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F&I Goes Retro

So it appears the “99.9%” close is making a comeback. At least that’s what I gathered from this year’s F&Idol video entries. See Page 24 for more on this year’s contest, and if you aren’t familiar with the technique, here’s how it’s done:

A brand-loyal car buyer objects to the service contract because he believes his vehicle is too reliable to break down. You’ll need to have your service manager calculate the average repair bill before attempting this technique. Make sure he only includes warranty, service-contract and out-of-pocket repairs. Here’s how it works:

Business Manager: That car does have an excellent reputation for reliability. However, would you be satisfied if it was 75% reliable?

Customer: No.

Business Manager: Would you be satisfied if it was 99.9% reliable?

Customer: Yes.

Business Manager: Your new vehicle has approximately 16,000 moving parts. If it was 99.9% reliable, that would mean 16 parts may fail during your ownership of the vehicle. If your vehicle is better than 99.9% reliable, or the manufacturer’s limited warranty paid for some of the repairs, would it be fair if you were responsible for, let’s say, only six repairs?

Customer: Yes.

Business Manager: Well, six repairs at an average repair bill of $800 may be opening you up to $4,800 worth of repair bills. Wouldn’t it make more sense to enroll in a service-contract program that will pay for all repairs, a rental car and the sales tax?

As Johnson Automotive’s Grady the Badger (look him up on YouTube) would say, “Kapowee!” I’m just kidding. It’s a nice close. However, I pulled that technique from an article we published back in October 2010. It was penned by F&I trainer Tony Dupaquier. The article’s headline: “4 Classic F&I Closes.”

Like I said, it appears the classics are making a comeback. In fact, the “Variable Payment vs. Fixed Payment” close was also prominent in this year’s F&Idol entries. If you aren’t familiar with it, check out Tony’s article on

I’m not suggesting that you rely on the classics, nor would Tony. But I do have a theory as to why they’re making a comeback. I believe today’s in-car technology is making these closes relevant again. In fact, this year’s winner of F&Idol’s Vehicle Service Contract category, Timbrook Automotive’s Dina Wilson, likened today’s vehicles to a cell phone, telling her customer that, like a mobile device, many of the electronic components inside a vehicle can’t be repaired and must be replaced.

By the way, Wilson, the 2012 F&Idol winner, didn’t use either of those classic closes I mentioned.  

Now, in preparation for the Executive Panel I’m moderating at this month’s Industry Summit, I tested my theory with F&I product executives. One of them noted that today’s transmissions are built so well that they now cost less to replace than an in-car navigation system.

There are two recent J.D. Power reports you can use to back up your service-contract pitch. The first is the firm’s 2014 Vehicle Dependability study. When it was released, I’m sure you heard that increased engine and transmission problems contributed to the first decline in vehicle dependability in more than 15 years. What you may not be aware of is that engine and transmission issues weren’t the only culprits. See, of the Top 10 causes, in-car technology was listed three times.

Then there’s J.D. Power’s Initial Quality Study, which pointed to in-car technology as one of the main drivers of the 3% increase in problems per 100 vehicles. In fact, between 2006 and 2012, in-vehicle technology issues rose 45%, according to the report.

Another one of our resident experts, John Vecchioni, preaches a new twist on the F&I interview, and it’s pretty simple: Before you present your menu, simply say, “That’s a great vehicle and we sell a lot of them. What are some of the features you like?” Not only are you engaging the customer in your process with that question, you’re discovering the details you need to attach your service contract’s benefits to the features your customers care about most.

Of course, not all of the in-car tech issues recorded by J.D. Power were related to system failures. Some of them were customers who simply had trouble syncing their mobile device to their vehicle’s Bluetooth-enabled audio system. Still, for many car buyers, being able to take advantage of some of these new infotainment features is one of the main reasons they pulled the trigger. But given what I saw from this year’s F&Idol entries, you already knew that.


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