Today’s current economic climate has forced auto dealers to buckle in for a wild, unpredictable ride with their car shoppers. Auto dealers face new, unprecedented challenges that demand a strategic approach to wealth-building and F&I portfolio management. The Presidential tariffs are expected to cause manufacturers to raise vehicle & parts prices, which will inevitably put more affordability pressure on car shoppers and consumers.

A new analysis by the Center for Automotive Research found that the 25% auto tariffs imposed in early April will increase costs by about $108B for automakers in the U.S. in 2025¹.

This situation necessitates a comprehensive game plan that not only addresses immediate financial concerns but also positions dealers for long-term success.

Adjusting Capital Strategies

Auto dealers must collaborate closely with financial advisors to adjust their capital & investment strategies. This collaboration is essential to ensure that dealers have a solid foundation to weather the obvious economic fluctuations taking place in the near term (no one knows how long this will last). Financial advisors can provide valuable insights into market trends and help dealers make informed decisions about their investments. By working together, along with trusted F&I program administration partners, dealers can ensure they have a wealth-building program that is resilient and adaptable to changing economic conditions.

Diversifying The F&I Portfolio

One of the key aspects of this strategy is diversification. Diversifying F&I operations is important in mitigating risks associated with market volatility. Dealers should have a range of F&I products that cater to varying market demands. For instance, if there is a spike in used car sales, dealers need to ensure that their used car VSC (Vehicle Service Contract) program is robust enough to meet the increased demand. Similarly, they should have products in place that can address fluctuations in new inventory sales. Product diversification helps dealers remain agile and responsive to market changes, thereby maintaining profitability.

Moreover, dealers should focus on building a strong financial foundation that can support their operations in the long term. This involves making strategic investments in areas that are likely to yield high returns. For example, investing in technology that enhances the customer experience can lead to increased sales and customer loyalty. Additionally, dealers should consider investing in training programs for their staff to ensure that they are equipped with the skills needed to navigate the complexities of the current economic landscape. Selling F&I products can sometimes be challenging when car shoppers feel extra pressure at the wallet, and proper training can help ensure dealers know how to address concerns during the sales process.

Risk Management & Customer Communications

Another important component of the wealth-building strategy is risk management. Dealers need to have a clear understanding of the risks associated with their operations and develop strategies to mitigate them. This includes having contingency plans in place to address potential disruptions in the supply chain as a result of re-routed components from suppliers, fluctuations in demand, and changes in regulatory policies. By proactively managing risks, dealers can minimize their impact on their business and ensure continuity.

In addition to these strategies, dealers should also focus on building strong relationships with their customers. In a highly competitive market, customer loyalty can be a significant differentiator. Dealers should invest in initiatives that enhance the customer’s experience, such as personalized marketing campaigns, loyalty programs, and exceptional customer service. By building trust and rapport with their customers, and an overall sense that we are truly all in this together, dealers can create a higher level of loyal customers that are less sensitive to price increases and more likely to return for future purchases.

Furthermore, dealers should stay informed about the latest developments in the automotive industry and the broader economic landscape. This includes keeping abreast of changes in consumer preferences, technological advancements, and regulatory policies. By staying informed, dealers can anticipate market trends and adjust their strategies accordingly. This proactive approach enables dealers to stay ahead of the competition and capitalize on emerging opportunities.

The current tariffs present a unique challenge for auto dealers, but they also offer an opportunity to reassess and strengthen their wealth-building and F&I portfolio game plan. By collaborating with their administrator and financial advisors, diversifying their operations, managing risks, building strong customer relationships, and staying informed about industry developments, dealers can navigate the current economic climate and position themselves for long-term success.

The need for auto dealers to have the right wealth-building and F&I portfolio game plan is more critical than ever. The economic volatility resulting from the administration’s tariffs requires dealers to adopt a proactive and strategic approach to their operations. By focusing on diversification, risk management, customer relationships, and staying informed, dealers can mitigate the impact of price increases on consumers and maintain profitability. This comprehensive strategy will not only help dealers weather the current economic storm but also build a solid foundation for future growth and success.

About The Author: Tim Blochowiak is the VP-Sales, Client Wealth, Financial Institutions, and Training for Protective Asset Protection.

1: https://www.reuters.com/business/autos-transportation/study-finds-t...