F&I scrambling to join digital world

A few months ago, virtual finance and insurance presentations were little more than rumors in the auto retail world. Select dealerships were piloting digital presentations and a handful of F&I product companies and dealer service programs were conducting tests in limited markets.

But the spread of COVID-19 shocked the U.S. economy and upended the F&I office. And retailers weren't ready.

Some dealerships with robust digital retailing offerings, such as McGee Toyota in Claremont, N.H., transitioned rapidly to fully digital sales. For those that decided to leave F&I out of online processes, though, the road to remote sales was more challenging.

Adam Marburger, president of F&I training company Ascent Dealer Services, said dealerships floundering to assemble a digital experience are looking to their neighbors.

"Dealers are just copying each others' messages," he said. All of a sudden "they're in digital retailing because the dealer down the road is doing it. But they don't have a plan."

Tapping dealership trainers, software providers, 20 groups and social media, dealership employees are seeking insight in how to shoestring an F&I process for remote product presentations and financing arrangements.

What some don't realize is many of the capabilities for virtual deals already exist in the tools at their dealership. Ritch Wheeler, vice president of training for American Financial and Automotive Services, based in The Woodlands, Texas, said one question his company has fielded in the last few weeks from dealerships is: "How do I send retail installment contracts to customers?"

That question is just one indicator of how far behind some stores are, Wheeler said.

"This technology has already been here and these people haven't been using the tools they've already been given," he said.

Jack Kare, digital performance manager at Pat Milliken Ford in Redford, Mich., said digital tools are only worth the investment if a dealership prioritizes leveraging them.

"There are so many dealers that have the same exact tools as us, but how come they're not selling as many cars as us? Those are the same guys that are scrambling," Kare said.

Many dealerships, however, are catching on quickly. Dealership adoption of Cox Automotive digital retailing solutions — which include desking functionalities, vehicle listings, credit approval and funding and digital contracting — increased 189 percent month over month, according to a spokesperson.

Dealerships that launch virtual F&I programs without a plan open the dealership up to a host of compliance liabilities. Experts say that even though the format has changed, F&I managers are bound by the same compliance concerns in virtual deals.

"Dealers that were not prepared for this change that are trying to find solutions on the fly are struggling with how to do it and be compliant," said Shannon Robertson, executive vice president for the Association of Finance and Insurance Professionals, a nonprofit group that offers a compliance certification program for dealership personnel.

Presenting F&I products outside of an F&I office is one of the larger challenges, where dealerships may skip steps to save time and close a sale.

Compliance experts advise dealerships to maintain meticulous records of F&I presentations, even through virtual means. Recording F&I product presentations conducted over video conferencing platforms could help or harm a dealership, depending on their processes.

"That's Exhibit A for any kind of lawsuit by the consumer or from a lending source," said Eric Johnson, a partner at Hudson Cook. "You better have a really good closing script that you've had reviewed by an attorney, and you do it right each and every time."

Even dealerships with robust digital retailing processes were hamstrung by no-contact sales orders. Most digital car-buying experiences were developed to save time, not lives.

Very few dealerships were ready for a fully remote F&I experience, Johnson said. But dealerships shouldn't relax standards in the face of new challenges, he said.

"Whether it's done on Skype, over the phone or in person, you have the same compliance responsibilities you have to meet," he said.

Dealerships with more robust digital processes were better equipped to sell F&I outside of the dealership. In fact, some stores prefer it.

Jason Quenneville, general manager at McGee Toyota, says his store will likely expand remote sales once quarantine ends. His nine salespeople communicate through a Zoom meeting, which is streamed on his computer every hour that the store is open.

Salespeople at his store conduct F&I presentations at customer homes with iPads. The average F&I profit per vehicle retailed is about $2,000, he says.

The store, which had sold about 80 cars per month when Quenneville came on in October, is tracking to sell 72 vehicles remotely this month.

"We weren't going to stick our heads in the sand," Quenneville said. "We wanted to see what we could do so we had something to come back to when this was over."