Digital Retooling boosts F&I profits for RFJ Auto

RFJ Auto

02/14/2020

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RFJ Auto Partners Inc. has sold the majority of its vehicles online for the past few years. And until January 2018, F&I sales to customers had been limited to a quick pitch from a menu at the dealership or description of bundled products over the phone.

A switch in F&I vendors, including adding Darwin Automotive’s F&I software Darwin and Darwin Online, has allowed Rick Ford’s dealership group of 28 rooftops to present, explain and sell targeted F&I products to car buyers.

RFJ began using Darwin’s predictive software on iPads in stores in January and launched the complete digital retailing tool more recently, Darwin Automotive CEO Phillip Battista said.

Battista: Buyers are educated.
Battista: Buyers are educated.

The moves have boosted RFJ’s average profit per-vehicle retailed or PVR by $286 in the first six months of this year compared to the same period in 2017.

“We’ve been able to increase our bottom line year-over-year in an industry where most dealer groups, dealerships have seen declining profits,” Ford, CEO of the dealership group in Plano, Texas told Automotive News.

RFJ now is working with Warranty Solutions and RoadVantage for F&I products. And with Darwin, RFJ is presenting F&I products in a “very consumer friendly format, very transparent,” Ford said.

With the new Darwin program, customers complete a short questionnaire and their purchase, service, parts and body shop history with RFJ dealerships and the current deal are factored in.

Using algorithms and artificial intelligence, Darwin predicts in real time and scores F&I products a customer is most likely to need, Ford said. The scoring also factors in the likelihood of a customer to purchase the products.

“It presents it to a customer very similar to an Amazon product, where it will say based on your history with us, based on other customers like you, these are the top products that we believe will fit,” Ford said.

“Traditionally dealers have always offered basically the same products to every customer. What this does … is it really tailors the offerings to the customer, to their individual needs and their individual history, driving history.”

Ford: Benefit to the bottom line
Ford: Benefit to the bottom line

So, if a customer had a windshield replaced with their last vehicle and is predicted to drive more miles and be out of warranty before they will sell the car, then windshield protection and extended warranty coverage would be pitched to that customer, Ford said. Or if a customer finances with the dealership, the Darwin software also can predict a possible negative equity situation and GAP (guaranteed asset protection) insurance coverage may be pitched.

The software works in real time and if a consumer changes a payment term, for example, the software may no longer suggest GAP coverage, Battista said.

And with most of RFJ’s stores in rural and small towns and 88 percent of sales either trucks or SUVs, Ford said tire and wheel warranties are strong sellers.

An unlike the quick in-store pitch, online customers can read at their own pace and on their own time about products coverage and benefits, Ford said.

The increase in PRV isn’t the only plus RFJ has seen with its vendor switch and addition of Darwin software. It’s also seen its penetration rate, or customer take rate, rise “significantly” across its extended warranty coverage and other F&I offerings, though specific amounts weren’t available, Ford said.

Ford, who said the sales will help with service and repurchase loyalty, said the changes have aided revenue in a time of compressed new car margins.

“What this has allowed us to do is to replace a lot of that margin compression with increased F&I profits,” he said. “So it’s been a huge benefit to us from a bottom line perspective.”

About 150 U.S. dealerships are using Darwin Online and some have seen dramatic increases in F&I PVR because consumers are educated on the offerings, Battista said.

RFJ Auto is ranked No. 34 on Automotive News’ list of the top 150 dealership groups based in the U.S. measured by 2017 new-vehicle retail sales. And the company is No. 22 on Automotive News’ Top 100 dealership groups ranked by 2017 used-vehicle sales. RFJ sold 45,699 new and used cars last year.

Phillip Battista

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