Dealers need to innovate because the traditional F&I profit centre is changing, says Andrew Binns, a director at insurer Premia Solutions. He believes they can benefit from the UK’s rash of potholes following the severe winter.

“The credit crunch and increased compliance have combined to create an environment where finance penetration has commonly improved, but where profit per unit has fallen,” he said.

“By increasing the product range, dealers can help themselves and their customers – innovation is the key.”

Premia’s Complete Wheel Protection is being sold by 15 groups in the AM100, he said, retailing at around £450 with a margin of about £250.

Binns claims a three-fold benefit for dealers: front end income (typically £100), back end profit and increased customer satisfaction and advocacy.

“Dealers are seeing a static bottom line for finance, but insurance has changed dramatically,” said Binns.

“PPI has virtually disappeared, leaving GAP as commonly the only product available in the showroom. But consumers are more risk averse in times of austerity and other insurance products can help to boost F&I income.”

Premia’s new product covers wheels and tyres and is aimed at car owners worried about hefty repair bills after pothole damage.