There is no end to what can be purchased online in 2024. As consumer adoption and shopping preferences continue to favor the online buying experience, many auto dealers are adapting their practices to accommodate the online shopper. But what about F&I products? Can they be effectively sold online and are consumers receptive to this sales approach?
Traditional F&I Selling Practices
Traditionally, the F&I sales process has been conducted in a face-to-face manner, allowing the salesperson to consultatively walk the buyer through their options. This allows for a more personal needs assessment and a tailored explanation of benefits and costs for any programs under consideration. It’s as much education as it is sales, which begs the question — can F&I truly be sold online and, if so, what are the potential benefits and risks?
F&I Sales: The Online Approach
Several F&I providers and auto dealers have begun exploring the possibility of selling vehicle service contracts and ancillary coverage plans either partially or completely online. This development mirrors the shopping preferences of today’s consumers, particularly Generation Z. Consumers are moving toward a multi-channel buying approach, incorporating extensive online research with an in-person close. According to Cox Automotive’s 2023 Car Buyer Journey Survey, 71% of consumers indicated they will likely complete their next vehicle purchase in a hybrid manner, interacting with Dealers in both an online and in-person manner.
One such example is JM&A’s Virtual F&I, which aims to “solve pain points on the consumer side, allowing for faster service times, while also ensuring retailers have access to the best possible F&I manager even when their in-store representative is serving another client” (-CBT News Article). By deploying a virtual team of online associates and trainers nationwide, JM&A looks to respond to market demand and enable Dealers to service consumers’ financing needs whether online or in-person.
In addition, a host of dealerships around the country have begun incorporating online F&I content into their web experience to allow consumers to research available F&I programs, preparing them for a more informed car buying experience. With that said, the jury is still out on the adoption and success of the online F&I buying experience.
Online F&I Growing Pains
According to a recent survey by Protective Asset Protection, which surveyed over three hundred Dealers, 53% of respondents indicated that they were unsure about whether F&I products should be sold online, despite the performance gains that many participating dealers are experiencing.
“The impact of online F&I sales in the automotive industry is undeniable. While some dealerships are reaping the rewards of embracing digital retail, challenges and concerns remain. Striking a balance between online convenience and in-person expertise is key.”
Some key concerns include limiting the relationship-building that effectively occurs during an in-person sales experience and the impact this may have on customer loyalty as well as sales revenue. Furthermore, many dealers have expressed concerns over transparency. An online sales experience, while convenient and expedient, puts the onus on the consumer to understand the terms, exceptions, and costs of F&I programs without the personal consultation of a trained sales consultant. While the future and efficacy of online F&I sales is a developing matter, it’s clear that consumer demand and preferences will continue to drive the actions of F&I providers and Dealers alike.
The Value of Online Education in F&I
One thing is clear — giving consumers more information about available F&I programs online can help to inform potential buyers when they eventually arrive at a dealership. It can also prepare the buyer for the F&I sales experience, which many consumers find to be confusing and even pushy. Dealers who explain the F&I process, do a good job of describing available products, and set transparent expectations online can improve the customer experience and drive more sales.
“However, our study shows that the current F&I process breeds consumer skepticism. By changing when and how the shopper is introduced to F&I products, dealers could see a dramatic change in consumers’ likelihood to buy F&I products.”
About AutoXcel
For over 20 years, AutoXcel has delivered innovative F&I solutions with personal service and industry-leading Claims support. With a portfolio of over 30 programs ranging from comprehensive Vehicle Service Contracts to Ancillary Bundles, Lease Wear and Tear Programs, Tire and Wheel packages, and more, AutoXcel is your trusted and responsive F&I provider.
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