The growth of digital retailing is broad-based in the auto business.  

It runs the gamut from startups offering consumers peer-to-peer or direct-to-consumer online car-buying, to companies like Cox Automotive and CDK Global helping facilitate digital retailing at dealerships. And even certain pieces of the car-buying process are becoming more digitalized — for instance, consumers being able to get a price on their trade online.

And as digital retailing continues to grow, it may have an effect on the F&I office, says Kelley Blue Book senior analyst Alec Gutierrez.

“I would honestly say, within two or three years, I wouldn’t be surprised to see a majority of dealers having at least a buy-it-now, shopping-cart, digital retailing solution integrated into their websites,” Gutierrez said during a conference call with the media on Friday.

“Now, with that said, just because there’s a button that says you can buy this thing online doesn’t mean you’re going to find a ton of consumers willing to make that leap. I would say you’re going to see a minority of the market (go that route),” he said.

Gutierrez estimates that the proportion of consumers “willing to go point to point and finalize the deal” would be 5 percent or lower.

However, he believes there will be “more and more willing to at least start the process, apply for credit, get a real deal baked and perhaps just not sign on the dotted line, but at least walk into the dealership fully informed on what they should expect to pay.”

Gutierrez has spotted improvements in F&I and extended warranty penetration among dealers his company works with that have implemented “more transparent pricing online, where they’re providing actual pricing to market to consumers.”

As such, the customer and dealer don’t spend 45 minutes or an hour going back and forth on the price of the car or the value of the trade, he said.

“When you’re not focused on getting the right price on the purchase and trade, you’re a little bit more open to spending time on the test drive, understanding the values of the car and ultimately understanding how to protect that car by an extended warranty and some of the other products that are available in the F&I office,” Gutierrez said.

“As digital retailing takes more of a foothold as consumers are better informed in terms of what they should expect to pay at the dealership, what they should expect to receive for their trade before they walk in the door, I would suspect that you’re going to see the profit centers of the dealership shift more and more into the F&I office.”

Over at AUL Corp., a service contract administrator, chief operating officer and senior vice president Jimmy Atkinson shared his thoughts on the following question:

Given the way people shop for cars these days — with some buying completely online and many taking care of much of the process before they get to the dealership — how has that impacted the appetite for service contracts and extended warranties at the dealership?

“We are actually seeing a rise in dealership penetrations. The most recent data shows them around 42 percent,” Atkinson said. “We are seeing dealers make a more transparent process in F&I as a response to online shoppers and we think that over the next several years more deals will be negotiated and finalized online

“That will mean the service contract and other F&I products as well. There is a strong demand for the service contract as vehicles become more expensive, automated and complex.”