New Technology Drives F&I Profits

Helping dealers

Helping dealers better determine how they continue to grow and strengthen their businesses in the future will be more important than ever as changing demographics drive shifts in the automotive industry and the F&I office. BY CAROL WHITE

With the rapid pace of technological advances being made in automobiles today, F&I departments are faced with keeping up with the ever-changing needs of the marketplace. Protective Asset Protection is addressing those needs with the introduction of a new product designed to grow with the changing needs of dealers and their customers. “With a product like a service contract, it is essential to stay abreast of changing needs resulting from advancing technology,” said Scott Karchunas, president of the company.

Protective Asset Protection has been a player in the F&I solutions business since 1962 and currently serves more than a thousand dealerships across the United States. Its sales, product management and marketing teams work hard to keep up with future trends by conducting research and leveraging long-standing industry knowledge, according to Karchunas. “In addition, we are constantly communicating with our agents, dealers and other industry professionals to make sure we are prepared for emerging trends.”

Protective, a wholly owned subsidiary of Protective Life Corp., unveiled its newest offering – the Protective Vehicle Protection Plan – last month at NADA’s Convention and Expo in San Francisco. It is a newly designed VSC that aligns with today’s advanced vehicle and consumers’ needs, according to Karchunas, who’s been with Protective since 1988. “Above all, this is a service contract platform that will grow with the changing needs of dealers and their customers.”

The new product is designed to meet the needs of the evolving new vehicle marketplace. “To ensure that this new product is positioned for today and tomorrow we have focused on developing a protection plan that focuses on key changes in the auto industry, particularly in the areas of technology and safety. We are continuously evaluating the landscape and we are confident this new service contract surpasses most franchise auto dealer’s needs,” he said.

He went on to explain that auto is the third fastest growing technology segment, behind phones and tablets, making it imperative that F&I departments continue to be an active part of this evolution by offering products that provide up-to-date coverage for the new technology and safety found in today’s vehicles. “Technology is evolving quickly and traditional manufacturers are turning to technology companies to design and develop center-stack interfaces, as well as other technology for the vehicles. Manufacturers are shifting from designers and developers of these technologies to thoughtful integrators. This trend may speed up the evolution to more autonomous, safe and productive driving. Also, technology is continuing to change the way cars are retailed – beginning with the lead generation process and continuing with a search for a more consumer-friendly and efficient sales process.

“The complexity of the technology used in vehicles is only going to grow. Consumers have now come to expect the latest technology in their vehicles, and with the sheer number of millennials in the market, the focus on automotive technology is growing at a rapid pace. Manufacturers have no choice but to give consumers what they want and those of us providing F&I solutions are going to have to seize this as an opportunity in terms of the products and services we offer, as well as how the products are offered.”

While millennials are the largest demographic segment since boomers – they represent 40 percent of the U.S. car-buying population ­­– they have been slower to enter the market than their predecessors. But this doesn’t diminish their influence on auto and F&I sales. Karchunas believes that sales and marketing techniques aimed at millennials will need to provide information earlier in the purchase decision process. “They will also expect products and processes that better meet their individual needs,” he said. “Today, car buyers average only around 1.6 dealership visits, that’s down from five-plus less than a decade ago. These trends are just a few of the reasons why we have developed solutions such as consumer-facing websites that dealers can use to educate their consumers about the value of having a vehicle protection plan.”

Aside from technological advances, dealers still need to pay close attention to other issues facing F&I, according to Karchunas. For example, the influence of F&I inside the dealership should continue to grow in several ways; among them is driving future customer retention through the sale of thoughtfully selected products. “One trend to keep a close watch on is product placement within F&I,” he said. “As the lead generation and sales process evolve, the ways we expose consumers to F&I products will evolve along with the ways any post-sale follow-up may occur.”

Compliance remains another area on which dealers need to maintain focus. “As we’ve seen over the past couple of years, the CFPB & FTC continue to exhibit their influence on the auto industry, leading to a need to closely monitor compliance regulations. Dealers are going to have to work with their service contract providers to make sure they are well informed.”

And of course, working with an F&I partner to maintain a customer-service focus and deliver products that provide value to their customers will play a major roll in generating profits in F&I. Karchunas is confident that Protective Asset Protection can help dealers do just that. “By listening to and implementing feedback, we have simplified many aspects of our business. Everything from our internal processes to our product portfolio has been streamlined to make it easier for dealers and their customers to do business with us.

“Our focus is to provide dealers with the products and services they need to realize the full potential of their customer relationships. We are guided by our core values of doing the right thing, serving people, building trust and simplifying everything to deliver value to our dealers.

“Trust is built with our dealers through long-term relationships and our offering of innovative solutions that maximize their F&I revenue and customer satisfaction. Our employees are passionate about the business and the independent agents we work with are among the best in the business because they know how to help dealers grow their F&I business.

“We help increase day-to-day productivity through training, professional claims processing, experienced underwriting and technology. We have been at this for over 50 years, paying out more than $1.9 billion in claims. It’s important to us that when a dealer signs on to one of our programs they can rest assured that they have a reliable provider they can count on so they can focus on running their business.