Dealers need to adopt even better best practices which are honest and transparent if they are to keep GAP as a vital revenue stream, according to Adrian Foster, director of Remit Showroom which provides F&I training and recruitment services.
Foster will breathe new life into GAP and show dealers how to maintain its popularity and win over public opinion, which is increasingly suspicious of insurance products, when he speaks at AM’s Used Car Market Conference on October 10 at the Ricoh Arena in Coventry.
Foster said: “GAP is both extremely profitable for dealers and a useful product for consumers but dealers need to be mindful of profit versus fair price and find the right balance if it is to continue to figure highly on add-on sales.
“It can be very tempting to make as much money as possible from a single sale which delivers both high margins for the dealership and excellent commission for the sales executive but that kind of strategy is short sighted and dangerously short term. As consumers are much more aware of the products available and their market price, it has become much more important to ensure consistency from price to service is maintained throughout an individual business, franchise or group.
The new Financial Conduct Authority (FCA) has launched an investigation into the value of add-on products, including GAP and Foster believes dealers should be reviewing their F&I processes to make them as open, honest and robust as possible.
In addition, dealers need to understand the implications of commission disclosure and be prepared to face questioning from today’s extensively informed consumer. Foster will explore ways in which dealers can operate a commission disclosure policy and when it is necessary to provide that information to customers.
He added: “All consumers understand businesses will make a profit on all products they sell whether it’s the vehicle itself or the F&I products but, quite rightly, no customer expects to be overcharged.
"By following a consistent F&I policy, dealers will win the trust and respect of customers who are more likely to recommend and refer whether that’s by word-of-mouth, social media or online customer reviews. As consumers make their views on products and businesses more widely known, it will support the sale of F&I products and reduce the likelihood of consumers buying products such as GAP independently.”