Digital retail could hurt dealer F&I revenue

Digital retail platforms have mushroomed as car shopping steers online.

But the trend could stall a profit engine for auto dealerships — finance and insurance income.

About 70 percent of in-store car sales at Tim Dahle Nissan Southtowne carry an extended service agreement, said Tyler Slade, operating partner at the suburban Salt Lake City store.

“We’re not even half that on vehicle sales via the [email protected] digital platform,” Slade told Automotive News.

Nissan’s digital tool, launched in 2021, allows customers to shop for vehicles, schedule test drives, complete purchase paperwork and take delivery without stepping inside a brick-and-mortar store.

Slade echoes an industrywide concern that dealerships could leave F&I money on the table without face-to-face discussions with the customer.

It’s easier for customers to click away or decline F&I products online than in the store.

“The customer is not getting a good presentation of extended warranties or GAP insurance or any of the products that we typically sell in person where an F&I manager can help them understand why they need it,” said Slade, who is also Nissan National Dealer Advisory Board chairman. “It’s harder for customers to see value when it’s just on a screen.”