July 29, 2021

Adoption of digital F&I depends on dealership encouragement, study finds

Dealerships have operated at varying capacities amid the coronavirus pandemic, with some locations restricting vehicle sales to online only and others opening showrooms for customers. Regardless, customers spent more time online to execute a car purchase and completed more of the finance and insurance process online than ever before.

Customer adoption of digital tools is contingent on what a dealership offers and also on how they promote those features, said Michelle Denogean, chief marketing officer of digital retailing platform Roadster.

Denogean said she was surprised results of a September study found elements of the vehicle finance transaction, such as F&I product selection and price negotiation, had higher adoption rates than virtual trade-in assessment tools, which have been around longer.

“It is a huge indicator of where we’re moving,” she said.

In the study that surveyed 320 franchised dealerships and 1,000 recent car buyers, Roadster found increased digital adoption of certain components of the finance process. But the study also discovered that adoption largely depended on what the dealership offered and how much was encouraged by dealership staff. Forty-seven percent of dealerships surveyed were fully open for business. Twenty-six percent were operating only through online sales, while 27 percent said showrooms were open by appointment only. Consumers were considered recent car buyers if they purchased within the last five months.

Roadster partnered with the National Automobile Dealers Association for the study. This is the second joint study they released on the impacts of the coronavirus pandemic on auto retailing.

For customers who purchased a vehicle at a dealership that had both online and in-person sales options, 34 percent said they negotiated the price of the vehicle online. The same amount said they submitted a credit application online. Twenty-three percent said they signed documents digitally. One-third of respondents said the transaction took less than an hour to complete.

“You’ve got this transition happening, mostly at the dealership, as to how much they’re encouraging [digital] behavior,” Denogean said. “As more and more dealerships see that you can create such efficiencies by doing this, that the more units per salesperson can be sold as demand goes up. There’s just this huge opportunity for them to fundamentally rethink their cost structure.”