Taking F&I out of the box

April 26, 2023

The rise of digital automotive retailing has changed the F&I game

The automotive industry has come a long way since the days of customers walking onto the lot and spending hours perusing the showroom floor. The rise of digital automotive retailing has changed the game, allowing customers to complete their entire shopping journey online, from the comfort of their own home. With the arrival of the pandemic, the industry had to move quickly to adapt. With this, we have started seeing digital retailing mandates coming directly from OEMs.

Why the push for digital retailing? It’s simple—customer satisfaction creates loyalty. Fully integrated digital retailing solutions, that include the ability for a customer to review and pick their own F&I products, not only improves the customer’s buying journey but also increases dealership sales and gross profit.

A study published in the Journey of Interactive Marketing in 2020 found that when customers were provided with detailed product information and the ability to self-select F&I products, they were more likely to make a purchase and had higher levels of satisfaction with those purchases.1

According to the 2020 Cox Automotive Digitization of End-to-End Retail Study, the number of shoppers buying F&I products online is also increasing. In fact, 61 per cent of customers who purchased a vehicle online also purchased at least one F&I product online. The study also found that customers who shop online express more interest in F&I products than those who shop in person. For example, customers who used a digital retailing tool to purchase a vehicle expressed interest in an average of 2.5 products, compared to 1.2 products for those who purchased in person.2

Moreover, dealerships that offer digital retailing tools have seen a significant increase in gross revenue. The study found that dealerships that offer a fully integrated digital retailing solution saw an average gross profit increase of $360 per new vehicle sold and $260 per used vehicle sold. This is in addition to the profit center created by the inclusion of F&I products.

Beyond the financial benefits, offering digital retailing solutions that include F&I products can also improve customer retention in the service department. When customers purchase extended warranty they are more likely to return to the dealership for service and maintenance, rather than taking their vehicle elsewhere. In fact, the study by Cox Automotive found that 62 per cent of customers who purchased extended warranties returned to the dealership for service compared to just 32 per cent of customers who did not purchase extended warranty.

The benefits of digital retailing that includes F&I products are clear, and so as the Canadian market continues to evolve, we’re seeing full F&I integrations being developed. It is important for dealerships to embrace these solutions as they become available to fully capitalize on these sales opportunities.

Another exciting development in the automotive retailing space is the emergence of pre-qualification tools for customers. These tools allow customers to learn about their vehicle affordability before even selecting a vehicle, similar to getting pre-approved for a mortgage. This information can help customers make more informed decisions about their purchase to avoid the disappointment of falling in love with a vehicle that is outside of their budget.

Including F&I products up front not only helps manage customer payment expectations but also allows dealers to have two chances at selling F&I products. The customer can choose to add their own F&I products online, or if they opt-out, the dealer has another chance to sell them on the F&I turnover.

The next generation of prequalification tools will take this even further by not only telling a customer what they can afford but also providing a list of vehicles that match their budget and financing options, including F&I products. This will not only improve the customer experience but also help dealerships close more sales and increase gross revenue by presenting customers with vehicles they are more likely to purchase with greater potential for profit.

Digital retailing is not a fleeting trend in the automotive industry. It has become a necessary part of the customer buying journey and it’s time to hop on the digital bandwagon.


  1. DeBellis, J.M., & Etgar, M. (2020). Self-selection of add-on products: A laboratory experiment on framing effects. Journal of Interactive Marketing, 51, 107-120. https://journals.sagepub.com/doi/full/10.1016/j.intmar.2020.03.001
  2.  Cox Automotive. (2020). Digitization of end-to-end retail study. Retrieved from https://www.coxautoinc.com/wp-content/uploads/2021/01/2020-Digitization-of-End-to-End-Retail-Study-FINAL.pdf
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