September 27, 2020

Driver-assistance technology may present new F&I opportunities

Cars are chock-full of costly components, especially as radar sensors and cameras for advanced driver-assistance systems — such as parking assist, lane-departure warning and blind-spot monitoring — become more and more standard.

With these sensors and other advanced technologies comes cost — and customers walking into dealerships might be bombarded with a slew of finance and insurance options to cover the expense of protecting and repairing them.

Many dealerships already have F&I products in place to offer customers protection in lieu of them risking steep repair costs in the future. For instance, front radar sensors used with automatic emergency braking and adaptive cruise control systems could cost $900 to $1,300 to repair, according to a study from AAA. Repairs for rear radar sensors used with blind-spot monitoring and rear cross-traffic alert systems could cost $850 to $2,050.

“Vehicle service contracts are still the premier offerings when it comes to technology on vehicles and, really, the shift has moved,” Ritch Wheeler, vice president of training at American Financial & Automotive Services Inc., told Automotive News in February. “We used to look at, ‘What are the mechanic components of a vehicle, what are the moving parts, and how can a vehicle service contract cover those?’

“The mechanical components on a car are no longer the focus, not only for a consumer, but also from a service contract standpoint,” he added.

In addition to service contracts, windshield fix replacement products and key replacement products are among the best F&I offerings related to new technology, said Tony Dupaquier, director of The Academy, an F&I training center in Austin, Texas.

Dupaquier said these offerings help differentiate to customers the maintainable parts of vehicles vs. the parts that aren’t.

“If we properly maintain the vehicle’s motor and transmission and drive axle system, the likelihood of something in those breaking or failing is pretty low,” Dupaquier said. “But you cannot maintain the technology.”

Dupaquier said that after explaining to customers what the manufacturer’s warranty covers and does not cover, F&I managers can justify their products.

For example, windshields now often contain lane-departure, autobraking and active cruise control technologies that, if the windshield is cracked or broken, require extensive replacement and recalibration.

Dupaquier said Subaru dealerships, for instance, have accelerated their F&I windshield protection products because of the technology in the Subaru EyeSight platform, a driver-assist system that integrates a number of technologies into the windshield.

Keys also present an opportunity for dealerships now that they are more like “proximity remotes,” Dupaquier said.

Ronald Montoya, senior consumer advice editor at Edmunds, said that whether the technology is damaged in a collision or if it simply does not last as long as traditional automotive components do, “We don’t have enough information on how long these technologies will last, how durable they are.”

Montoya said he generally recommends that consumers purchase the F&I products related to advanced safety features and sensors that increase the cost of vehicle ownership and repairs.

Cars “have gotten much more technologically advanced, and a lot of people don’t know about how complex these vehicles are,” Montoya said.

Wheeler added that one glitch in a car’s software can shut down a major part.

“It’s even more cost-effective for a customer to have one of these protective products more so than it used to be,” he said.

Consumers who show limited willingness to pay for advanced vehicle technologies from the get-go could make getting buy-in on F&I products for this tech tricky.

“You have to sell the right kind of service contract,” Wheeler said.

Once a dealership explains to a customer all the technologies that are in a vehicle, they become more inclined to purchase the contract, he added.

“The technology that vehicles have today is absolutely fantastic justification for many of the F&I products that are offered today,” Dupaquier said.