The lasting legacy of the pandemic on F&I

On March 26th 2020, the first lockdown period came into effect. At the time, it was so unprecedented it was hard to know what would happen as, for a period, the automotive and F&I sectors pretty much ground to a halt. However, it did not take long for businesses to adapt, to go online and adjust the notion of distance-selling.

From modest levels of online finance activity, this model became normal. Necessity was the mother of invention and dealers moved to meet the desire of consumers to buy cars and F&I services online. It wasn't just dealer finance that went online. It is fair to reflect that online banking, now largely app-based, blazed the trail. Concerns about privacy and security were quickly overcome.

While Covid-19 is still with us today,  much of life and commerce has moved to the ''new normal''. Sales are no longer all online; instead, for the most part, dealers and car buyers have embraced an omnichannel model, tailoring the buying/sales process as appropriate to each customer's needs.

For me, there have been five key changes to F&I as a result of the pandemic;

1. Digital process – the move to online finance has taken a quantum leap forward. Some dealers still try to encourage face-to-face contact. Still, many others have been happy to enable customers to set up their finance online for themselves with the backup of the personal touch available if preferred or required.
2. Digital communication – dealers have become very good at liaising with customers digitally, including for finance; again, it is an option that allows the customer to choose what works for them.
3. The evolving role of a Business Manager – the BM role is changing, and today it is less about promoting F&I and more about ensuring good customer outcomes and compliance standards are achieved consistently
4. The compliance experience – digital processes create a level of consistency of process and control that the human touch cannot match. With the focus on compliance increasing, this is business critical.
5. Insurance- the pandemic made people more aware of unexpected lifestyle changes and more open to risk mitigation, which can be met by tailored insurance products. It is something that could well continue in the current inflationary environment. Reading a US trade publication, I saw a report indicating that due to the changes to people's risk awareness, dealers are averaging about 1.6 products per transaction.

A final part of the changes is increased customer trust and satisfaction with the car buying process, with 84% of UK car buyers reporting that they are satisfied they got a great or good deal on their most recent used car purchase.

Debbie McKay, Commercial Director of Motor Sales