Most experts agree the economy is not in a recession. Some, however, believe we could be entering one soon.

The good news is dealers might not feel the impact until the middle of 2023.

But in this period of economic uncertainty, it’s important to prepare your F&I department for a potential downturn.

Which steps are worth taking and which ones should be avoided?

Here are tips to recession-proof your dealership.

When finances get tight, potential customers tend to think twice before buying a new or used vehicle. And the customers you have might start exploring cheaper options for auto servicing and upgrades.

To keep the customers you have, it’s important to build long-term connections. This way, your customers will remember why they chose your dealership over the competition. Here are three strategies to help retention.

1. Follow up multiple times after each sale. Many dealerships follow up two weeks or earlier after each sale. But make sure to check in at the six-month and one-year marks, too. Ask customers about their overall vehicle experience, see if they need any upgrades and encourage them to come in for servicing.

2. Be genuine on every call. Instead of relying on call scripts, get to know your customers so you can personalize every interaction.

3. Document each interaction. Keep a record of every follow-up so you know when to reach out next.

When you create authentic touchpoints with your customers, you can build long-term relationships that keep your dealership top of mind.

Last year, nearly half of customers said their auto purchase cost more than expected. The impact: an 11-point dip in price satisfaction.

Vehicle price hikes are common, especially on the front end, with dealer-added markups and more pre-loaded items.

In a downturn, dealers need to be even more transparent with customers regarding the asking price throughout the entire selling process.

If a customer gets in over their head with payments, the chances of lender scrutiny toward the dealer is much higher; the first area of investigation will be the deal jacket.

To keep things aboveboard, here’s what I recommend:

  • Don’t pack payments. In the auto industry, it’s all too common to give inflated quotes or conceal back-end products. But payment packing isn’t just misleading — it’s also illegal. This practice can weaken your customers’ trust and push them away from your dealership.
  • Don’t go for the whale deal. If you’re scoring big on a sale, you might’ve pulled a little wool over your customer’s eyes (even if you’re not strictly packing payments). But in an economic crunch, it’s important to do what’s best for customers — even if that means a little less profit.
  • Give customers the right financing for their needs. Try to quote the shortest term at the best price. If customers want longer-term financing for lower monthly payments, consider suggesting a more affordable vehicle so they’re not making payments for years on end.

Vehicles have a long-term impact on customers’ financial well-being. Do right by your customers and they’ll remember. And there’s a good chance they’ll spread the word.

During a slowdown, it’s easy to focus on boosting revenue and put F&I compliance on the back burner. But that’s a risky approach. When your revenue is unstable, the last thing you want is to slip up on regulatory best practices and get slapped with a hefty fine.

That’s why dealers should use this period to invest in tools that can keep them compliant. Here are some options:

  • Consider an F&I audit. An F&I consultant can help you identify risk exposures (like sales practices that open you to liability) and point you toward the tools to correct them.
  • Invest in digital training tools. With learning management software and a mobile training program, you can improve regulatory compliance throughout your dealership.
  • Consolidate vendor services. Many dealers use multiple platforms to facilitate HR or EHS training. Instead, look for an all-in-one digital solution that can consolidate services at a fraction of the cost.

When you invest in F&I compliance, you can reduce your liabilities and boost your financial security.

During the 2008 recession, the dealers that survived looked for responsible ways to close deals and deepen customer relationships. As a result, the industry bounce back was historic.

There’s a good chance this slowdown will have a lighter impact. But the takeaway is the same: Beef up your F&I practices now and it will be easier to come out strong on the other side.