Time to Step Up Sales in the Automotive F&I Industry: Focus on VSCs, Tire and Wheel, and GAP
The automotive industry is in a constant state of growth and transition, with new opportunities and challenges emerging on a regular basis. Recently, we have faced vehicle shortages, predominantly due to supply chain issues and increased demand. However, that circumstance has started to change, providing an opportune moment for the Finance and Insurance (F&I) side of the business to step up their game. One approach to navigating this new landscape involves focusing on Vehicle Service Contracts (VSCs), Tire and Wheel Protection, and Guaranteed Asset Protection (GAP) coverage.
The Changing Landscape
Automotive inventories are gradually filling up again. It's no longer a seller's market where virtually every vehicle—new or used—flies off the lot without much need for additional sales effort or F&I products. When interest rates and money factors run high, they prevent consumers from making vehicle purchases. As vehicle availability stabilizes, competition will increase again, not just among dealers but also from a wide variety of online platforms offering vehicles and F&I products. This makes it imperative for dealership traditional F&I departments to revisit their strategies.
Why VSCs?
Vehicle Service Contracts have long been a staple in F&I departments. They offer consumers peace of mind by covering the cost of unexpected repairs after the manufacturer's warranty expires. They serve to continue the relationship between customer and dealership, ensuring that your customer receives the best service possible. In today's market, where reliability is a significant concern due to the rapid advancements in automotive technology, VSCs are more relevant than ever. Highlighting the benefits of a comprehensive service contract can help differentiate a dealership in a crowded marketplace.
The Importance of Tire and Wheel Protection
Another F&I product deserving focus is Tire and Wheel Protection. Anyone who's suffered a blowout knows the expense and inconvenience it causes, not to mention potential safety risks. With roads becoming increasingly hazardous due to weather conditions, poor maintenance, and increased traffic, tire and wheel coverage is a prudent option for consumers. Dealerships that offer comprehensive tire and wheel protection packages can gain a competitive edge and enhance overall customer satisfaction.
The Role of GAP Coverage
GAP insurance is often seen as an optional extra, but it should be presented as essential. With vehicle prices and loan terms both on the rise, the financial gap between what a car is worth and what is owed on the loan can be significant. GAP coverage protects the consumer in case of total loss, making up the difference between the insurance payout and the remaining loan balance. As vehicles become more expensive, the need for GAP insurance becomes increasingly apparent. Educating your customers about GAP is critical.
The automotive F&I industry is in a critical phase, transitioning from a seller's market fueled by vehicle shortages to a more competitive, balanced environment. To remain successful, F&I professionals must adapt their strategies to focus on high-impact products like VSCs, Tire and Wheel Protection, and GAP coverage. Not only do these options add value to the customer's purchase, but they also represent substantial profit centers for the dealership.
The time has come to revitalize the sales strategy, focusing on the offerings that matter most to consumers. This renewed focus will not only drive sales but also enhance customer satisfaction and loyalty, key indicators of long-term success in the automotive F&I industry.
Want to learn more about getting the most out of the F&I strategy at your dealership? Reach out to Frank Torchia today at ftorchia@ezvds.com or through his LinkedIn.
