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The automotive landscape has witnessed a remarkable growth in the number of sweet spot vehicles in operation. These vehicles, typically 6 to 12 years old, are in the optimum spot for aftermarket services such as brakes, suspension, and engine repair. Recent data reveals that nearly 35% of vehicles in operation fall within this sweet spot, representing a substantial increase of 19% over the past four years. This surge in potential customers calls for a strategic shift in focus within the F&I department. By aligning the right strategies and focusing on this growing segment, dealerships can unlock untapped potential and drive F&I Profitability with Sweet Spot Vehicles. Let us explore how the rise of sweet spot vehicles offers a strategic advantage and discuss the key steps to maximize F&I profitability.   Can sweet spot vehicles positively impact dealership profitability? When it comes to cars, trucks, or SUVs, regular maintenance is the key to keeping them running smoothly on the road. From oil changes to tire rotations, all vehicles, regardless of their make, model, or year, require attention and care. However, as time goes by, the age of the vehicle often influences the specific repairs needed, the frequency of maintenance required, and even the go-to destinations for getting the job done right. It’s time to tap into this golden opportunity the sweet spot vehicles bring. With millions of cars falling within the prime range, there’s a vast potential for F&I teams to provide comprehensive solutions and maximize customer satisfaction. The expanding potential of the aftermarket sweet spot: The prime market for aftermarket products and services comprises vehicles manufactured between 2011 and 2017. As of Q1 2022, there were approximately 10.5 million 2011 model-year vehicles on the road. However, this lower volume segment will soon move into the post-sweet spot category next year. Simultaneously, the sweet spot will see an influx of approximately 16.5 million 2018 model-year vehicles. Additionally, within the next year, an estimated 16.7 million vehicles with a 2019 model year and nearly 14.3 million vehicles with a 2020 model year will transition into the sweet spot, offering significant potential for aftermarket opportunities. Position yourself as a solution for this group: Firstly, sweet spot vehicles represent a substantial portion of the market, with over 98 M vehicles in operation within this range. Millions of vehicles within the sweet spot range highlights an apparent and active demand from a substantial portion of customers seeking solutions tailored to their cars. Therefore, by focusing on this specific segment, dealerships can position themselves as a solution provider to a substantial number of vehicle owners in the market for maintenance, repairs, and additional aftermarket services. Generate more F&I revenue: Sweet spot vehicles exhibit higher service and maintenance requirements, presenting an opportunity for dealerships to generate a consistent revenue stream. Being in the optimal age range for various repairs and maintenance services, these vehicles necessitate frequent maintenance. By offering comprehensive maintenance packages tailored specifically for sweet spot vehicles, dealerships can meet their customers’ unique needs and establish long-term relationships built on trust and reliability. Furthermore, the relationship nurtured by trust and positive experience can help you generate more references and leads. Leveraging sweet spot data insights: This sizable customer base could be your potential customers for trade-ins, new vehicles purchase, and increase F&I sales of products aligning with customer needs and vehicle conditions. The F&I department could benefit from keeping track of sweets spot data such as model year and types of vehicles in operation to anticipate consumer needs and driving habits. In addition, the aftermarket professionals can ensure ongoing support for the maintenance and repairs of the existing vehicles on the road while also preparing for the upcoming developments in the aftermarket industry in the years ahead. It is evident that professional training holds immense potential in assessing consumer needs and offering valuable ancillary products to maximize the advantages presented by the increasing age of vehicles. Capitalize on shifting dynamics in the aftermarket sweet Spot: Overall, by focusing on sweet spot vehicles, dealerships can expand their customer base, increase sales of F&I products, and secure a steady stream of revenue through service and maintenance needs, significantly impacting profitability. Reach out to your growth partner and take advantage of their support to maximize your F&I profitability.  

