THE NEW RULES OF F&I EVERYTHINGS CHANGED? Vernon Blanc © 2011 Vernon Blanc – All rights reserved.

THE NEW RULES OF F&I THE NEW RULES OF F&I EVERYTHING’S CHANGED?EVERYTHING’S CHANGED?

Vernon BlancVernon Blanc

© 2011 Vernon Blanc – All rights reserved

The Facts…The Facts…

The New Rules The New Rules of F & Iof F & I

Important Facts…

65% will borrow money to purchase a recreational product.

33% of all customers will finance if simply offered.

50% will buy insurance products if recommended.

75% will buy if sold by an F & I professional.


What’s Changed?

Fewer lenders

Lack of desire to lend

No floorplan

Lack of liquidity

Educated consumers

Lack of professionals

Major adjustment in credit measurement


What hasn’t changed…What hasn’t changed…

1. The need to discuss payment options with your customer

2. Need for a professional F & I system

3. Your customer EXPECTS you to offer to help them with their F&I

4. The dealership’s need for F & I revenue

5. Most lender criteria

6. Multiple lending partners

7. That F & I is a full time job


The most important element in The most important element in

the success of any F&I program the success of any F&I program

is the full acceptance by the is the full acceptance by the

dealer principal and sales and dealer principal and sales and

office personnel that F&I is a office personnel that F&I is a

vital department and an vital department and an

important source of income.important source of income.

IMPORTANTIMPORTANT


What hasn’t changed…What hasn’t changed…

WhoeverWhoever isis selling the selling the boat boat cannotcannot, , should notshould not, , must notmust not, try to sell , try to sell

F & I benefitsF & I benefits..


1. Finance savvy

2. Access to financial information

3. Demanding of a good deal

4. Expecting service

5. Confused about boat lending

6. Gets conflicting information

7. Has (private) financial issues

8. Not stupid!

Understand your customerUnderstand your customer


1. How does it feel when…?

2. Why would you want to…?

3. Will they tell you the truth…?

DON’T DO IT!

Understand your customerUnderstand your customer


The Purpose of the F & I DepartmentThe Purpose of the F & I Department

1. Protect the gross profit

2. PROVIDE ONE STOP SHOPPING

3. Control the sale – Close the deal

4. Provide a service for your customers

5. Enhance the dealership image

6. Increase sales volume

7. Beef up the bottom line


F & I benefits…F & I benefits…

1. Can take the customer off the fence…NOW!

2. Studies show 70% of the customers who finance at the dealerships resources return for a second purchase.

3. Builds a stronger buying habit from your lenders.

4. Can build revenue by offering insurance products.

5. Capture the lost 40%.

6. Will increase your volume.

7. 8-10% + additional profit.


To be successful, you must…To be successful, you must…

1. Turnover 100% to F & I.

2. Operate F & I as a profit center.

3. Assume that all customers will finance (somewhere).

4. Properly communicate all finance & insurance options.

5. Offer all products & services.

6. Establish goals.

7. Commit the entire dealership to working together.


ProfitabilityProfitability

1. What has changed?

2. What’s the benchmark?

3. What are the sources?

4. What is the cost?



F & I PROFIT POTENTIALF & I PROFIT POTENTIAL

Boat Sale A - $25,000. $25,000.

$2,000 average finance profit $2,000 average finance profit (8%)(8%)

$1,250 average warranty profit$1,250 average warranty profit$600$600 Marine GAP Profit Marine GAP Profit$3,850 $3,850 ADDITIONAL PROFIT ADDITIONAL PROFIT

THAT’S 15.4% ADDITIONAL PROFIT!THAT’S 15.4% ADDITIONAL PROFIT!



F & I PROFIT POTENTIALF & I PROFIT POTENTIAL

Boat Sale B - $150,000.00 $150,000.00

$6,000 average finance profit $6,000 average finance profit (4%)(4%)

$4,500 average warranty profit$4,500 average warranty profit$800$800 Marine GAP Profit Marine GAP Profit$11,300 $11,300 ADDITIONAL PROFIT ADDITIONAL PROFIT

THAT’S 7.5% ADDITIONAL PROFIT!THAT’S 7.5% ADDITIONAL PROFIT!


6 Cardinal Rules of Successful F & I6 Cardinal Rules of Successful F & I

1. Offer every product to every customer

2. Always pull credit file

3. Never shotgun applications

4. Hire a full time F & I person or company

5. Assume all customers expect to finance

6. Never ignore the insurance products


ABSOLUTE MANAGEMENT SUPPORT

AUTOMATIC REFERRAL

PROPER INTRODUCTION

PROPER APPEARANCE

NO PRE-EXPOSURE TO F & I

NO PAYMENT OR RATE QUOTES

NO EXCEPTIONS!NO EXCEPTIONS!

7 ELEMENTS OF A SUCCESSFUL 7 ELEMENTS OF A SUCCESSFUL BUSINESS OFFICEBUSINESS OFFICE


Legal responsibilities…?Legal responsibilities…?

1. Red Flags

2. OFAC

3. Truth in lending laws/Reg Z

4. Disclosure laws

5. Patriot Act

6. Moral laws

7. Murphy’s law



Is there enough business?Is there enough business?

Things to consider

Market

Business volume

Product line

Business plan

Cost of employee

Revenue potential

The cost of ignoring your The cost of ignoring your Financial ServicesFinancial Services


EXAMPLE: Dealership A

$5 million annually

$20,000. Average sale – 250 units

Mix of product line – OB/IO/New/Used

Target F & I revenue

8% of sales@ 60% penetration

$240,000 $240,000 potential profitpotential profit

The cost of ignoring your The cost of ignoring your Financial ServicesFinancial Services


EXAMPLE: Dealership B

$15 million annually

$80,000 Average sale – 187 unitsMix of product line – Large,OB,IO,New,Used

Target F & I revenue

6% of sales@ 60% penetration

$540,000.00 $540,000.00 potential profit !potential profit !


In SummaryIn Summary

If you continue to do what If you continue to do what you’ve always done…you’ve always done…

……You’ll continue to get You’ll continue to get what you’ve always got!what you’ve always got!

Vernon BlancVernon Blanc

Thank You!Thank You!Thank You!Thank You!


727-324-1362

THE NEW RULES OF F&I EVERYTHINGS CHANGED? Vernon Blanc © 2011 Vernon Blanc – All rights reserved.

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