July 24, 2021

EFG exec: F&I products must meet changing consumer demands

The coronavirus pandemic prompted many changes at U.S. dealerships last year, particularly in the finance and insurance office. Eric Fifield, chief revenue officer at EFG Cos. in Irving, Texas, outlined some of the challenges and opportunities retailers experienced in 2020, and his predictions for the year ahead, in a conversation with Staff Reporter Jackie Charniga. Here are edited excerpts.

Q: At a high level, how has the pandemic affected the F&I transaction?

A: It definitely created some sharpening of our skills. Back to the basics. Nothing happens until a vehicle has been sold. Used-car prices start to hike up because of the shortage of supply. Inventory has definitely started to stabilize, but that doesn’t mean we’re out of the woods yet. It’s going to take all of this year, 2021, before we start to get back to pre-pandemic levels.

What are customers looking for in the F&I office during the pandemic?

The average price of a vehicle is passing $40,000. Consumers are educated and understand they’ve got to protect that [vehicle].

From an F&I product standpoint, we’re constantly evolving our core products to match customer demand. Our challenge is matching customers’ driving habits. You have more and more work-from-home options, and I don’t think that’s going away anytime soon. You’re going to see longer-term ownership with less miles being driven. But cars still tend to break down even when they’re not being driven as often just because of age and erosion. We have to have terms, features and benefits that speak to that.

How are EFG and the F&I product landscape working to address those shifts?

We have to make sure that we have terms and underwriting guidelines that speak to those customers. We can understand almost to the trim level based on the VIN of what the loss costs are. With the 43 years that we’ve been in business, we have hundreds of millions of contracts that we have underwriting data from. We don’t need to supply general terms anymore.

We have a vehicle-return program that we launched 15 years ago in the U.S. called Walkaway. That Walkaway product is more prevalent now than it ever has been. [EFG says nearly 1 million customers have signed up.] It’s a product that’s designed for customers that may lose their job. It allows dealers to buy that car back and we pay the negative equity. That’s just one example.

We, being the F&I community, have to be thinking about solutions like that, thinking about the consumer and how their driving habits are changing and what their concerns are as far as the ability to make their car payments. Are they going to be employed in the next 12 or 18 months?