Cash customers can be F&I customers, too

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Many dealerships have begun to rely on back-end profits as vehicle sales margins shrink. Selling finance and insurance products on every deal has become an important goal. But the mission can be daunting when car buyers walk in with cash because the expectation is they won’t be inclined to purchase extras.

Cash buyers can be won over, though, F&I insiders say. The key is following a consistent process.

There’s some evidence cash buyers have made up a steady share of the market over the past few years, according to Tony Dupaquier, director of the academy at Service Group, an Austin, Texas, F&I income development company that provides insurance products, training and servicing solutions to dealerships. This year through July 25, 13.8 percent of deals in Service Group’s network of more than 200 dealerships were cash deals. That compares with cash buyers making up 13.7 percent of the company’s portfolio in the 2015 period and 13.9 percent in the 2014 period. What’s more, those cash buyers have maintained a 50-50 split between new-car purchases and used, Dupaquier says.

So how should F&I managers handle cash buyers?

Treat them the same as finance buyers, experts say.

“Most F&I people don’t give the same effort to a cash customer as they do to a finance customer,” Dupaquier said. “They almost throw up their hands, like, ‘Oh, it’s a cash deal.’”

Sometimes sales staffers negatively affect the cash deal, too, Dupaquier says. If they ask customers to write the check before going into the F&I office, customers often rule out ancillary purchases before the products are even offered because the checkbook is already back in the pocket, he says.

Mills Auto Group’s Margot Miller: Follow a consistent process, no matter what kind of buyer is sitting across the desk.

‘Matter of discipline’

Auto retailers have worked for years to convert cash buyers to finance buyers so they can sell F&I products at a monthly payment rate rather than for a larger one-time payment, points out George Angus, training director at F&I research and training company Team One Group in Scottsdale, Ariz.

But cash buyers can be F&I buyers, too. “It’s just a matter of discipline to offer every product to every cash buyer every time and to take lots of noes,” he said.

Willingness to work with cash buyers also depends on the F&I manager’s clientele, Angus said. If half the dealership’s customers typically pay in cash, F&I managers need to learn how to sell products to them. But if dealerships’ transactions are financed 90 percent of the time, F&I managers tend to adopt a “don’t worry about it” attitude with the cash buyers, even though they probably shouldn’t, Angus said.

F&I-focused dealers train their F&I managers to present products to customers consistently, no matter what their payment plan, says Jim Maxim, president of MaximTrak Technologies, a Wayne, Pa., F&I vendor that offers an iPad-based F&I menu and reporting system, e-contracting and other electronic F&I tools.

“The perception that cash buyers don’t buy [F&I products] is not true,” Maxim said.

Indeed, Service Group’s data show that through July 25 this year, 16 percent of cash buyers purchased service contracts.

Margot Miller, corporate director of finance and chief compliance officer for Mills Auto Group in Fort Mill, S.C., says she reminds her F&I managers that “the only thing in that office that remains consistent is you.”

“If you’re going to sell something to a cash customer, it depends on one thing, and that’s you,” she said.

‘Recipe for success’

She advises them to follow a consistent process no matter what kind of buyer is sitting across the desk.

If cash buyers can write a check for a $30,000 vehicle, “surely they can write a check to protect it for a tenth of that price,” she said. It “should be an easier sell if you get your head around it.”

Most dealerships measure income per finance deal and total F&I profit per vehicle. But six months ago, Mills Auto began measuring F&I profit per cash deal. Since then, product penetration has increased a “good 10 percent” on cash deals, Miller said. Measuring the F&I managers’ success with cash buyers holds them more accountable.

She said the combination of consistency and measuring results “creates a recipe for success.” 

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Cash customers can be F&I customers, too