Automotive News - September 23, 2019 - Best Practices Supplement - A7

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SEPTEMBER 23, 2019 | 7

BEST PRACTICES IN F&I

Rethink your business approach
to get the most from your store

ealers can fight margin compression and prepare for more challenging times by rethinking their approach to each area of their business, auto industry experts say.
F&I: Despite growing profits in F&I, dealers
can be even more effective in working with
customers - and increase sales of prepaid
maintenance products,
says Gabe Garroni, vice
president of sales for Ally
Insurance. "A mistake I
continue to see finance
managers make is starting
the customer conversation with a high price for
products or packages and
reverting back into a tradiGarroni: Create
tional back-and-forth nea culture of
gotiation or haggle," Gartransparency.
roni says. "Especially for
dealers who advertise a
single-price model, a significant deviation from
that into a traditional F&I
negotiation can frustrate
the customer." Dealerships should create a culture of transparency, Garroni says. "The F&I prodBanks: Develop
ucts we offer provide great
a strategy for
value to the customers," he
used vehicles.
says. "Dealers need to
show their confidence in those products with
a more transparent transaction."
Used vehicles: If you don't have a used-vehicle strategy, it's time to get serious. The nation's supply is going to be at historic highs,
with a record number of vehicles coming off
lease and making late-model used cars more
affordable, says Jonathan Banks, vice president of vehicle valuations and analytics for J.D.
Power. "This is a good time to optimize the affordable inventory that's coming back to the
market," Banks says. "The millennial population is aging and buying cars. The technology
in the vehicles coming back can be updated so
there won't be technology gaps in these used
cars. I see a three- to five-year window where
dealers can make a lot on used vehicles."
Service: Service is a growing part of the typical dealer's business. Invest in your service
department to provide the best customer experience. That great experience, in return, will

Having enough techs to repair cars well and efficiently is crucial to a great customer experience.
The right
strategy in
the F&I office
can help
retailers
become more
effective in
working with
customers
- and
maximizing
their profits.

encourage car buyers to invest in prepaid
maintenance. A great experience means, first,
repairing cars well and efficiently - and that
means having enough technicians. "I hear lots
of complaints about the technician shortage,"
says Scot Eisenfelder, CEO of the relationship
marketing company Affinitiv. "We can sit here
and wring our hands, or we can roll up our
sleeves and get something done and work to
fix the capacity problem ourselves." Dealers
can work to develop technician talent internally, Eisenfelder says, or create a pipeline of
talent by promoting tech jobs and careers at
high schools and colleges along with providing internships.
Operating structure: Take a hard look at
your expenses and efficiencies. "It's a silent
killer," says Garroni. "Dealers are chasing
profit on sales and in F&I, and at the same
time expenses put internal pressure on that

profit," he says. "Look where you can save
without making major changes. Can you find
efficiencies in how you staff? How about ongoing payments to vendors or programs that
are either not being utilized or fail to provide
an appropriate return? Each of those things
can help the bottom line."
People: Turnover costs a dealership dearly;
each new team member means additional
money and time spent on recruiting, hiring and
training. Protect profits by working to retain the
best people. At Columbus' Bob Caldwell Automotive, turnover was 100 percent in 2017.
Dealer principal Justin Harmon says it's now 35
percent. Harmon says he hasn't changed much
except the workplace culture. He has begun
monthly team meetings on the showroom
floor, keeping everyone in the loop about
what's going on, asking for employee feedback
and, he says, focusing on being positive.

Automotive News - September 23, 2019 - Best Practices Supplement

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