A shift in the auto market
The used-car market is booming, making it an opportune time to offer valuable F&I products to the consumers. The global chip shortage has disrupted the global supply chains and impacted the delivery of new vehicles. As the auto retail industry pivoted towards the used cars inventory to keep up with demand and used cars become the industry’s hottest commodity, there is a big opportunity for the F&I department.
With the businesses reopening, stimulus checks, and tax refunds deposited in people’s bank account, the demand for used cars will increase significantly. Evidently, as every dealer focuses on selling used cars, the supply of used vehicles is starting to tighten. However, the silver lining for the dealers is that the consumers will begin to consider different models to increase their prospects of getting a good car for a reasonable price.
Source: Automotive News, April 26, 2021 issue
Opportunities for you to sell F&I products as the market shifts from new to used inventory
As per U.S. automotive social intelligence update, the volume of posts related to chip shortage surged in March 2021. It shows consumers are aware that the chip crisis is impacting the supply of the new vehicle. So, they are open to buying used cars.
According to a finding from an automotive news research and data center survey, 81% of all respondents, including dealers, feel the chip shortage will severely impact the way they do their job. In addition, 88% of respondents think that the chip crisis will affect how their companies conduct business. Most concerning for all respondents is how the problem will impact their ability to keep up with the consumer demand.
Amidst the new vehicle shortage and emphasizing used cars inventory, the dealers must ensure that their F&I products offering aligns with the consumer’s needs opting for a used vehicle instead of a new one.
Therefore, being proactive in your approach to understanding consumer needs and offering consumer-oriented products and safety products such as Brake Plus, Cilajet, and Forever Start, will add value to the purchase. Additionally, a tangible product that you can give to the customer as a part of their purchasing vehicle could considerably increase customer satisfaction.
Insights into understanding consumers’ needs to match F&I products
Your customers have varied needs that match several F&I products. For example, some products speak to drivers’ safety while others can be combined to better meet consumers’ lifestyle and vehicle protection needs. When a consumer is buying a vehicle, whether it is new or used, it is a treasured asset or valuable investment for them. Thus, they want to safeguard the vehicle along with its look and feel. That being so, a consultative approach to guide the consumers could help match products to meet the consumers’ needs.
For instance, consider a scenario when you offer a bundle to the customer:
Most people lose interest after a third explanation. Car buyers are no different. Bundled products allow you to provide more, with a shorter presentation. Express 5 is bundled asset protection that covers the appearance of the vehicle. It includes:
- Roadside Assistance
- Windshield Protection
- Tire & Wheel Protection
- Dent & Ding Protection
- Key/Remote Protection
Your customer’s value
- Exceptional benefit at a lower cost than purchasing coverages individually.
- Overall appearance is covered – their car will look better longer.
- Potential increase in future trade-in value.
- Presenting fewer items makes it easier for your customer to say yes.
- Less time spent in the F&I office may improve CSI scores.
How you sell it
- Share the excitement with your customer by pointing out vehicle features.
- Ask open-ended questions that trigger customer stories and share your own that speak to pain points.
- Educate them on the cost to replace a smart key, premium wheels & tires, and their high-tech windshield.
- Find out if they know that the appearance of their vehicle impacts its value.
A five steps approach to sell your F&I products:
Considering a classic five-step methodology for selling the products could prove beneficial in closing the deal faster. Let us look at the five essential steps of selling:
- Qualify: A question or statement you would ask to orient the customer to the topic you are going to discuss.
- Create Needs awareness: This step is a guided discovery process leading your customers to discover or realize the needs of the product or service.
- Show Need Satisfaction: Showing the customers the brochure and walking them through it and discussing how you would cover them in various areas.
- Trial Close: This step is an affirmation that you have your customer’s buy-in. It should help you determine if the customer is ready to close.
- Close on a Choice: Give your customers two or more choices as a call to action. The number of alternatives must be very few; otherwise, the customers may get analysis paralysis, so they choose to do nothing rather than making a choice.
Furthermore, the sixth and seventh steps come into play if the customer objects or asks a question. In that scenario, take the following steps-
6. Redirect: When you encounter an objection or resistance from your customer, this step will let you resolve the concern by redirecting an objection, which means asking questions in a conversational way to understand the cause of resistance.
7. Re-close: Finally, giving two choices to the customers, both of which end in a sale. When a customer asks about the product’s price, provide them the information, and re-close with a course of action. For example, when does your house payment comes due? Would you want your product payment to come payable with your house payment or more towards the middle of the month? Here, the buyer is induced to decide on two administrative options rather than on a significant purchase.
Offering customer-centric, safety, and security products
Typically, about 80% of customers choose to finance when buying a vehicle. However, in the current situation, when finding the desired vehicle while staying within one’s budget might not be as easy, it is essential to ponder on circumstances such as theft. GAP waiver can potentially save customers thousands of dollars. GAP coverage covers the unpaid balance of an auto loan in the event of a total loss of the vehicle. Furthermore, many customers assume collision and comprehensive insurance coverage offers complete protection if their car is stolen. However, if they are financing or leasing a vehicle and experience a total loss, they could be in for a harsh reality. Thus, informing the consumers about the potential loss in the case of unrecovered theft would be a wise move.
Similarly, ancillary F&I products such as tire and wheel coverage, glass and windshield protection, key fob replacement, and exterior appearance products serve well to the customers’ needs and help your F&I department meet the financial objectives.
With these insights, the F&I department will be better equipped with the right products to help the customers’ shopping vehicles in this unprecedented time and beyond.
We can help you
We at PRO Consulting strive to help dealers serve their customers better. In the time of supply chain disruption caused due to the pandemic and chip shortage, we can assist you in navigating the situation while growing your profits. Reach out to us for custom F&I products, reinsurance programs, sales and F&I training, and compliance audit.