There are two scenarios:
- Promoting or hiring a newbie into the F&I department and training them from scratch.
- Hiring a trained F&I director from another organization.
Both have different cost structures, but they both need training and management oversight for a set time.
If they are a newbie, they have to learn all the lending parameters of your lending institutions. If they are a horizontal hire from another organization, they may need to learn some new lenders and processes for your organization. There is an inherent cost to management oversight for both but easily absorbed as part of the day-to-day operations.
You can also send newbies to online training courses (Auto Dealer institute charges $2,795 for their online training) to speed up the training process. There are also compliance training and management costs that every dealership has to do as well.
Those are some of the hard costs, but let’s talk about the soft costs.
Soft costs are a little harder to calculate as they are somewhat unknown. For example, how many deals get lost because of slow processing as they try to figure out deal structures or new lenders? How much revenue was lost because they didn’t use the right lender that would cover an ancillary product fully? How many deals were structured and finalized below MAXIMUM profit?
We have audited dealerships without a newbie F&I manager and find 20% of all deals fail to capture maximum profit. Do newbies or new hires perform worse? We don’t have any specific research on newbie or transfer hires, but we assume that they are below standard because they are still learning the job or systems of the dealership.
Matching lenders to buyers and maximizing profit is tricky enough with ‘experienced’ F&I managers. Generally, they only maximize profits on 80% of their deals every month. F&I trainees could be significantly below the 80% average for six months to a year as they learn all the ins and outs of the lender programs and processes. How much revenue is that costing your dealership?
Ideally, every F&I manager would be able to deliver maximum profit on 100% of their deals every month, and newbies would deliver maximum profit starting on day one, deal one.
With a bit of help from technology, both newbie and seasoned F&I managers can capture maximum profit on 100% of their deals.
ProfitIQ is like moving from doing handwritten calculations to using a modern electronic calculator, but it’s the technology leap needed to identify and capturing maximum F&I profits. Faster, easier, and much more accurate. ProfitIQ automates the profit calculations of all the lender decisions and compares them side by side. No more bouncing in and out of lender decisions, calculating and recalculating profit on each variation to find and capture maximum profit.
Newbies and experienced F&I managers instantly view an organized profit comparison to begin their profit analysis for the deal. They can easily compare what products are best to sell within each lender’s decision based on caps and LTV limits. If the client wants GAP insurance but doesn’t want a VSC, which lender decision would be most profitable? What if the client want’s both a GAP and a VSC? What lender would cover both and still be under LTV?
Automating the calculations and recalculations allows all F&I managers, new and experienced, more time to focus on capturing maximum profit based on matching the final deal parameters with the best lending decision for maximum dealership profitability. Capturing maximum profit on 100% of your F&I deals is a lot better than 80%. Or less for a rookie. When it comes to the dealership’s bottom line, capturing maximum profit on 100% of your deals is vital.