We are always looking for silver linings when things are going haywire in life. The last 6 months navigating the COVID-19 crisis as a nation is no exception. Every day it dominates the national and local headlines and there is nothing positive about it. It’s awful, it’s still here, and it has left an indelible mark on society.
Every industry has been affected in some way and where some businesses have thrived, others have struggled and still struggle today. Again, not much good news across the board.
For the automotive industry, we saw a sharp drop-off in the end of Q1 and most of Q2 with sales and F&I numbers bottoming out. There has been a recovery in the last few months and the summer was not as dismal with used autos carrying the day and a nice rebound to PVR.
So, for F&I, can we point to anything positive that has come out of the COVID-19 pandemic? Are there positive changes that have come as a result of the shutdowns and ‘new normal’ that we are all living within now?
Let’s take a look at a few good things that have come out of the pandemic and how F&I has been able to turn lemons into lemonade.
Used Car Sales Up = Higher PVR
Even before COVID-19, the industry was already seeing a noticeable uptick in new car pricing. Payment are topping out at over $500 per month average and the average new car price is well over $36k. Enter COVID-19 and now you have more customers looking at used cars. Worry over income and the high new car prices have made used inventory more appealing…and we know what that means.
Used cars offers a higher margin for financing and more opportunities to sell VSC. All good news for F&I.
Back in late March and through April and May, though there were fewer customers in the showroom, there was a surprising benefit to the slower lot traffic. F&I managers nationwide were reporting decent PVR stats in large part due to having more time to spend with each customer in person and in some cases, via online web conference.
Without having to rush through one deal after the next, now F&I managers could take more time to ask the right questions, dig a little deeper, and give a measured presentation. Sure, there were not as many overall deals and conditions were not ideal with furloughs and shortened staff shifts, but this was an unexpected bright spot during some dismal months.
Related: How F&I can play a part in increasing customer retention
A Better Customer Experience
COVID-19 forced every business nationwide to re-examine protocols for cleanliness and safety. Dealership and F&I in particular were no exception. Offices had to be clean, distance needed to be further, and even tablets had to be disinfected after every deal. Masks are a given now.
Where is the positive in this? Think about how many F&I offices you may have been in as a customer yourself and think about the pens that everyone touched all day. The touchscreen that had a day’s worth of fingerprints on it. The desk that had been leaned on all day by other customers. You get the picture. But back then we thought nothing of it. Now we do. Having the F&I office cleaned between every customer, even down to offering a sanitized, prepackaged pen to sign docs is really better for the customer. Pandemic or not, this needed to happen.
Into the 21st Century, Kicking & Screaming
This was a tough one…would F&I departments across the nation be willing to finally embrace their role in digital retailing? The positive here is clearly yes, they did. Some dealers had been avoiding this for years with the notion that the old way of delivering a car would never change even with online competitors like Carvana lurking around the corner in most major markets.
But over the last few months, dealers have been reporting that they were able to handle the digital delivery constraints that COVID-19 placed on everyone and still made money. For years the industry has been warning this day would come. You have new generations of buyers that want to be able to choose an in-person sales and delivery process with the option of going digital. Now they have dealers who can adapt more easily. A BIG positive here.
It’s easy to get mired down in the negative new stories surrounding the pandemic and the death toll that doesn’t seem to stop, but for the automotive industry and the F&I managers that help drive the revenue that keeps the doors open, these few silver linings have been a bright spot. And don’t we all need a little of that right now?
Related: Conducting customer interviews online to discuss F&I options
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