As we navigate through the phase of growth and opportunity in the retail auto sector, it’s essential to take a moment to reflect on our personal and professional goals for the year ahead. If you’re in the sales or finance and insurance (F&I) department, maximizing your potential and performance should be at the top of your list. But how do you achieve this balance of talent, proficiency, and preparedness? Let’s explore the importance of creating a development roadmap and preparedness to complement your professional goals and how it can make all the difference in your sales and F&I growth and success. Self-assessment forms the basis of your roadmap While goals are centered on the end result, a development roadmap focuses on the specific skills, knowledge, and strategies you need to acquire to reach those goals. The foundation for building a practical roadmap begins with a thorough self-assessment. Your roadmap is an essential tool that will keep you focused on the actions that matter most to your success. This process involves identifying your strengths, areas for improvement, and short and long-term professional goals. From there, you can focus on developing proficiencies, skills, and traits to help you achieve those goals. In addition to self-reflection, a behavioral analysis tool can be an excellent resource for gaining insights into your personality traits, work style, and areas where you may need additional development. However, analyzing the results of such a tool can be a complex process that requires experienced eyes. With the insights gained from your self-assessment and behavioral analysis, you can prioritize the skills, knowledge, and strategies you need to acquire to achieve your goals. Remember, your roadmap is the compass for your growth journey, and it should be revisited and updated regularly to ensure that you stay on track towards your goals. Focusing first on what is within your scope By focusing on what you can change, you can maximize your efforts and improve your chances of growth and success in F&I. For example, instead of setting a goal to increase sales by a certain percentage, focus on the specific behaviors and skills you can improve to achieve that goal. This might include improving your communication skills, learning new sales techniques, or improving your product knowledge. You can make steady progress toward your goals and build momentum for continued growth and success by prioritizing what you can control. Additionally, this approach can help you feel more empowered and motivated as you work towards goals you have greater control over. Preparedness in F&I Once you have started building the necessary skills and knowledge, you will see progress towards your goals. However, it’s important to note that your progress is not just about having the technical skills to perform your job. It’s also about being prepared—having the right mindset, attitude, and approach to face challenges and adapt to change. From an F&I perspective, being prepared means: 1. Having a solid understanding of the various policies, contracts, and products, including their benefits, limitations, and pricing, to effectively engage with customers and provide exceptional service. 2. Communicating the value of the products to customers and addressing any objections they may have. 3. Staying up to date with industry trends, regulations, and compliance requirements to ensure that the dealership is operating within legal and ethical boundaries. 4. Building strong relationships with customers by providing exceptional service and following up with them after the sale to ensure their satisfaction, retention, and repeat business. 5. Collaborating with other departments within the dealership, such as sales and service, to identify opportunities for cross-selling and upselling. 6. Continuously developing new skills and knowledge through training, workshops, and other professional development opportunities. Furthermore, as you reexamine your goals for the new quarter of the year, evaluate your preparedness to achieve them. Identify the goals where you may need more preparation, as these are often the ones with the most significant impact. Remember to prioritize what is within your scope and control. Additionally, don’t be afraid to seek additional resources, professional training, and support to enhance your preparedness. Navigating the market shifts The retail auto presents a different landscape for dealerships compared to the past years, but with a development roadmap in place, you can position yourself to thrive regardless of external factors. Avoid focusing only on the outcome and not on your preparedness to achieve it. Take the time to assess your skills, knowledge, and strategy, and create a roadmap for development that will position you for F&I growth and success in the year ahead. PRO has been utilizing behavioral assessments to help dealership professionals identify their strengths, motivators, and areas to focus on. This tool is a great resource to help individuals improve their performance. In addition, it allows dealerships to retain talents and grow profitability. Let us work together towards achieving your goals this year.

  The retail auto industry has undergone significant changes over the past few years, including shifts in consumer behavior, supply chain disruptions, and technological advancements impacting how dealerships operate. The current challenges of declining sales and affordability issues, along with the increasing number of older vehicles on the road, create an opportunity for dealerships to focus on areas like F&I, which can help maintain your dealership profitability. Analyzing the most significant trends shaping the retail auto industry could help manage their impact on dealership profitability. Therefore, it is critical to monitor the significant shifts in the industry, such as: 1. New light-vehicle sales in 2022 topped 13.7 million units, the lowest number of sales since 2011. The National Auto Dealers Association reports that the industry sold 13.7 million new cars and trucks last year, the lowest number of total sales since 2011. In addition, the semiconductor microchip shortage and other supply chain disruptions dealt a significant blow to the retail auto industry, causing sales to drop by 8.2% compared with 2021. However, this disruption also allows dealerships to strengthen their F&I departments. Dealerships need to maximize profits on each sale. F&I departments could be a profit center to provide an additional revenue stream on each sale, helping offset any revenue loss from lower sales volumes and maintain dealership profitability. 2. Parts-and-service revenue is on the rise. Six publicly traded new-vehicle groups reported same-store parts-and-service revenue of $12.7 billion last year, an increase of 10.5% year-over-year. The companies reported $3.4 billion in same-store parts-and-service revenue for the fourth quarter, up 9.1%. This reflects an opportunity for dealerships to offer F&I products like maintenance plans and service contracts. These products can help customers save money on future service needs while generating additional revenue for the dealership. Furthermore, the trend also highlights the rise in vehicle mileage. 3. Average age of cars increases to 12.2 years. The average age of light vehicles in operation (VIO) in the US rose to 12.2 years, according to S&P Global (formerly IHS Markit). The 2022 average age marks another all-time high. According to the analysis, the global microchip shortage and associated supply chain and inventory challenges could have influenced consumers to continue operating their existing vehicles longer. As the average age of vehicles on the road continues to rise, dealerships have an opportunity to capitalize on the increased demand for repairs and maintenance services. This presents a win-win situation for both customers, who could save on their repair costs, and dealerships, who could generate additional revenue from the services offered, including through their F&I department. 4. Aftermarket “sweet spot” is growing- 6.5% year-over-year increase. According to Experian, 35.8% of vehicles in operation (VIO) now fall within the aftermarket sweet spot, a 6.5% year-over-year increase. As more vehicles fall into the 6- to 12-year-old category, they become ineligible for general manufacturer warranties, increasing the importance of maintenance and potential component replacement for owners. Aftermarket professionals must keep track of the model year and types of vehicles in operation to anticipate potential consumer needs and driving habits. In addition, F&I departments can benefit from professional training to assess consumer needs and offer valuable ancillary products to capitalize on the opportunity presented by the increase in vehicle age. 5. More car owners struggle to keep up with their car payments than they were in 2009. As per Bloomberg, automobile repossessions are climbing, and Americans fall behind on their car payments at a higher rate than in 2009. If used vehicle prices continue to decline and the negative equity gap widens, the situation may worsen. People who cannot trade for a lower payment may end up surrendering their vehicles to the bank. Dealers can improve their profitability by helping customers mitigate negative equity by offering payment solution tools. The tool would help customers make an extra payment each year by making bi-weekly payments, which saves them money in financing charges and helps build equity faster. `Reach out to your PRO Team to implement this tool in your dealership.

