Categories
Industry Trends

Focus on What You Can Control

We’ve all heard pundits and analysts make predictions about everything under the sun. These days, the economy and political wrangling provide rich fodder. We at EFG also make predictions as part of our strategic guidance to our clients and partners, backing them up with nearly 50 years of experience, including 11 presidential elections, 22 Congressional elections, countless state and local contests not to mention the Great Recession and a pandemic. We’ve been there, done that.

All that to say, we recommend retail automotive dealers set a tone of operating with certainty and focus their efforts on F&I, training customer service best practices, and differentiating their dealerships based on the value provided. We have all experienced challenging markets like this, and volatility is nothing new in our industry. We know that when front-end margins shrink, back-end margins must expand.

Fortunately, dealers today have an ace up their sleeve! The new labor force in retail automotive is extremely well-educated and eager to be successful. But for the last four years, dealer sales and F&I teams have had an easy time of it, responding to an eager consumer with COVID cash. They lack the training or muscle memory for selling and generating revenue through consumer protection products.

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Categories
F&I

F&I Takes Center Stage

Eric Fifield Author

If you’re like most dealers in the country, it’s likely you’re struggling to move your metal. As you watch your cost of inventory grow daily, and your bottom line takes a hit, it’s no wonder you might be feeling a little friction. According to Cox Automotive, new vehicles are sitting on lots between 75 and 80 days! You’re not alone feeling the financial pinch.

Consumers are also watching the value of their bank accounts decline thanks to high prices and stubborn inflation. According to Edmunds, negative equity has reached an all-time high. Consumers are rolling over upwards of $6,167 in negative equity in almost a quarter of all vehicle sales. Now, we know that’s an average and there are consumers with higher and lower amounts in the market. But, what happens when they have $10,000 in negative equity on a vehicle they bought at $10,000+ over MSRP? This is just one of the uncontrollable issues putting a damper on unit sales.

And there’s more. Edmunds recently stated that the average down payment for a new car in Q1 2024 was $6,682. Conversely, according to a Time Magazine from March, the average personal savings on hand is only $5,300. So, in order to buy a car, a person has to wipe out their savings AND ask for help? No wonder car sales are slow!

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Categories
Compliance

Words Matter

We’re all guilty of using the latest catchphrase or slang to grab our listener’s attention. These catchphrases serve several purposes. We use them to convey complex ideas, create brand identity or reflect cultural associations with specific demographic groups. When it comes to retail automotive sales, using the wrong catchphrase can land the team member – and the dealership – in compliance hot water.

Let’s consider the catchphrase “bumper-to-bumper.” Retail salespeople and F&I staff have used this term since the 80s to describe the concept that a warranty or protection product covers the entire vehicle. In fact, during a recent visit to a used car dealership in my area, the salesperson went to great lengths telling me about the total coverage warranty that made this particular vehicle such a great deal.

When I explained that “bumpers” were actually covered by insurance policies – not vehicle warranties – the salesperson tried to casually dismiss the distinction. While I’m a knowledgeable buyer, many car buyers are not. Creating the perception that a vehicle warranty truly covers an entire vehicle end-to-end is not only misleading, it could be an accidental violation of Section 5 of the Federal Trade Commission Act: Unfair or Deceptive Acts or Practices. When used to intentionally mislead a certain set of consumers, it may also violate other federal or state laws. Using this catchphrase is not only incorrect, but its use can also be unlawful and result in a costly fine of $51,744 per violation.

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