At this year’s Industry Summit, I attended a session called Presenting F&I Products Online. I have strong opinions on this, and I wanted to learn what other people are doing. I wrote here about using an expert system. Would I find my colleagues using apps, widgets, expert systems, and analytics? Do they have a menu for consumer use, with responsive design that runs on an iPhone?
Sadly, this session was not so much about how, but whether to present products online. This may explain why I got blank stares when I did this survey last year. I am biased, so I will try to be fair with the other side. Their argument is:
F&I is the last place we can make decent gross, so why would we screw that up by putting it online?
They assume that disclosing, say, VSC rates on a consumer site will inevitably lead to lower margins. Well, maybe. Consumers can apply for credit online, including direct lenders, and that hasn’t harmed dealer reserve. A robot will never sell as well as Justin Gasman, but a consumer on a web site has all day to self-close.
Even if we assume that putting products online is bad for margins, the question remains whether we can hold back the tide of internet commerce. This brings me to the Luddites.
In the early nineteenth century, Joseph Jacquard invented an automated loom that put a generation of weavers out of work. The Jacquard loom can be programmed to weave complicated patterns, using punched cards. This was the first time skilled workers had lost jobs to something resembling a computer.
The weavers didn’t take it lying down. Organized under the apocryphal Ned Ludd, they set about smashing and burning power looms all over England. I am wearing a silk jacquard shirt as I write this, but Luddism lives on wherever people fear losing out to technology.
This is not to demean thoughtful people like panelist Mark Thorpe, who quite reasonably want to see profits kept up for their dealers. From my perspective, however, protection products will inevitably be offered online. Consumers want to buy cars online, and providers want their products included.
When customers want something, the market has a way of giving it to them. If it’s not the usual vendors, like Cox and CDK, then it will be technology startups like ShowroomXpress or new entrants like Amazon. I see a parallel here with TrueCar and transaction prices. The Luddites say these dealers are cutting their own throats. I say they’re planning for the future.