As the automotive industry navigates a challenging economic landscape, one truth is becoming increasingly clear: Finance & Insurance (F&I) is no longer a secondary revenue stream; it’s mission-critical for dealer survival.
With margin pressure mounting and inflation driving up operating costs, the traditional reliance on vehicle sales alone is under strain. For many dealerships, F&I income will be key in maintaining profitability. This reality demands a strategic shift in how dealers approach the sales process and customer engagement.
Why F&I Matters More Than Ever
In 2025, the Federal Chamber of Automotive Industries (FCAI) reported that Australia’s automotive market recorded 1,209,808 new vehicle sales, a testament to the sector’s resilience and ongoing consumer appetite for choice. Despite a slight dip in overall volumes, demand remains strong as buyers embrace a diverse range of models for family, business, and leisure needs. The market is also shifting as advanced technologies become increasingly accessible.
December capped off the year on a positive note, with 98,744 vehicles sold, up 3% on December 2024. While these figures signal stability, they also highlight the growing profitability challenge, making Finance & Insurance (F&I) a vital component for dealerships looking to maintain margins in 2026.
This growth underscores the importance of finance as a core component of dealership profitability. Yet, the market is evolving rapidly. Digital disruptors and fintech players are reshaping consumer expectations, while Millennials and Gen Z now represent the largest cohort of car loan holders (Loans). These buyers value transparency, speed, and convenience, and they’re quick to research and compare options online.
Dealerships that fail to adapt risk losing ground to competitors who can deliver a seamless, customer-centric finance experience.
Challenges Dealers Face
Insights from our recent FinanceConnect webinar, Optimising Dealership F&I Performance, revealed the top hurdles dealerships encounter in converting finance opportunities:
- Assessing customer needs effectively
- Overcoming negative perceptions of dealership finance
- Driving customer engagement early in the buying journey
- Ensuring speed in quoting and follow-up to prevent customers from seeking alternatives
These challenges can be overcome, but they require disciplined processes and the right tools.
Opportunities for Improvement
The best-performing dealers share common traits: well‑structured processes, both within and beyond the business manager’s remit. They proactively engage customers early, understand their F&I position or sales status, and create opportunities for finance conversations to begin as soon as possible. Beyond that, they actively seek additional revenue streams to offset shrinking gross margins by offering a suite of value‑added products, including maintenance plans, aftermarket protection and accessories.
These offerings not only boost profitability but also enhance customer loyalty by delivering tangible value.
How to Gain a Competitive Edge
Customer experience is the new battleground. Dealers can differentiate themselves by:
- Pre-qualifying customers early to streamline approvals
- Prioritising speed and convenience throughout the finance process
- Delivering transparent, customer-centric service that builds trust
Technology plays a pivotal role here. Indiqator’s suite of tools helps dealerships qualify leads faster, reduce friction in quoting, and improve visibility across the customer journey.
The Bottom Line
In 2026, F&I is not just an add-on; it’s a lifeline. Dealers who embrace innovation, optimise workflows, and focus on customer-centric strategies will not only survive but thrive in a market defined by tight margins and heightened competition. Those who don’t risk being left behind.
👉 Learn more about our Finance and Insurance platform, FinanceConnect or request a callback from our team by completing this contact form.
