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Monday, December 12, 2005 

Vol. I No.3

So, Do you Know What “F & I” Stands for?

[Note: it is my intent to report on events, as I experience them, but, because I attended some very worthwhile events earlier this month, my first few entries will refer to events of the last couple weeks, in chronological order – don’t worry I’ll catch up in a few days…]

So I left Vegas from the JD Power Roundtable and SEMA show on November 4, knowing that after a brief stint in Philadelphia and Atlanta, I would return on November 9 to attend yet another industry conference. By the way, it’s a good thing I like Vegas, as it is the most chosen city in the US to hold car related events.

This time, I’m attending the “F and I Conference and Expo” ­­-- another ground breaking industry specialty event pioneered by my old friend Ed Bobit and his group at Bobit Business Media. From a few hundred attendees when it started out a few years ago, this year’s conference and expo looked to me like it had record attendance, six or seven hundred or more from what I could tell, which I guess is no surprise as “F & I” income represents about the only way a new car dealership can make any money selling cars, at least new cars anyway. [Not only do the domestic manufacturers lose millions on selling new cars, but, according to the National Auto Dealers Association (NADA), when costs are factored in, the average dealer loses money on every new car sales transaction. Only the income from “F & I” reverses this dead loss on new car sales.]

“F & I”, in case you don’t know, stands for “Finance and Insurance” and is the car industry’s generalized label for all products and services that are sold with, and as a complementary add-on to, a new or used car sales transaction. New and used vehicle financing, extended service contracts, GAP insurance, credit life insurance, etc., that are arranged and sold to you by car dealerships are all considered “F & I” products. It’s a big business that requires specialization, and recently, has gotten a lot of attention because of the small number of dealers out there who insert abusive mark-ups on financing rates, extended service contract profits, etc. It probably doesn’t surprise anyone that some dealers take advantage of consumers. Most don’t of course, but the ones who do give all a bad name and focus attention on legal compliance and requirements. This, along with the fact that the legitimate profit on “F & I” sales are vital to the viability of your average car dealership as the profit margins on new vehicle sales for a dealer are now pretty much non-existent and there is slimming down on used vehicle sales as well, made for a jam packed conference.

It may or may not surprise the average consumer that pretty much the first day of this three-day conference (Nov. 9-11) was devoted to “F & I Ethics Certification.” Regardless of what makes headlines, most dealers are dedicated to doing it right, and while about half the seminars were devoted to educational topics on recent sales developments and selling more effectively (“Automated Application Technology & Contracting,” “Captive Credit’s Valued Role”, etc.), the other half addressed how to make sure sales are achieved ethically within each store (“The Benefits of ‘Doing it Right,” “Bad Heart or Empty Head; Awareness Training for Legal Compliance,” etc.).

Hats off to the Bobit Media crew once again, not only for being in the forefront of auto retailing developments but also for making legal compliance presentations bearable…

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