ORLANDO — Despite increased momentum among financiers to develop direct lending products for consumers, dealers’ pace of growth in online F&I is less certain, said panelists at CBA Live last week.
As more dealers experiment with online car buying and financing, early data indicates a rise in profits from aftermarket products — but this boost may be short-lived, Cliff Banks, president and founder of The Banks Report, told AFN.
Some dealer groups on the forefront of digital retailing have “pulled back over the last year,” he said. “They’re seeing that those transactions are losing money on the F&I part of the business — as much as $500 per car.”
For now, these dealers prefer to sell F&I products in person at the dealership. Meanwhile, Cox Automotive is stepping up its online F&I presence with the pilot of a digital platform called Accelerate.
The platform allows consumers to calculate monthly payments, get trade-in values, secure financing, and browse F&I products.
On average, the 24 Las Vegas dealers piloting the platform have experienced an 80% increase in combined front- and back-end gross profits, said Mark O’Neil, Cox’s executive vice president and chief creative officer.
Cox credits the rise in profits, in part, to Accelerate’s educational videos about F&I products that consumers can watch at their leisure, creating a less pressured environment at the dealership and resulting in increased sales.
For more content like this, attend the Auto Finance Performance & Compliance Summit, slated for May 9-10, at the Omni Dallas. For information, or to register, visit autofinanceperformance.com.