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4/4/2011-Tackling F&I, an underperforming department

April 4, 2011
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These articles recap some of the opportunities uncovered by GSA powersports consultants during actual consulting visits. These are followed by recommended actions that address these opportunities. Our goal is to provide you with ideas to help improve your dealership.
This is part of a series on this dealership. In the last edition, the first part of the series, a GSA consultant provided an analysis of the overall dealership. In this second part, GSA reports on the store’s sales and F&I departments.
Although the primary purpose of this visit was their service department operation, GSA consultants also completed a review of the other departments. This is an important activity. Each profit center impacts the others.
Dealership
This dealership has been in existence for more than 40 years. Like many such dealerships, it has changed locations several times to accommodate expansion and improve access to the targeted market. The current, high-quality facility is fairly new and has excellent visibility and access to the public. The primary building is more than 50,000 square feet, and has a lot of room for expansion.
This multi-line dealership is located in a large metro market containing a number of highly competitive large dealers. The store sells more than 1,000 units, even in this challenging economy. Despite its size, it is still a family-run business with family members running most of the operation. While they have many of the major product lines, other key lines may become available to them due to dealership failures in this market. There was a discussion of the advantages and disadvantages of pursuing these opportunities.
Sales Department Overview
The showroom area is large, well-organized and very clean. However, it does not have exceptional eye-appeal or “wow” factor as you enter the dealership. There are no key focal points or lifestyle visualization displays.
Sales and service share a waiting area that is not visible to the showroom. Their thought was to encourage customers to leave this room and wander the store. However, there is statistical evidence to support that sales increase when there is a waiting area with a view of the showroom.
The sales manager holds regular educational and motivational sales meetings. He indicated his sales team follows typical sales best practices. They have an electronic system for customer logging, tracking and sales follow-up. It was recommended that someone call each unit sales customer within 48 hours to uncover issues and solicit referral business.
An electronic door counter is used to track traffic flow. They use a GSA appraisal form for trades, and apply over-allowances properly to the new unit.
As stated earlier, the sales department is receiving discounts from service and parts. These discounts have resulted in inflated profit margins for this department. All departments need to be on a retail basis for accurate analysis and benchmark comparisons.
Sales Department Action Items

  • Work with P&A to develop theme and life-style visualization displays of units and appropriate clothing and accessories.
  • Implement a new unit purchaser follow-up phone call within 48 hours. Customers have just shown their new unit to all their friends and relatives. Ask for referrals and address any issues.
  • Introduce customers to the service department and encourage scheduling of the first service.
  • Prepare customers for F&I sales.
    F&I Department Overview
    The physical F&I area was not inspected and all the information gathered came from a GSM interview. From the numbers, it would appear this department is underperforming. There is certainly a lack of focus in this area, whatever the reason. This provides an excellent opportunity to improve dealership profits.
    Prepaid Maintenance (PPM) has not been offered for some time because of issues that occurred with an in-house program. They now have access to an outside PPM provider. There are licensed insurance agents in the store, but the dealership does not offer insurance products, such as debt protection, credit life and credit disability. Overall, with the exception of ESC sales, the F&I penetration numbers are low when considering the 45 percent financing penetration.
    F&I Department Action Items

  • Acquire and promote all appropriate products, such as security systems, credit life, debt and credit disability.
  • Establish a “Priority Maintenance” (PPM) program and get the entire dealership involved in promoting the product. PSB
    Gart Sutton has been a leading provider of on-site dealer consulting, dealer 20-groups, online financial composites, accounting rescue services, and OEM and dealership training solutions for more than 30 years. For additional information on these services, visit www.gartsutton.com

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