Without spending too much time stuck on memory lane, I look back on some of the first cars I sold when I started in the business. There was a bill-of-sale, odometer statement for the trade-in, maybe a bank contract, and a buyers order. That was the entire paper process. You finished the deal by putting a stock tag on the trade (No FTC labels back then).

Within the year, there were added papers to verify that neither party tampered with the narrow gas tank h*** that was now standard equipment on many cars sold due to the conversion to unleaded gas. Then it seems there was an additional piece of paper added each year until today when it’s like closing on a house.

As technology advanced, we now video tape parts of the sales transaction, compel the staff to err on the side of caution, and as a result, profits have steadily diminished, turnover has increased, and finding and keeping talent is today’s ultimate challenge. But what does sales transparency have to do with any of that? Why does compliance and full disclosure have to cost profits?

The answer is – it shouldn’t. In fact, done properly in dealerships I’ve trained, profits have increased by as much as 30%. But like any other methodology for success, it won’t happen by accident. The dealer, manager, and everyone involved must commit to making the right changes rather than change just for the sake of change.

Since leaving the cold weather of New England and settling in the Carolinas, I’ve been working with a lot of independent dealers of all sizes and volumes. One of the first questions I ask them is, “How much profit are you making on parts?” As many of you know, a good deal of independent dealers don’t have a parts department. So, the answer is often that little or no money is made with parts.

That makes sense. If you don’t have a department, why should you expect profits? That should apply to F&I as well. If you feel you can’t dedicate someone to be your F&I expert, you shouldn’t expect to make much of a profit in that area. And, if the profits weren’t there, why on earth would you take on the liability? Regardless of how much money you do or don’t make financing a vehicle, you have certain responsibilities to the customer – and the liabilities that go with it.

Many of my New England clients have become “Cash and Carry” stores. They have made a decision to simply sell the cars. The customer is responsible for arranging all financing themselves. They have made the decision to risk losing a deal here and there rather than risk non-compliance violations. While that is a legitimate business decision, it may not be the best for your future.

Look, you’ve chosen the types of vehicles you sell based on how much profit you feel they can return. Why not do the same with F&I? (For a free list of the top 10 things a successful F&I department needs, email me at dealerprofitsnow@aol.com with your dealership name and number and we’ll send it immediately.) When doing a dealer evaluation, I always include F&I potential so the dealer can make an educated decision. And, there is not much extra work involved in developing a profitable department. In fact, you can actually increase profits, product sales, and customer satisfaction by doing the extra work.

First, make a final decision. If you want none of the liability, get out of the finance business. Like I said earlier; there is nothing wrong with this decision, but it must be final. You can’t be in one week and out the next. If you are committed to F&I, get the right person to handle it – exclusively.

Once you have the right person, get the “store” in order. That means get the products you’ll offer finalized. These products must be offered to every customer, every time. No exceptions. Products are plural but only one of each.

I can’t tell you how many times I go into dealerships and find almost as many Service Contract companies as cars on the lot. The more of each product you have to sell, the less likely you are to sell any. Go back to the first rule and make a decision. The customers aren’t shopping for the best price on “GAP,” chemicals, VSC’s, etc. They are looking for a good deal on a car.

Second, set and demand specific expectations. The first rule in F&I is that, “PVR is blind to volume.” That means excuses about profitability based on slow traffic will not be acceptable. Unless your volume dropped from 50 units to 3, volume should have nothing to do with the performance of your F&I department with each customer.

Finally, train your team. Training the sales staff is at least as important as making sure your F&I person is trained. If you or your team don’t know how to transition a customer from the close to F&I, you not only lose money, you can put yourself at risk. The best part about training is, it’s available everywhere. Vendors offer it, AFIP certification can be done online, and there are several private training companies that are local, regional or national.

While this may sound like a lot, consider this. For years, many of the franchise dealers have stated that F&I is what is keeping the doors of the showroom open. With the current economy, some of you may be looking for every opportunity to maximize income with every customer. Now, that opportunity may be just a decision away.

John Fuhrman has been training and consulting dealers since 1992. He is now focused on helping dealers recruit and train sales staff and is concentrating his efforts in North and South Carolina as well as New England. His programs, F&I consulting, and products are increasing profits while reducing liability for many franchise and independent dealers. His company offers seminars and in store training and free evaluations. You can contact him at dealerprofitsnow@aol.com.