Publics see FI gain in Q3, buoyed by add-on sales

A rise in F&I product penetration aided all six public new-automobile car dealer groups to enjoy third quarter gains in F&I revenue per-vehicle retailed. AutoNation Inc., the biggest of the firms, set a report.
In the 3rd quarter, AutoNation averaged $1,549 in F&I revenue per-vehicle retailed on a same-store foundation, an all time large for the six public stores. It turned out to be a 10.4% increase over the year-earlier period.
Higher merchandise and car support agreement penetration, along with higher sums funded per trade and much more clients funding their automobiles through AutoNation shops, drove the upsurge, mentioned Marc Cannon, AutoNation's CMO.
Lithia Motors Inc. noted the second-biggest increase in typical F&I revenue per-vehicle in the quarter, up 5.9% to $1,274 on a same-store basis.
F&I merchandise sales are growing support retention at Lithia car dealers, business executives said during an earnings call the other day. Service agreement sales grew 45% in the third quarter on a same-store basis, the firm said.
"The company're considering the goods and making certain we've the best products at every shop and ensuring our pricing is consistent with all the marketplace," Lithia CFO Chris Holzshu said through the call.
Sonic Automotive noted the next-biggest increase. On a same-store foundation, its third quarter F&I revenue per-vehicle jumped 5.6% to $1,279, thanks to large automobile service agreement penetration, CFO Heath Byrd told Automotive News in a message.
Appearance protection
Group 1 Automotive Inc. said its third quarter F&I revenue per-vehicle retailed increased 3.8% to $1,518 on a same-store basis.
"F&I work every day-to enhance underperforming shops and raise our merchandise penetrations," Peter DeLongchamps, vice-president of financial-services and manufacturing company relations, mentioned during a conference-call a week ago.
Through September, Group 1's U.S. car dealers have offered car service contracts at a penetration rate of 40%. DIFFERENCE policies are selling in a speed of 28-percent. The business said it arranged funding on 7 3% of new- and used-car trades.
Group 1 is additionally working to market F&I items that make "trade ins cleaner and worth more money," such as score policies and paint and material protection, DeLongchamps stated.
The business said consolidation of its own lender foundation, pre-downturn loan availability, enhanced subprime financing and conformity training also helped foster F&I profitableness per retail device.
"More lenders have recognized that the dangers are lower" with sub-prime lending, DeLongchamps informed Automotive information. "More lenders have a bit more desire to get slightly down the FICO [credit rating] group."
Training, performance
Penske Automotive Group Inc. and Asbury Automotive Group additionally are stressing F&I products.
Penske's F&I revenue per-vehicle retailed grew 2.5% on a same-store basis to $1,1 2 3, "basically driven by improved merchandise penetration," Tony Pordon, executive vice-president of investor relations and corporate development, informed Automotive information. "Our emphasis continues to be to raise training and enhance procedures to drive merchandise sales."
Asbury Automotive Group's third quarter F&I revenue per-vehicle increased 2.1% on a same-store basis to $1,362. Matt Pettoni, Asbury's vice-president and treasurer, mentioned greater penetration of "worth-improving insurance goods" and Asbury's F&I team's performance drove the increase.
AutoNation, of Fort Lauderdale, Fla., ranks No. 1 on Automotive News' listing of the top 150 car dealer groups centered in the United States, with retail revenue of 318,008 new automobiles in 2014. Penske ranks No. 2 on the listing, with re-tail revenue of 216,462 new models last year, and team 1 rankings No. 3, with re-tail revenue of 166,896 new models. Sonic ranks No. 5 on the listing, with new-device re-tail revenue of 135,932; Asbury rates No. 7, with 91,560; and Lithia ranks No. 8, with 91,192.

It's possible for you to reach Hannah Lutz at [email protected].

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Finance & Insurance
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03.11.2015
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