As dealerships look for ways to counter shrinking profit margins, F&I product sales are one of the revenue sources they turn to. NADA Dealership Financial Profile reporting for year-end 2019 shows that F&I gross profit as a percentage of vehicle sales increased over the previous year for both new and used vehicle departments.
In the push to make the most of this revenue source, it’s still important to make compliance part of the process. You should consult your legal counsel to ensure that your F&I sales process is compliant. Here are five tips to keep in mind as you promote and sell F&I add-ons:
- Be Consistent – Never skip required steps in the F&I product presentation process. Charge each customer substantially the same price for each product or grouping of products.
- Make Your Presentations Transparent –Prepare your menus, sales scripts and presentations to be up-front about what each product is and how much it will cost. Consult your legal counsel for questions about how your state’s laws apply.
- Train Your Employees – To help ensure consistency, transparency and compliance, train and test your staff on your F&I sales processes. Observe and document their performances regularly and retrain as needed.
- Exercise Caution with Incentive Programs – Consult the CFPB bulletin on incentives – and your legal counsel – when you’re creating and tracking any incentive programs. Take special care when incentives relate to products and services whose sale may benefit your employees more than their purchase will benefit customers.
- Change Your Presentations as Needed – Pay attention to customer feedback and CSI scores related to your F&I presentations and adjust menus, presentation scripts, and F&I sales practices to address changes in the law, negative consumer feedback, and your CSI scores.
With the FTC and the CFPB actively investigating the sale of all types of F&I products for unfair and deceptive practices, active compliance efforts are vitally important for dealerships. We recommend building a culture of compliance at your dealership throughout the deal process.
Want to learn more about aftermarket compliance? Sign up for access to the online Dealertrack 2020 Compliance Guide.