F&I has always been tasked with handling all the aftermarket sales over the years. VSC, GAP, tire & wheel, and many other smaller products and protections. They are trained in the fine art of presenting everything all at once and hoping that something sticks. It’s not easy and with more products, it can be overwhelming for the buyer, too.

Could there be a better way to get a higher close rate on these smaller appearance ancillaries? Most dealers cannot say they have a penetration rate much above 10-15%.

It hardly seems worth it to try with numbers like that.

Those of you working in F&I now know the challenge of convincing a customer to purchase a package that costs $500 or so on average. The customer pushes back that the factory probably already applied it and why pay for it again.

It’s tougher trying to squeeze those appearance protections in between the high-margin products that require a deeper level of consultative selling. A customer can easily get frustrated and say no to everything, including appearance protection.

F&I Can Narrow Their Focus

 If you move appearance programs to a Line 1 preload on every car you sell, you solve the penetration problem you have within F&I. As a preload, it’s one less thing that the F&I manager has to present. It’s already there either as wet or dry application, and full disclosure makes it stick at a much higher percentage.

Instead of being ok with 10% penetration rates, suddenly that number skyrockets to 70-80%. Fewer customers will push back if it’s presented properly all throughout the process with sales.

The more they hear about how it enhances their car’s interior and exterior and how it can help at the time of trade or resale, they are more likely to accept it as part of the price upfront.

Everyone is happy. But what comes along with the higher penetration rate?

More profit.

How It Looks For the Bottom Line

Your store sells about 100 units per month. In the F&I office, you are hitting at 10% penetration on appearance packages. That’s 10 per month at $495 per deal. $4,950 is okay but then you have to remember to subtract your cost of the chemical and labor. If your hard cost is $150 per deal, your profits are now around $3,450.

Now let’s say you preload an appearance package at $295 on every unit. You get to 80% percent penetration at a hard cost of $50 per unit.

80 appearance packages net your store around $19,600 front-end profit.

And F&I has nothing to do with it. They could focus on the bigger products that carry bigger margins like extended warranties, GAP, and maintenance. Those products lend themselves to a more consultative sale anyway. Plus, F&I CSI scores may improve by having the buyer experience a more streamlined process to paperwork and delivery.

With your store probably still trying to navigate through the COVID-19 recovery, that’s critical profit that is badly needed for many stores right now. And of course, this is assuming your store has enough inventory to make these numbers work this way. But even if you don’t, this is a good strategy to start implementing now so you know how to roll it out when inventory levels return.

Why Don’t More Dealers Embrace This?

Good question. Dealers have historically seen preloads for appearance protection as a tough sell for customers or something that they fear will be viewed negatively.

Preloading appearance is still a fairly new concept in the dealer space. Remember, F&I is usually tasked with presenting all aftermarket products. They have to do the heavy lifting after the customer has been there for hours trying to find the perfect car and negotiate the best price.

The way to overcome this fear of customer pushback or perception that you are trying to pull a fast one is to be transparent early and often. Have the addendum sticker right below the moroney and have the salesperson talk up the exclusive appearance protection that EVERY car at your store includes. Make it your own – private label it.

Preloading should not be looked at as taking money away from F&I. There are clearly positives to streamlining the F&I selling process that could yield higher PVR and better commissions for your staff. It’s worth a look if you have an administrator who has lower base rates.

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