As a percentage of dealerships’ new and used vehicle gross profits, F&I increased from 45% to 2015 to 53% in 2018, according to NADA.

However, many experts agree that dealers are close to maxing out F&I profit potential due to penetration rates reaching saturation, as well as the inevitability of online digital retailing, which will force more transparency in F&I pricing.

But this doesn’t mean you can’t grow your F&I profits. Growth is still possible, but it may require extra diligence to eke out incremental gains across all areas of your F&I operations.

For guidance, here are 10 best practices that top-performing F&I dealerships use to boost their profits.

Read: Mid-Level F&I Managers Need Advanced Training

1. Get Serious About Training.

Too often training gets shoved to the back burner when staff gets busy. Develop a training plan to help keep your team accountable to a schedule. Consistent, long-term training pays high dividends. In some instances, it may be beneficial to hire an outside trainer to help you develop a plan and stick to it.

2. Focus on F&I Products for New and Larger Vehicles.

According to a recent Automotive News survey, F&I profits on used cars tends to be lower than on new cars, even though it’s easier to sell F&I add-ons to used-vehicle buyers. Selling to new-vehicle buyers can be difficult because they’re focused on keeping their monthly payment low. One tip is to sell products quoting a monthly price vs. the total price; e.g. $4 per month sounds more affordable than $1,000.

Trucks and SUVs generate the highest F&I profit margins. These buyers tend to purchase more lucrative vehicle service contracts and maintenance products. Track what has sold well and pitch fewer, but more profitable, products.

3. Educate Your Team on the Products They’re Selling. 

The more your F&I team understands the products they sell and what their purpose is, the more they believe in what they’re selling. This in turn, allows them to portray confidence and establish a comfort level with customers.

4. Increase the Availability of Financing, Including Subprime.

Review all your lender options on a regular basis. The more customers you can finance, the greater your profits.

An electronic, mobile F&I presentation is the best way to increase customer engagement.

5. Use Technology to Improve the Customer Experience.

Consumers want more transparency and a faster car-buying experience. An electronic, mobile F&I presentation is the best way to increase customer engagement. The ability to capture electronic signatures also reduces cost and increases efficiencies.

6. Know Your Penetration Benchmarks.

Average F&I revenue per new and used vehicle is $1,482, according to Automotive News. Average penetration rates for popular products include: service contracts (40%); GAP insurance (28%); paint sealant (19%) and prepaid maintenance (12%).

These numbers may vary based on your location and brand, but establishing benchmarks gives your team something to strive for every month.

7. Customize Your Sales Presentations.

I no longer believe the 300% rule, which requires you to sell 100% of your products to 100% of your customers 100% of the time. Today’s consumers are used to product offerings based on their individual interests and needs, and F&I managers should offer a similar experience.

8. Improve the Sales-to-F&I Handoff.

Salespeople play a pivotal role in educating and preparing the customer for the F&I presentation. Be sure your sales team knows how to explain the process, qualify the customer, identify needs and encourage dealership financing. Team incentives can help.

9. Get Into Reporting.

On a regular basis, review how many deals you’ve done, which products you’ve sold, customer traffic and percentage gross. Use this data to track trends and plan for the future. If you’re not sure how to get the most out of your reports, reach out to your DMS provider and ask for help.

10. Follow Up After the Sale.

When customers reject an F&I product, put them on a follow-up list and reach out several times over the next six months. Once a customer adjusts to their new payment, they might not be reluctant to add to it.

In the next few years, F&I will remain a large contributor to dealership gross profits, but growth may slow. To maximize profits, don’t try to reinvent the wheel. Follow these 10 tips to make incremental improvements across all areas of your F&I operations.

Vince DeMare serves as product knowledge expert team manager for Auto/Mate Dealership Systems.

Read: 10 Secrets of Successful F&I Managers