SAN FRANCISCO — “Everything at the dealership ends up in our department,” says Cindy Kanellis, who oversees finance and insurance operations for a car dealership group here.
Well, not everything, but enough to keep typical F&I personnel busy as they arrange financing, do disclosures, cover compliance issues, complete paperwork and pitch products ranging from extended warranties to wheel-protection plans.
“When I think about what F&I managers have to go through, I have high regard for them,” says Dale Jones, Ford Credit's vice president-strategic planning and business operations.
Two particular F&I duties can clash as cross purposes.
One is to get customers in and out quickly, lest they grow impatient and later complain about it on customer-satisfaction surveys or, worse, social-media websites.
“A bad customer experience can come back and bite you,” says Greg Oltman, F&I director for the 67-store Van Tuyl Dealer Group, one of the nation's largest privately owned dealership chains, with 160,000 vehicle sales last year.
But the other duty can slow down the process. It is the legal need to cover all the matters required by government regulations, from explaining financing provisions to complying with new federal Red Flag Rules enacted to thwart identification theft.
“The compliance burden is placed on the F&I managers,” Jones says. “They have to make sure everything is right, explain it and make sure the customer is satisfied and feels good about the purchase.”
Generation Y buyers in particular “want to come in and within 15 minutes buy the car they picked out,” says dealer Michelle Primm, managing partner at Cascade Auto Group in Cuyahoga Falls, OH.
“We have to let them know we must take it slower and dot the ‘i’s and cross the ‘t’s or we could all end up in court,” she says. “It just takes longer, with more regulations, the Red Flag Rules and everything else that's going on.”
But it's not just young dealership customers who can get fidgety, says Kanellis, finance director at the Freemont Automotive Retailing Group.
“Everyone is in a hurry,” she says. “They'll say, ‘I've got to pick up my kids’ or ‘I've got to do this and that.’ I say, ‘Yes, yes, yes,’ and keep on going.”
Time-conscious F&I managers use certain tricks of the trade.
One is to go out to the vehicle-selling area to first meet customers and take care of preliminaries there. It reduces time spent in the F&I office where the clock is ticking.
“I get out of the office all the time,” Kanellis says. “It puts the customer at ease if I start out on the showroom floor.”
Another clever practice of savvy dealers is to use the mandated compliance requirements in ways that build customer trust.
“If I am doing credit scores and Red Flag disclosures, putting the various (documents) in front of the customers helps,” Kanellis says. “They may say, ‘What's all this?’ But they're fine once they see and understand the disclosures.”
The Red-Flag Rules went into effect in January. They require dealerships to take specific measures to combat identity-theft crimes, such as buying a car by falsely claiming to be someone else.
Some dealers had worried the regulations would place undue investigative burdens on them and alienate customers by subjecting them to greater scrutiny.
But it has worked out well, Kanellis says. “Customers like it when I explain someone could try to buy a car under their name. I like the compliance. It is easier than a lot of people thought.”
The law is intended “to make sure you are talking to the person you think you are talking to,” says Andreas Hinrichs, Mercedes-Benz Financial's vice president-marketing.
“We love compliance at Mercedes dealerships,” he says. “The cost of non-compliance is greater than compliance.”
F&I managers at VanTuyl dealerships “have gotten real good at compliance,” Oltman says. “If you get it down and learn to sell with it, it takes care of the customer.”
Many F&I staffers use modern technology. For instance, all 350 Mercedes dealerships in the U.S. are armed with iPad electronic tablets to expedite the F&I process. BMW stores have converted to e-contracting. Mercedes and other brands are headed that way. “Paper is the enemy,” Hinrichs says.
Technological progress happens “whether you are on the bus or off the bus,” he says. “We decided to drive the bus.”
It can be hard to keep up with the latest technology, “but you have to,” says Kanellis. After all, her customers are.
“People will be right there in my office using their mobile devices” to check F&I information online, she says. “That's never happened before.”
Prior to this, a young dealership customer “might call dad” to ask a car-buying question, Hinrichs says. “Now they're Googling.”
Hinrichs, Kanellis, Oltman and others participated in a panel discussion, “The Evolution of the F&I Office,” at the American Financial Services Assn.'s annual vehicle-finance conference.
But, says Hinrichs: “We're not seeing an evolution, we are seeing a revolution.” And it's moving fast, he adds. “Processes we'll see in the next five years, we probably haven't even thought up yet.”
It's a revolution most dealers will join because of F&I's role as a profit center. “A lot of dealerships have survived on F&I,” says Stephen Wade, chairman of the National Automobile Dealers Assn.
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