The results of a new poll released in May by The Associated Press-NORC Center for Public Affairs Research state that two-thirds of Americans would have difficulty coming up with the money to cover a $1,000 emergency. According to the poll, this spans all income brackets with 75% of people in households making less than $50,000 a year, 67% of those in households making between $50,000 and $100,000, and 38% of households making more than $100,000 all stating they would have difficulty coming up with $1,000 to cover an unexpected bill.
The poll also states that one of the main reasons for this lack of savings is lack of wage growth. 46% of workers said their wages remained stagnant in the last five years, and 16% said they’ve seen salary cuts. During this time, costs for basic needs such as food, housing and health care have risen.
Furthermore, the poll found that a third of Americans would borrow from a bank, friends, or family, or put the bill on a credit card to pay for the unexpected expense. 13% would skip paying other bills and 11% would not pay the bill at all.
Whether you are selling a luxury vehicle to a super-prime customer, or a pre-owned vehicle to a subprime customer, this information is a goldmine opportunity for your F&I manager to relate your F&I products to pressing consumer needs.
Based on aggregated claims data for 2015, EFG found the average vehicle repair bill to be $937.83, just shy of $1,000. Meanwhile, with a high-tension political season, it can be expected for economic change to begin occurring in Q4 of this year.
Savvy post-recession consumers understand the difficulty this economic climate puts them in, and they want to work with companies that offer services to help protect them from life’s uncertainties. By presenting F&I products in this light, and demonstrating the consumer value up-front, your F&I managers are in a better position to reduce objections and the amount of time spent explaining the products offered. In addition, your F&I director has the opportunity to work with your F&I managers to craft this information into a “close” to overcome consumer objections.
For example, let’s assume a customer says that they don’t need a vehicle service contract as they will “Take their chances”, or assume the risk themselves. Your F&I manager can then review the statistics for the demographic the customer is in and craft a logical discussion that appeals to the clients financial sensibilities. Here is an example of how that conversation could unfold:
“I understand. I wouldn’t expect you to take advantage of the benefit if you don’t see a value here. You may not be aware of this, but the average vehicle repair bill in our service department is around $900. Additionally, a recent AP poll just published shows that 67% of Americans in your income bracket are unable to come up with a $1,000 in the event on an unexpected bill. Would you agree that it would be a challenge for you to do so if you found yourself in that situation and on a tight budget? By taking advantage of the vehicle service agreement, you can avoid the high cost of an unexpected repair bill having to come out of your pocket when you least expect it. So can you now see a value in protecting yourself financially with the vehicle service agreement? It just makes sense, doesn’t it?
Equipping your Team
While you might see this relevant information pass your desk on a daily basis, how often do you think your F&I managers may see it or utilize it with their clients? By taking the time to share, discuss, and create a game plan on how to use this valuable data, you have the opportunity to set them up for success in meeting your dealership’s profitability goals.
At EFG Companies, we apply our almost 40 years of retail automotive experience within our training curriculum to maximize operational efficiencies, enhance customer service, ensure complete compliance and drive more sales. Our AFIP-certified client services team works with dealership management to equip their team with everything they need to succeed, from developing closes based on industry and consumer trends, to working with their lenders to create a synergistic partnership. Contact us today to put our training to work for you.