Industry Summit 2013, held last month at the Paris Hotel and Casino, in Las Vegas, held a wide range of sessions that touched nearly every facet of the F&I industry. One of the big draws of the show were presentations from two powerhouse keynote speakers, who looked at the industry from very different angles – David Westcott and Charles Robinson.
David Westcott, chairman, National Automobile Dealers Association (NADA), was up first, and focused on dealer-assisted financing, why it’s so important for a vital industry, and what the NADA is doing to help educate federal agencies such as the Consumer Financial Protection Bureau (CFPB) on what it is and how it works. “We all know it’s a great system,” Westcott noted, “but some people in Washington just don’t understand.”
He noted that customers do have the option to go directly to banks or credit unions, but 80 percent choose to finance through dealerships instead. It is more convenient, and is a very competitive model, he noted, reducing the cost of credit for millions of customers – “it helps people buy cars,” he said.
The biggest threat to that system, which has been in place for more than a century now, is the CFPB’s guidelines, issued this past March, which give vague orders based on, Westcott noted, a wholly inappropriate foundation – disparate impact theory. The theory focuses on pricing disparities, and uses information such as U.S. Census data and surnames to try and assign race to loans after the fact, and then create policy around those assumptions. But discrimination, he noted, is determined through rigorous statistical analysis. “There is a right way and a wrong way to do it, and they choose the wrong way,” he noted.
And by trying to change a system that works well, for dealers and consumers, Westcott stressed, the CFPB runs the risk of forcing a system that doesn’t just hurt dealers in the long run, but consumers as well, making it more difficult and more costly to obtain credit, and potentially shutting some consumers out of credit altogether.
He also attacked the talk of forcing a flat-fee model on dealer-assisted financing, noting that he believes it will weaken competition and ultimately hurt consumers as much as no access to credit at all. It eliminates the incentive for dealers and lenders to help consumers find the best loan at the lowest rates. It will do just the opposite he contends – driving dealers to push consumers toward loans with higher flat rates, and higher payments. “It doesn’t help us, our customer, or anyone,” Westcott noted.
Attitude Determines Altitude
The second keynote speaker was Charles Robinson, president and COO, Resource Automotive. He focused on how the automotive industry as a whole, and F&I in particular, have changed and continue to change.
The first significant change to the auto industry, Robinson noted, was the introduction of F&I into the mix in the 1960s. The second two, he noted, are both happening now, and revolve around the rapidly changing technology effecting every aspect of the dealership, and the increasingly strict regulatory statutes that dealerships have to understand and be compliant with. “We’ve come a long way in how we [sell products],” noted Robinson, but what we do hasn’t changed.”
He believes there are still core values for success that were true when F&I was still young, and are still true today. First, determining who the end user is – the consumer. The focus has to be on them, on what they want from the product and how it will affect them long-term. The second core value Robinson highlighted is recruiting – the need to have the best people and the best processes. Finally, he noted, “we need to educate the outside world on how great this industry really is.”
To achieve those goals, he noted, communication is key. “There is nothing that can’t be solved by communication,” Robinson noted. That means it needs to be transparent to everyone in the process, as well as sincere. He believes that as long as an F&I manager is confident without ego, has respect for others and does what he or she says they will do, they will have won half the battle.
But there also needs to be training – and not just a one-time event, but an ongoing process that involves not just the F&I managers, but the sales force as well, since they are part of the sale. He even went so far as to say he believes menus are coming for the sales desk – precisely because he believes the battle between the desk and the F&I office over price quotes needs to end – it needs to be a streamlined, transparent process for the consumer. Pay plans, he said, should also be balanced and fair, and should promote balanced selling.
As for the products, he advocates that dealerships choose three core products, with just 3-4 ancillary products to offer. Consumers, he noted, are most affected by what they see first, and overwhelming them with product isn’t going to increase the sales. It’s also important to have a clear, state- and federally-compliant process in place to sell them, he noted.
At the end of the day, he doesn’t suspect the industry will change all that much, even with new regulations to contend with, or new technology. “You can’t buy into the latest widget all the time,” Robinson noted. He said that 10 percent of products are really good, 10 percent are really bad, and 80 percent is the reality of where most products fall today. It’s the attitude of the F&I manager, with good training and good communication skills, that gets them sold. “Life is 10 percent what happens to me, and 90 percent how I react to it,” Robinson said. His tips?
Make your career fun;
Fill in your educational gaps and always seek to improve;
Do what’s right versus what’s easy;
Set your sights high – you can have what you want, and what you’re willing to work for;
Organize and reorganize – it allows you to accomplish more;
Be fair and honest;
Empathize and sympathize;
And treat whomever you’re with as the most important person at that particular time.
