Dealer Talk at NADA 2020: Increasing PVR, New F&I Services and Changing Consumer Behavior
If we had to use one word to sum up the focus of conversations at NADA Show 2020, that word would be “change.” In conversations with auto professionals at our booth and elsewhere, the talk was about how cars, customer expectations, and buying preferences have changed from even just a few years ago, and things are continuing to evolve at a rapid pace. As a result, dealers are closely examining how they drive revenue, serve customers, and improve the skills of people throughout their operations.
Improving PVR By Closing More F&I Sales
Increasing PVR is always a hot topic for dealers, with a big focus on improving F&I sales, often their largest source of revenue. Discussions zeroed in on ways to better educate consumers about the benefits of F&I products and make it easer for buyers to consider them as part of the overall vehicle-purchase experience – not just an add-on.
For example, the majority of auto shoppers know about vehicle service contracts (VSCs) but are much less likely to actually purchase them. One way some dealers are working to close the gap between F&I product awareness and product ownership is to train their sales staff to help educate consumers about the value F&I products bring to them personally even before entering the F&I office. For instance, the national average cost of car repairs is $1,186 a year, but more than 85% of vehicle shoppers expect to spend less than that on repairs. Are salespeople asking customers how much they have budgeted for repairs? Or explaining that third-party service providers might not be using the same high-quality parts as the dealership?
Many dealers spoke about experimenting with new ways to sell F&I services in response to shopper preferences. For example, 86% of car shoppers do online research before going to the dealership, according to an Assurant study. Some dealers are making F&I part of the online car shopping experience, allowing buyers to explore protection products along with inventory and financing options before even visiting the dealership.
By introducing F&I products sooner, dealers are able to build more awareness and trust with customers, allowing F&I managers to take on a more consultative role, offering the products that best match a buyers needs and lifestyle. The result is a better customer experience, that can lead to improved F&I attachment.
Meeting Customers Where They Are
Customer experience was another hot topic, with many dealers talking about how they are digitizing their businesses to meet the customer on their own terms. They are using digital channels to communicate with consumers, educate them on the value of F&I products and to streamline and speed up the overall customer experience.
Dealers expressed willingness to try new digital approaches and models, such as the fully end-to-end digital sales platforms that industry upstarts are introducing. Mobile integration for more efficient operations was another discussion point. For example, the ability to locate inventory and track sales from phones instead of desktop computers so that they can access information for customers from wherever they are located.
Dealers also want to use performance data in more sophisticated ways so they can better understand not only their customers but to keep a pulse on their operations and have forecasts at the touch of a button and then use that insight to make better decisions. Dealers expect to become more data-driven in the years ahead, but to do that they must have the tools to cull through the various data points and make them meaningful and actionable.
In addition, dealers spoke about the desire of many consumers to make their phones their primary interface with the dealership. From researching and purchasing to keeping track of their maintenance history and scheduling appointments, consumers expect to be able to handle communications in a single app.
So, what’s the next “big thing” for consumers that dealers are keeping their eyes on? Dealers continue to track the “gigification” of car ownership in the market. Subscription-based car ownership, purchasing a vehicle to rent out on car-sharing apps, ride-sharing and subscriptions for protection plans are trends that indicate approaches to car ownership are continuing to evolve.
Now Hiring: All-Stars
With the changing needs of consumers and the high-tech requirements of today’s cars, dealers are focusing more and more on who they hire and how they train.
Dealers continue to struggle to find qualified auto technicians for their service centers. On the sales floor, they are focusing on professional development so that salespeople from all backgrounds have the foundation they need to effectively sell F&I products while delivering a superior customer experience.
To help develop the next generation of auto professionals, Assurant supports the NADA Foundation’s Workforce Initiative, which connects people to on-the-job training while promoting technician careers to prospective students. During NADA Show 2020, Assurant announced a $25,000 contribution to the initiative to help fund its ongoing education efforts.
Change is Here. Are You Ready?
Assurant Resource Automotive is a partner that can help you keep up with the rapid change facing dealers today. Our dealer services program, reinsurance participation strategies, F&I training services, and products and support like Digital Engagement Toolkit can help you meet your goals. Learn more about how our vehicle protection solutions can help you improve your profitability, your customer experience, and your team.
1Assurant study, 2018: https://www.assurant.com/documents/assurant/news/insidetheautomotivecustomerexperience_final_2619.pdf?sfvrsn=c9798804_2
2Assurant study, 2018: https://www.assurant.com/documents/assurant/news/insidetheautomotivecustomerexperience_final_2619.pdf?sfvrsn=c9798804_2