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Dealers face F&I threat as customers shop around for best deals

Dealers need to rethink their F&I strategy as car buyers are more likely to shop around on a much wider scale for the best finance deal in much the same way as they would for the car itself, warns Peter Landers, consumer finance expert with Grant Thornton’s Leasing & Consumer Finance advisory team.

“Just as car-buyers are arriving at dealers with a very good of idea of the exact vehicle they are considering, the price they want to pay and the value of their part-exchange, increasingly they are more likely to have pre-arranged finance so reducing the dealer’s opportunity to sustain F&I earnings,” Landers argued. "This is compounded by the increasing concerns around regulation and the constant need to ensure that sales processes stand up to scrutiny.”

Landers draws on his 25 years’ experience in automotive finance to deliver an insight into the current market as well as looking at the future when he speaks at this year’s AM Used Car Market Conference which takes place at the National Motorcycle Museum in Birmingham on October 9.

“Dealers are facing even greater challenges as we all know. Despite pressure from government on banks to increase lending to consumers and SMEs, this is not borne out in recent data.”

But it’s not all doom and gloom, according to Landers: "Dealers need to simply re-evaluate their F&I strategy, continue to put pressure on partner finance companies to develop innovative products and solutions and consider new funding options to uphold finance penetration and earnings.”

More information and details of how to book your place at the event are available here

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  • Motor Consultants - 18/09/2012 11:16

    Recent figures have shown that the level of finance lending and penetration at dealership level is very much on an upward curve, but it is important to make sure that this growth is then reflected in increased margins wherever possible as opposed to order taking. It is widely acknowledged that a significant amount of this growth can be attributed to low-rate or 0% manufacturer schemes which offer little or no commission to dealers, therefore, it is vital that dealers have a robust sales process in order to capitalise on the sale of added value and insurance products in a compliant manner. It is also true that in today's internet savvy "go compare" marketplace dealership staff need to remain alive to the threat of banks and direct lenders and receive expert training as to how to overcome customer objections. Dealers also need to also look at what they can do to help themselves. For example, when a sales exec qualifys a customer and finds out that they have a "pre-arranged" loan, they can use their conversion skills and the consumer credit directive (CCD) to their advantage, as if they can offer the customer a better overall package, the customer can always invoke their right to cancel their "pre-arranged" loan within the cooling off period. A big issue for dealers is that many (not all) dealership staff do not possess the experience to ask the probing questions that would put them on the front foot as opposed to the back!