Toyota Dealer bans the F&I Office???

Well, I'm still not sold on this - but I have been hearing a lot about the concept of letting the salesperson complete the transaction from start to finish with a customer. This report is from a sales trainer who I respect - but in this case, don't agree with.

"For most dealers nationwide, a one-pricing sales strategy is a tough concept to accept. To even suggest that their sales staff should be given the authority to finalize every transaction at their desks and include the menu presentation without sending any customer into "the box" is heart-stopping for them. What about banning the F&I office altogether?

Well, one dealer I know is doing just that and very successfully. During these tough economic times, Colonial Toyota in Milford, CT, made a critical decision. The dealer chose to ban the F&I office and let his sales staff take charge of every transaction from beginning to end. He gave them all the title of "sales manager." I applaud Colonial Toyota for realizing that today's customers have changed and they needed to initiate their own changes to capture their business.

I was hired to train these sales managers in the proper and most effective presentation of menu presentation. I was skeptical at first, and then wholly impressed by this dealer's innovative "out of the box" thinking. The sales staff was enthusiastic and infused with optimism. The showroom is humming to a different beat of the drum and the excitement is palpable. Customers are buying and liking the upfront honesty projected by the staff.

Ironically, far too many dealerships still don't understand the necessity for transparent selling. They would rather stick to the status quo and continue to use outdated sales techniques. Their F&I managers tout their use of menu selling, but their process is seldom conducted with proper disclosures. They rarely review the base payment with customers for fear that any upfront disclosure will reduce their personal income. Although there are several great menu software providers on the market, the reality is that individual dealership menus are often changed to accommodate the missing base payment or itemization of cost. Dealers and F&I managers fear they cannot make a profit by being upfront with their customers. It's time to set fears aside.

One-price vehicle sales and the menu go together. Take Saturn, for example. Back in 1989-1990, when they first opened their doors with a brave new concept of "one-price" sales, the so-called experts in the industry said it wouldn't work. Customers wanted to haggle for the best deal. Customer wouldn't pay retail for a car without the bargaining process. Surprise! Customers did buy Saturns with the one-price offer and were happy to do it. The showrooms were packed with customers and the cars were hard to come by"

And look at what happened to Saturn by the way...


AFI's take on this:

I fully agree that the more transparent your sales techniques are - the more money you will make.

I also know that human nature will always take the path of "least resistance".

For example - if a salesperson badly needs his _x_th car to hit a bonus level - and it's the eve of the last day of the month - he or she will give ALL the gross of the car away, work the manager for maximum trade ACV, quote the customer payments at "buy rate" and sell ZERO F&I products.

Prove me wrong.

Some (most) people really can't be good F&I Managers, just like some F&I Managers can't be good Sales Managers. You really don't know until you give it a try.

Like our buddy Obama - imposing his "Grand Experiment" on our country.

I wish Colonial Toyota the best in their experiment and hope it works out.

My opinion is to still have the F&I Manager come out and greet the customers before them coming into the F&I office (building transparency).


F&I Manager: "Hello, congratulations on the purchase of your new vehicle.

My name is _______ and I am the business manager here at _______. My job is to take care of all the legal issues such as your title work and registration, as well as go over the mandatory disclosures related to your purchase.

The process will normally take about 20-25 minutes. To help expedite the process, I have a few questions to ask before I can prepare your paperwork. Can we sit and review those now?

This will lead into the interview. (a good topic for a future post).


Next topic: GAP Objection Handling

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Objection Handling: GAP Total Loss Protection

Here are some good closes brought to us by Safeguard Products:


Objection: I have insurance already; I don't need more.

Response: I understand ... your insurance company is obligated to provide you funds that are equal to your actual cash value. However, they are not obligated to give you the amount equal to your payoff. If you owed $25,000 on your vehicle, you wouldn't accept a $20,000 settlement, would you?


Objection: I can't afford it.

Response: I understand ... but what would happen if your vehicle was deemed a total loss and you still owed $5,000 after the insurance company settled?

You would be forced to finance that $5,000 into your next car purchase - which would add an additional $100 to your monthly car payment, or you would have to come up with that $5,000 out of pocket.

Wouldn't it make more sense to pay $10 more per month right now for that coverage and peace of mind?


Objection: I have never had a car totaled before.

Response: I understand ... and you are lucky! However, let's say this does happen to you. When your car is totaled, your insurance company calls all the shots, and their goal is to settle as cheaply as possible, often using unfair techniques to determine the value of your car.

GAP protects you from the consequences of this unfair treatment by paying off your loan regardless of the valuation methods used by your insurance carrier.


Objection: I'll check with my insurance company about GAP.

Response: I understand ... however, it is important to note that some states do not allow you to purchase GAP from your insurance agent because there can be a conflict of interest.

Insurance companies often fail to total out vehicles that would otherwise be totaled, simply because the customer has GAP insurance through that carrier.

Rather than pay off your lender, the insurance companies may decide to pay to fix your car, although this may leave you with a greatly devalued vehicle that may be unsafe or uncomfortable to drive.


Objection: I have been with the same insurance company for years, and they will take care of everything.

Response: I understand, and it's great that you have a great relationship ... but did your agent ask you how much you were financing today?

I bet he didn't because whether you financed $5,000 or $50,000 on this car, your insurance company is only going to pay the Actual Cash Value of the vehicle if it's totaled.

You will be responsible for the payoff difference after your insurance company settles. With GAP protection, you are completely covered.


Best Practices

1. Ask Questions: Most customers know very little about GAP, and a simple explanation of what GAP covers in the event of a total loss will make financial sense to the customer.

What do you know about GAP?

In the event your car is totaled, where will you find the money to pay off your loan and insurance deductible?

2. 553 Contract Close (CA only):
Using a current 553 Law contract, point out Outstanding Loan Balance Settlement section.

Say to the Customer: This is a legal contract, and printed in RED is the statement that your insurance may not cover the outstanding loan balance.

Flip Contract Over and Say: You will notice that this has become such an issue that the notice is printed a second time.

You are required to initial this notice as recognition that you understand your insurance coverage may not pay off the balance you owe in the event of a total loss.

*This example refers to Settlement GAP.


Good stuff! - AFI

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Tags: Automotive Finance, F&I, Finance & Insurance,
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