A new J.D. Power and Associates study asked dealers how happy they are with their F&I service providers. Independent companies came out looking particularly good.
This study received 3,385 completed surveys from dealer principals and general managers representing over 5,053 dealerships from every franchise nationwide. I was the study's project consultant.
The results are startling as independent providers on whole outrank the factory programs in every satisfaction measure.
In addition, the study offers significant revelations regarding F&I practices nationwide, what is effectively being sold, and how the most successful results are achieved.
“The most surprising finding is that dealers rate services from independent providers much higher than they rate the factory providers,” says Scott Weitzman, a J.D. Power senior director who led the study.
- The average independent provider scored 791 (1,000 being a theoretical perfect score) versus only 719 for the average factory provider.
- The primary driver of dealership satisfaction is the service level provided to the dealership. The quality of the representative/agent is the single most important individual component.
- The type of products provided is the second most important area.
- Financial administration and fees comprise the third most important attribute cited by surveyed dealers. Management of interest accounts comprise the highest impact part of the index.
Despite the significant difference in satisfaction scores, the majority of polled dealerships remain committed to the factory provider.
Says Weitzman, “Factory providers still have a distinct advantage over the independent providers, as a result of their long-established relationships with dealers.
“Where they really get hurt is in the area of client relations. Dealers are much happier with their independent representatives and the sales and product training they deliver.”
- 80% of dealers who primarily use the factory provider are involved in a direct (commission only program). This compares to less than one-third of dealerships using an independent provider.
- 18% of dealerships don't know what type of financial program they use. This is a warning. Potentially too much money is at stake to neglect this.
- Dealers involved in a participation program are happier and more satisfied than dealers simply using a direct program.
- Despite the difference in satisfaction, dealers are generally far more loyal when using the manufacturer-sponsored product. The average relationship with the factory provider is 14 years versus six with an independent, however the range varies depending on the provider.
The study also tries to create a snapshot of what is happening in dealership F&I offices, what products are being emphasized, what percentage of dealerships are using a menu-selling system, and what impact that's had, if any.
Results indicate the effectiveness of a menu sales method.
“Menu-driven sales processes are now found at nearly two-thirds of all dealerships. The dealers using menus are much happier with the additional profit their F&I departments earn by selling a broader product line,” says Weitzman.
Specific findings include:
- When asked which products they emphasize in selling, 97% of dealers say service contracts. That's followed by GAP at 75% and aftermarket accessories at 66%. VIN etch had the lowest priority at 31% of eight different F&I products reviewed.
- Dealerships using an independent provider are more likely to use a menu.
- Among dealerships using a menu, 63% emphasize selling such additional products as credit insurance, GAP, chemical protection packages, VIN etch, theft deterrents maintenance agreements and aftermarket accessories. This compares to 43% at dealerships where a menu is not used. This indicates that without a menu system, money is left on the table. It's hard to sell a product that's not even being offered.
Bryan Dorfler is an F&I consultant for dealer groups and automotive lenders. He can be reached at [email protected]