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Venom Off Road is ready to grow. The Kelowna-based power sports dealership, in British Columbia’s Interior, currently sells about 150 units a year. However, owner Doug Carey has plans to change this: increasing sales of ATVs, UTVs, dirt bikes and snowmobiles while adding new departments and product lines to his arsenal. His first step: hire an in-house F&I (finance and insurance) manager.

“Financing is an area that I know can be very profitable for dealerships,” he said. “Venom didn’t do any financing until about 2010 and at the moment we finance about 10% of our sales. I want to set-up an in-house F&I department that can grow this.” A smaller-sized dealership, Venom Off Road shares its new F&I manager with a nearby car dealership – helping alleviate the costly expense of adding an F&I manager to its payroll and ensuring the F&I manager stays busy. The plan is that this new increased cost will quickly be off-set by an increase in sales using consumer financing, which can generate more revenue per transaction.

F&I Can Increase Sales and Revenue

Having a compliant and competent F&I department is a “must have” for dealerships wanting to grow sales and revenues, explains LMG Finance Inc. Director Rob Williamson. LMG is one of Canada’s largest F&I outsourcing companies, providing outsourced F&I departments to automobile, marine, RV and power sport dealerships across the country. “The primary advantage of having an F&I department is that it can focus on networking with a variety of competitive lenders and F&I product providers, which helps get more loans approved,” he said. “We’ve found that having a well-run F&I department can help grow annual sales by 20-40%. F&I also generates revenue through commissions, loan protections and warranties that can quickly add up. We regularly see cases where financing a power sports unit generates $600-$1,000 in extra revenue for a dealership.”

F&I Can Enhance Customer Relationships

As the name implies, the core role of an F&I manager or department is to meet customer’s financing and insurance needs. They ensure customers can secure credit to buy what they want along with any protection they desire. However, their real value extends well beyond this – with Mr. Williamson calling F&I the most important department at a dealership. “If a customer cannot find a way to buy what they want it hardly matters how well run a dealership is or how good its sales team is,” he explains. “A well-run F&I department does far more than just fill out and submit a customer’s credit application. Not every customer’s credit is perfect, and this can be particularly true for power sports customers. Only a professional can handle such a sensitive subject, while helping someone get their dream purchase.”

Options for Smaller Dealerships

A dealership can expect to pay at around $50,000/year plus benefits for an experienced F&I manager, making them too costly for many smaller and mid-sized dealerships. This is why some dealers only recommend hiring an in-house, dedicated F&I manager if they are selling at least 60 units a month and F&I-generated profit can easily cover costs. Dealerships that move fewer units than this have options such as sharing an F&I manager, as Venom Off Road decided to do, or outsourcing F&I to a company such as LMG. Mr. Williamson says an increasing numbers of dealers are choosing to outsource F&I programs off-site. “If you do this, you want to ensure your F&I solution is licensed and recognized in your industry. An outsourced F&I solution gives a dealership access to a team of professionals working to maximize each deal.”

An F&I Foundation for Growth

At Venom Off Road, Mr. Carey says it is still too early to gauge the impact of their F&I manager, who was only hired weeks ago. But winter is approaching and he plans to use it crunching the numbers and developing his plans to grow the dealership, including possibly adding road bikes, truck accessories, servicing and cars to a product mix that now includes F&I. Early indications are that his F&I manager is already having a positive impact. “When someone walks in to our dealership and they are looking at a dirt bike – and they are excited by that bike – we can now send them straight upstairs to talk finance that day, instead of them leaving the store as finance is worked out and their excitement slowly ebbing away,” he said. “My aim is to build the F&I department up and make it a profit centre for my dealership.”