Kelly's Korner - Add Products to Increase Profits
In many dealerships, customers are beginning to trade in their vehicles just prior to end of the factory warranty period. When this trade cycle occurs in the marketplace, the sale of service agreements slows, as customers recognize their vehicles will still be in warranty at trade-in. No matter how skillful your F&I producers are at selling, they will find it difficult, if not impossible, to sell service agreements on short term leases (which, by the way, are currently advertised nation-wide).
If you are a dealer who continues to rely upon reserve and service agreements as your sole source of F&I income, now is the time to look to additional products to increase your F&I income stream.
Prepaid Maintenance is a Plus
One recourse is to proactively support the factory prepaid maintenance program or develop one of your own. Either way, you will add a profit center at the time of the vehicle sale and offer a service that brings the customer back to the shop as long as they own the vehicle. Is it a huge moneymaker? No, but it is something, and something is better than the nothing that many dealers are looking at now.
Prepaid maintenance represents value to the customer and guaranteed business for the shop. The discounted rate is offset by not giving up the work to an independent shop down the street in your own hometown. Prepaid maintenance also provides an opportunity to forge a strong business relationship between the shop and your customers. People buy from those they like and trust and will keep returning to spend additional dollars on products and services that are not covered by the prepaid maintenance.
Accessories Add Up
Accessories give your customers an opportunity to customize their vehicles, and open the way for F&I to make a profit on a hard-add item that can be included in the amount financed.
If the traditional F&I profit areas are not being utilized due to lack of value, funding, or presentation, then depart from the ordinary and find something your F&I managers can excel in. Just by giving a customer a list of customizing options to review while the F&I manager is completing data entry can add $10K-$40K a month to your bottom line.
As you will see from the example that accompanies this column, you can offer your customers a list of items that can be installed and added to the loan, or paid with cash or credit card. Show them a retail price, then show them a “today” sales price and ask for the order.
The advantage is yours when you profit from the product alternatives that prepaid maintenance and accessories offer.
“Kelly’s Korner” column, Oregon Dealer News, February 2007