Greatest Profit Opportunity in the F&I Department?

[XDCX]

As new-car gross profits continue to slide, dealers are being forced to rely on their F&I Department for additional profits.

The purpose of this post is to survey Finance Managers in an effort to determine what they believe are their greatest profit opportunities for 2008?

The question will be posed to each franchise group in an effort to determine if the answers differ based on the franchise. As an example, is it easier to sell a Service Contract on a domestic vehicle than an import? Is it easier to hold rate on a lower priced car line than a high-end car line?

So, here's the question for the Finance Managers: What's your greatest opportunity to increase profits for 2008?:

Interest Rate Reserve
Vehicle Lease Reserve
Service Contracts Sales
Maintenance Plans
GAP Coverage
Life, Accident and Health Plans
Vehicle Accessory Sales
Chemicals/Appearance Products
OtherPlease take a moment and share your thoughts - maybe you have an idea that could help someone else?

[bruce350]

Gap coverage is the best opportunity. Low cost. Great margin. And everyone knows someone who can relate to a vehicle being totalled and the insurance company not paying what was owed to the bank.

Also, it has a much lower rate of cancellation, unlike extended warranties.

[XDCX]

Gap coverage is the best opportunity. Low cost. Great margin. And everyone knows someone who can relate to a vehicle being totalled and the insurance company not paying what was owed to the bank.

Also, it has a much lower rate of cancellation, unlike extended warranties.

Great point. I was always surprised how few customers knew about the need for GAP coverage. It seems like so many are convinced that their insurance company will take care of them. :confused:

[F&I Pro]

While GAP is pretty much a given in today's market with rapidly depreciating vehicles, I find that Maintenance Programs provide not only immediate profie (smaller margins in some cases) but also tie the customer back to the dealership for longer term overall profit opportunity throughtout.

[XDCX]

While GAP is pretty much a given in today's market with rapidly depreciating vehicles, I find that Maintenance Programs provide not only immediate profie (smaller margins in some cases) but also tie the customer back to the dealership for longer term overall profit opportunity throughtout.

Great point.

The other cool thing about Maintenance Programs is that they tend to have lower cancellation rates = less chargebacks for the dealership.

I remember when Maintenance Plans first came out that a lot of Service Managers hated them. They would rather sell their own service schedule which included more services and generated a higher gross profit. Given how slow business has been lately, I'm betting that most Service Managers would support any product that drives the customer back to their Service Department.

On a different note, what type of Service Contract do you sell - Factory or Aftermarket?

[hinterlander]

Factory only sold in our store. We've had too many problems with aftermarket warranties that were sold elsewhere. We always advise the customer that if you drive GM, buy GM. Likewise with the Ford and Chrysler stores. All 3 have good programs, with Chrysler having the best products, pricing and programs.

[squish]

[QUOTE=XDCX;1833]I remember when Maintenance Plans first came out that a lot of Service Managers hated them. They would rather sell their own service schedule which included more services and generated a higher gross profit. Given how slow business has been lately, I'm betting that most Service Managers would support any product that drives the customer back to their Service Department.


I love anyway way we can get customers back in the drive, "can't upsell 'em if they ain't here!" but i am missing something on the reimbursement rate of these chrysler maintenance plans. they are either $15 or $25 for an oil change. with 3/10 to 1/2 hour labor, oil and filter it can go way over that.

i have talked to two service dm's and my csc dm and they tell me that's just the way it is.

am i missing anything? or am i still happy to see a living customer, becasue as i said before, you can't upsell 'em if they ain't here. plus we spiff our techs and writers to upsell.

[hinterlander]

Chrysler increased the oil change reimbursement for it's basic Essential Care lube, oil & filter plans to $20.00 2 years ago. They started at $15.00, but most of those are gone now. They also have a $30 reimbursement program called Owner Care LOF. Now that we are selling on the service lane, we can offer the buy one, get three free program and maintain service traffic by being competitive with the independents.

[squish]

thanks for the info, i will make sure the guys in the drive are up to date, we are still getting quite a few $15 though, but glad to know the should be all used up soon. thanks again:)

[XDCX]

thanks for the info, i will make sure the guys in the drive are up to date, we are still getting quite a few $15 though, but glad to know the should be all used up soon. thanks again:)

I don't get too involved with service, but doesn't the oil change reimbursement amount show up when you run a VIP on the VIN?

If it does it might make it a little easier for your Warranty Manager to process the claim if he/she knows what the total allowance is before they submit the claim.

[squish]

yes, the reimburse rate does show on the VIP. but for example, looking at the last one i did for $15.00, my labor cost was $8.50 + filter $4.20 + oil $12.15 gives me a cost of $24.85. i know this doesn't take into account the rewards rebates and other discounts, but there is still a decent amount of cost involved. but like i said before, it does get a customer in the drive, and although this customer didn't get upsold anything on this particular RO, she is actually a transient customer who lives in our town, bought her previous car at the next chrysler dealer, they sold her an essential care contract and out of convenience she brought it to us for the oil change, we made her a loyal service customer, she traded in that car and bought a new one from us with another essential care. so it is worth it to get people in for a couple dollars loss, if that. :)

also, i have had customers tell me that they have been to some dealers that will charge them the difference between the actual retail price for the oil change and the $15 or $25 reimburse. whats up with that. :confused:

[XDCX]

Factory only sold in our store. We've had too many problems with aftermarket warranties that were sold elsewhere. We always advise the customer that if you drive GM, buy GM. Likewise with the Ford and Chrysler stores. All 3 have good programs, with Chrysler having the best products, pricing and programs.

Member has been BANNED. Chrysler LLC Corporate employee falsified registration to appear as dealership employee.

Member was BANNED for violating Terms of Service.

[XDCX]

Chrysler increased the oil change reimbursement for it's basic Essential Care lube, oil & filter plans to $20.00 2 years ago. They started at $15.00, but most of those are gone now. They also have a $30 reimbursement program called Owner Care LOF. Now that we are selling on the service lane, we can offer the buy one, get three free program and maintain service traffic by being competitive with the independents.

Member has been BANNED. Chrysler LLC Corporate employee falsified registration to appear as dealership employee.

Member was BANNED for violating Terms of Service.