Improving F&I Within The New Automotive Climate

Automotive Tariffs and Tough Times: How Used Car Dealers Can Stay Ahead

Recent changes in the automotive market, especially the introduction of new tariffs, have left many used car dealers facing significant challenges. In a recent episode of LotTalk, hosts Chris Keene and Renaldo Leonard, along with special guest Zac Jones, Vice President of Sales at AutoFi, explored the effects of these tariffs and shared strategies for dealers to thrive despite these obstacles.

Facing the Tariff Challenge

Dealers across the U.S. are now dealing with new automotive tariffs, increasing uncertainty in an already complex market. Jones acknowledged that the automotive industry has always been resilient, finding creative ways to overcome unexpected hurdles. He emphasizes the importance of adaptability and seizing opportunities that arise, even during uncertain times.

One major impact of the tariffs is compressed front-end margins, forcing dealers to reassess their sales and finance strategies to remain profitable. According to Jones, these compressed margins highlight the crucial need for comprehensive training and proactive management styles.

Strengthening Sales Teams Through Training

Jones points out that many current sales professionals entered the industry during relatively easy times—particularly the period following 2020. As markets tighten, these professionals must shift from simply taking orders to actively selling and creating value.

"Training is what makes technology and sales methods effective," Jones emphasizes. He encourages dealers to reinforce foundational sales skills and return to the basics of providing exceptional customer experiences. Effective sales teams today must understand customer needs, clearly communicate value, and smoothly transition buyers from sales to F&I departments.

Improving F&I Performance

Finance and Insurance (F&I) departments can significantly impact profitability, especially when front-end margins are under pressure. Jones stresses the importance of ensuring customers are educated early about available products, rather than using high-pressure tactics at the last minute.

"Customers today want transparency and trust," Jones explains. He suggests making F&I product information readily available online to foster trust and reduce buyer anxiety. Providing clear, concise information—including video explanations—can make consumers feel more confident and informed when making significant purchasing decisions.

Building Long-term Relationships

Jones also highlights the importance of creating exceptional buying experiences that encourage long-term customer loyalty. Given the rising prices of vehicles, buyers now more than ever need to feel assured they're making sound investments. Sales professionals should communicate value clearly and authentically to build lasting relationships and trust.

Practical Tips for Used Car Managers and Salespeople

• Prioritize Comprehensive Training: Equip your team with the skills necessary to handle challenging market conditions.
• Enhance Online Transparency: Clearly present your F&I offerings on digital platforms to educate buyers and reduce friction.
• Emphasize the Customer Experience: Focus on creating pleasant, memorable interactions that encourage repeat business and referrals.
• Facilitate Smooth Handoffs: Train sales teams to provide seamless transitions between sales, F&I, and service departments.

The automotive tariffs present real challenges, but with a renewed focus on training, transparency, and customer experience, dealers can successfully navigate these uncertain waters. As Jones and the LotTalk hosts emphasize, the automotive industry is known for its adaptability and resilience, qualities that will undoubtedly help dealers weather this latest storm.