F&I: It’s All About Alignment
Having both a profitable sales and F&I department is largely a matter of ensuring they work together.
By Denise L. Rondini, Executive Editor
Every dealer wants to be profitable, but if each department is evaluated separately, dealers may be missing out on valuable opportunities. No place is this clearer than the relationship between the sales and F&I departments.
“Dealers need to align the interests between the departments,” says Juergen Rochert, vice president of Daimler Truck Financial USA, LLC. “Generations of captive finance company executives and other F&I executives would have given you the same answers. And it still has not happened. It needs to trickle down from owners and top managers.”
One of the main things that gets in the way of this alignment is a commission structure that is separate for salespeople.
“You get what you pay for,” Rochert says. “If the salesperson’s commission is based on getting a signature on the dotted line for the right number that is what he will do.” This way of doing business can make things difficult for the F&I department to sell their products and services.
But the dissatisfaction goes both ways. “There also are times when the sales department is not happy with its F&I colleagues,” Rochert says, “because they want to add products [to the deal] and then the payments get higher and the customer does not like that.”
Given the cost of today’s vehicles, most customers are not paying cash for their vehicles. It all comes down to payments. Allowing the F&I department to pre-qualify a customer can actually help in the sales process.
Rochert advocates that salespeople bring the F&I team into the process sooner rather than later. “If it’s too soon, the F&I people will let the salespeople know.” However, if they are involved early they can get the information that is needed all at once so the customer is not being asked for information constantly throughout the process by a variety of people, which can be annoying.
In recent years the role of the F&I manager and F&I department has changed. As a result of downsizing in reaction to the recent recession, many dealers reduced or eliminated their F&I staff. Some however more savvy dealers merely expanded the scope and the responsibilities of the F&I directors in order to keep them on staff, adding training, management, sales or other responsibilities to their job descriptions.
While the F&I market is recovering nicely, according to Rochert, there are some trends that will impact it. “Small business and owner-operators and many businesses in construction and construction-related businesses have left the market,” he says. “The owner-operators probably won’t be coming back and this is not a good thing for F&I because [those types of customers] typically are where the most opportunities are.”
Most fleets typically get more than one offer so there is more competition for their business and that business usually comes with lower margins, according to Rochert. “The other downside is that the insurance opportunity is less on many fleets, even small ones, which very often have their own insurance coverage.”