An auto dealer could have the best F&I team in the country and still may not be able to close every F&I sales opportunity. Some customers are simply not ready to make decisions on how to best protect their vehicle at the point of sale.
The vehicle service contract market as a whole represents a $35 billion opportunity that is still growing, according to Colonnade Advisors’ Vehicle Service Contract Industry Market Commentary. Although the post-sale opportunity is currently the smallest of the four primary VSC sales channels, it still represents $2.4 billion in sales … typically walking out the door.
This seemingly small segment of the market is long overdue for the introduction of an innovative mechanism for penetration, as it is continuously replenished as factory warranties expire. Unfortunately, since the post-sale channel can only be successfully serviced by a direct-to-consumer model, that means the missed opportunities on-site translate to missed revenue for the dealer. Making matters worse, there are third-party organizations that spend millions to target dealership customers who haven’t purchased VSCs by buying vehicle registration data. Some manufacturers have even started going around the dealer and soliciting customers directly.
The industry is ripe for a solution, and consumers and dealers alike demand an easy-to-use digital F&I marketplace. Car buyers are searching for an innovative online retail site where they can review vehicle protection options and control their coverage selections and dealers would benefit greatly from a virtual post-sale VSC partner.
One of the leading concerns customers have when considering the purchase of a VSC is the fear that they will never have a claim and may never realize any financial benefit from the money they’ve paid for coverage. Consumers are tired of feeling forced to buy long-term or mileage-limited service contracts in order to ensure their vehicle repairs are covered. They’re ready for an online shopping experience where they can buy coverage specifically for their needs and driving habits, and want the ability to cancel at any time.
On the other side of the transaction, it’s no secret that many dealers are tired of struggling to recapture lost opportunities from customers leaving without purchasing F&I products. The industry is ready for an experienced, virtual post-sale VSC partner.
Looking ahead for 2020, let’s envision a technologically enhanced solution that allows consumers to control their vehicle protection decisions … and dealers can finally turn F&I fails into F&I sales.