objections to adding F&I products.
Whatever the trainers are teaching dealership F&I employees, it seems to be working.
Dealership profits from F&I sales soared in 2020. Total F&I revenue for the 150 largest dealership groups in the U.S. increased 4.5 percent in 2020 compared with 2019, according to an Automotive News survey. Of those groups, 133 averaged more than $1,000 per new and used vehicle.