1. THE NEW RULES OF F&I EVERYTHINGS CHANGED? Vernon Blanc © 2011 Vernon Blanc – All rights reserved

2. The Facts… The New Rules of F & I

3. Important Facts… 65% will borrow money to purchase a recreational product. 33% of all customers will finance if simply offered. 50% will buy insurance products if recommended. 75% will buy if sold by an F & I professional. The New Rules of F & I

4. Whats Changed? Fewer lenders Lack of desire to lend No floorplan Lack of liquidity Educated consumers Lack of professionals Major adjustment in credit measurement The New Rules of F & I

5. What hasnt changed… 1.The need to discuss payment options with your customer 2.Need for a professional F & I system 3.Your customer EXPECTS you to offer to help them with their F&I 4.The dealerships need for F & I revenue 5.Most lender criteria 6.Multiple lending partners 7.That F & I is a full time job The New Rules of F & I

6. The most important element in the success of any F&I program is the full acceptance by the dealer principal and sales and office personnel that F&I is a vital department and an important source of income. IMPORTANT The New Rules of F & I

7. What hasnt changed… Whoever is selling the boat cannot, should not, must not, try to sell F & I benefits. The New Rules of F & I

8. 1. Finance savvy 2. Access to financial information 3. Demanding of a good deal 4. Expecting service 5. Confused about boat lending 6. Gets conflicting information 7. Has (private) financial issues 8. Not stupid! Understand your customer The New Rules of F & I

9. 1. How does it feel when…? 2. Why would you want to…? 3. Will they tell you the truth…? DONT DO IT! Understand your customer The New Rules of F & I

10. The Purpose of the F & I Department The Purpose of the F & I Department 1. Protect the gross profit 2. PROVIDE ONE STOP SHOPPING 3. Control the sale – Close the deal 4. Provide a service for your customers 5. Enhance the dealership image 6. Increase sales volume 7. Beef up the bottom line The New Rules of F & I

11. F & I benefits… 1.Can take the customer off the fence…NOW! 2.Studies show 70% of the customers who finance at the dealerships resources return for a second purchase. 3.Builds a stronger buying habit from your lenders. 4.Can build revenue by offering insurance products. 5.Capture the lost 40%. 6.Will increase your volume. 7.8-10% + additional profit. The New Rules of F & I

12. To be successful, you must… 1. Turnover 100% to F & I. 2. Operate F & I as a profit center. 3. Assume that all customers will finance (somewhere). 4. Properly communicate all finance & insurance options. 5. Offer all products & services. 6. Establish goals. 7. Commit the entire dealership to working together. The New Rules of F & I

13. Profitability 1.What has changed? 2.Whats the benchmark? 3.What are the sources? 4.What is the cost? The New Rules of F & I

14. Profitability F & I PROFIT POTENTIAL $25,000. Boat Sale A - $25,000. $2,000 average finance profit (8%) $1,250 average warranty profit $600 Marine GAP Profit $3,850 ADDITIONAL PROFIT THATS 15.4% ADDITIONAL PROFIT! The New Rules of F & I

15. Profitability F & I PROFIT POTENTIAL $150,000.00 Boat Sale B - $150,000.00 $6,000 average finance profit (4%) $4,500 average warranty profit $800 Marine GAP Profit $11,300 ADDITIONAL PROFIT THATS 7.5% ADDITIONAL PROFIT! The New Rules of F & I

16. 6 Cardinal Rules of Successful F & I 1.Offer every product to every customer 2.Always pull credit file 3.Never shotgun applications 4.Hire a full time F & I person or company 5.Assume all customers expect to finance 6.Never ignore the insurance products The New Rules of F & I

17. ABSOLUTE MANAGEMENT SUPPORT AUTOMATIC REFERRAL PROPER INTRODUCTION PROPER APPEARANCE NO PRE-EXPOSURE TO F & I NO PAYMENT OR RATE QUOTES NO EXCEPTIONS! 7 ELEMENTS OF A SUCCESSFUL BUSINESS OFFICE The New Rules of F & I

18. Legal responsibilities…? 1.Red Flags 2.OFAC 3.Truth in lending laws/Reg Z 4.Disclosure laws 5.Patriot Act 6.Moral laws 7.Murphys law The New Rules of F & I

19. The New Rules of F & I Is there enough business? Things to consider Market Business volume Product line Business plan Cost of employee Revenue potential

20. The cost of ignoring your Financial Services The New Rules of F & I EXAMPLE: Dealership A $5 million annually $20,000. Average sale – 250 units Mix of product line – OB/IO/New/Used Target F & I revenue 8% of sales@ 60% penetration$240,000 potential profit

21. The cost of ignoring your Financial Services The New Rules of F & I EXAMPLE: Dealership B $15 million annually $80,000 Average sale – 187 units Mix of product line – Large,OB,IO,New,Used Target F & I revenue 6% of sales@ 60% penetration$540,000.00 potential profit !

22. The New Rules of F & I In Summary If you continue to do what youve always done… …Youll continue to get what youve always got!

23. Vernon Blanc Thank You! The New Rules of F & I 727-324-1362