It’s hard to overstate the importance of the F&I department in today’s franchised car dealerships. The F&I function shouldn’t just be seen through a profit lens. Car shoppers put a high level of trust in the both the process and the F&I Manager themselves. In the latest research from CDK, four out of five shoppers said they were satisfied with the time they spent with the F&I Manager.
While that number is down slightly from our previous study in 2023, there’s an incredible amount of evidence that F&I, in one form or another, is a bedrock that should still be built upon.
Time Spent
The average time it takes to buy a car is between two to three hours, and we know from years of research that the more time spent past the two-hour mark, the less satisfied the customer gets. F&I is where the majority of shoppers spend the most time, 67% in this year’s study, up considerably from 55% in 2023.
Dealerships need to make every minute count and have the right processes in place, not only to streamline the process once in the office, but also to optimize interactions before a customer even enters the store. The most successful dealers I work with present F&I menu items to the customer and discuss what takes place in the F&I office early in the process. Some even from the very beginning of the buying experience, even before the test drive.
Top Products Get More Popular
It’s become apparent over the last year or so that car buyers are concerned about economic stability and that’s reflected in the products they’re selecting in the F&I office. The top two products shouldn’t come as a surprise: extended warranties and prepaid maintenance. However, the gains they’ve made since our last study are significant, from 39% to 58% and 34% to 42%, respectively.
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These numbers, along with comments from over 1,200 car buyers CDK surveyed, suggest that F&I products are seen as insurance against the uncertainty they feel in the economy. They’re hedging bets against prices rising, forcing them to keep their cars for longer periods as well as locking in maintenance expenses.
More F&I products are also being sold. One in five car buyers reported purchasing three to four F&I products—double the rate from 2023, when only one in ten did so. The number of shoppers who didn’t purchase any products also dropped from 36% to 30%. Notably, baby boomers were more likely to fall into that camp, suggesting that as younger generations continue to enter the market, F&I product adoption may increase.
Trust and Emotion in the F&I Office
One of the most interesting themes that showed up in this year’s study is the range of emotions taking place in the F&I office. Asked if they felt the F&I Manager was honest, earned their trust, was patient or maintained good communication, the results were almost universal with four out of five customers agreeing.
These results are more impressive when considering that 22% of customers reported feeling overwhelmed during the process. This sentiment was especially prevalent among the youngest surveyed, decreasing with each subsequent age group. Overall, car buyers leaned toward positive emotions, with 54% saying they were excited, and 43% comfortable during their time in the F&I office.
Future F&I Paths
There were some interesting shifts in this year’s study that follow the recent rise in a single point of contact model among some dealers. When we asked customers who they trusted more to handle the F&I process, most did say the F&I Manager at 58%. But that was down sharply from 65% in 2023. Meanwhile, 42% said they trusted their salesperson more, up from 35%. This trend also follows generational lines with younger shoppers leaning toward the salesperson and older customers toward the F&I Manager.
The majority of buyers (51%) say they like the traditional process but 22% said they’d prefer working only with a salesperson if they could do it all over again. That number is up from just 15% in 2023. And again, millennials and Generation Z are more likely to fall in this camp.
No matter which scenario a dealer follows, it’s the overall process that matters. One that makes the customer comfortable with the idea of F&I at the earliest stage possible and one that adds more certainty — not minutes and hours — to what should be an exciting purchase.
The views and opinions expressed in this blog are those of the sponsor and do not reflect the views, opinions, or positions of J.D. Power.