Inflation remains high despite prices cooling in July and August. In addition, rising interest rates indirectly increase the cost of borrowing, making it more expensive to buy a vehicle. As per Kelly Blue Book data, the average price of new vehicle prices increased by 12% from July last year, and used vehicle prices have gone up by 40%, as per data released by the U.S. Bureau of Labor Statistics. Inflation and high prices have caused issues of vehicle affordability for consumers and impacted dealers’ profitability. However, there is light at the end of the tunnel for both consumers and dealers. F&I products provide relief to consumer and dealers in inflation. F&I products such as vehicle service contracts (VSC) could help shield customers in inflation and provide financial security from costly repair and replacement expenses in the future. Customers most likely would be using their service contract after a couple of years when a part breaks down or in the event of a malfunction. With prices rising rapidly and the cost of parts and labor going up, customers are locking in the current rate and saving in the future. A VSC creates peace of mind that the expense of owning a vehicle is more fixed than variable. Increased age of cars in the U.S. Chart source: S&P Global Mobility The average age of light vehicles in the U.S. reached an all-time high in 2022 as consumers continue to hold onto vehicles. A study by IHS Markit shows that the average age of light vehicles is now 12.2 years. The global chip shortage influencing the supply chain and inventory and rising prices are the primary factors pushing the U.S. vehicle age higher. F&I products provide relief to consumers in inflation With the rise in vehicle ownership, consumers look for options to safeguard themselves against expensive and inconvenient repairs and replacements. Therefore, F&I products purchased now could provide relief for customers later. Let’s look at the examples below to see how F&I products help protect customers. Guaranteed Asset Protection (GAP) GAP helps pay the difference between the vehicle’s market value at the time of the incident and the outstanding loan balance. With limited inventory, rising car prices, and higher interest rates on loans, GAP protects customers against financial burdens. Exterior and interior appearance coverage Every day, drivers encounter things that are out of their control — the elements, the weather, and the playful toddler. But these encounters don’t have to devalue the car. Now more than ever, when the prices of new and used vehicles are skyrocketing, it makes sense to maintain the condition and appearance of the cars. Therefore, offering industry-leading appearance coverage, such as Cilajet, would add value to the customers’ purchases. In addition to the coverage, PRO offers comprehensive training to support sales goals and the growth of your F&I department. Tire and wheel coverage As per AAA data, drivers Paid $26.5 Billion in Pothole-Related Repairs in 2021. “In many parts of the country, winter roads will likely give way to pothole-laden obstacle courses,” said Mary Maguire, Director of Public/Government Affairs for AAA Northeast. “When a vehicle hits a pothole with any kind of force, the tires, wheels, and suspension get the brunt of the impact, and fixing any of those items is pricey.” Thus, considering tire and wheel coverages for vehicles would ensure additional security and savings for customers. Anti-theft product backed by warranty With vehicle theft up by almost 12% since 2019 and high prices of new and used vehicles, anti-theft products can offer relief to today’s buyers in the event of a theft. The immediate benefit for your customers is, in general, a lower insurance premium for theft. In other words, the insurance settlement may be far less than the cost of replacing a vehicle. Serving the needs of customers With more used vehicles sold amidst inflation and inventory issues, dealers and F&I managers should ensure their product portfolio aligns well with the needs of today’s consumers. In uncertain times, consumers tend to look for low-risk purchases and time-stamped guarantees. Certified pre-owned programs, appearance protection, and vehicle service contracts provide buyers with an extended piece of mind that can be tied to your dealership. Highlighting the limitations of CPO coverage may be in their best interest and yours. We can be your resource Over the years, PRO has helped dealerships turbocharge their profitability. With a dedicated team and strategies to support your success, you could successfully navigate the uncertainties of the market while growing your bottom line. Reach out to us today.