Summary
The report depicts an F&I market cooling from post-pandemic highs and entering a more deliberate omnichannel phase. Growth continues but at a slower pace, as consumer affordability concerns sharpen value scrutiny and push dealers to refine education, product design, and technology use.
Market signals
- 62% of dealers reported F&I product sales increases, but those with >10% growth fell to 11% (from 31%).
- Affordability is the primary headwind; perceived lack of value for F&I protections was cited more than twice as often as last year.
- Emphasis shifts from overcoming price objections to re-educating consumers on F&I value in a high-cost environment.
What consumers still buy
- Steady demand for protection against costly mechanical failures and advanced technology system repairs.
- Strong interest in GAP coverage to address total loss risk and negative equity.
- Buyers remain willing to pay for coverage that mitigates catastrophic expenses.
Omnichannel and technology
- Over 63% of dealers provide robust online F&I information but finalize transactions in person, blending self-education with in-store consultation.
- AI adoption is early: 8% of dealers report active use, presenting an opportunity to personalize menus, match coverage to risk profiles, and illustrate relevant use cases.
Dealer playbook: three pillars
- Early consumer education: Transparent online content explaining coverage, pricing, and vehicle fit to build trust and address value concerns pre-F&I office.
- Product innovation for affordability: Tailored terms, modular options, and designs calibrated for used vehicles (higher mileage, out-of-warranty) to align price, coverage, and term.
- Strategic tech adoption: Incremental deployment of digital tools (including AI) to personalize experiences across online research and in-person menus.
Financial structures
- 58% of dealers participate in wealth-building programs such as reinsurance to diversify income and stabilize earnings as front-end margins tighten.
Specialty segments
- Marine registrations down 11.19% year over year.
- Powersports: new unit sales down over 13%, while used sales up 2.04%.
- RV sector stabilizing after steep cooldown.
- F&I products (notably extended service contracts and GAP) are increasingly central to profitability and consumer protection amid rising repair costs and ongoing negative-equity risks.
Outlook
The market is maturing: penetration can grow, but broad double-digit gains are less likely. Success hinges on clearer value communication, affordability-minded product design (especially for used vehicles), refined training and menu presentation, and measured technology use. Dealers are prioritizing early education and in-person consultation while testing data-driven tools that better match products to customer needs.
