F&I -- it's magic

Jim Henry is a special correspondent for Automotive News.
I'm adding my welcome to our new F&I newsletter and my perspective on the crucial importance of the whole F&I space, which was newly reinforced at the NADA convention in Orlando.

By my count, there were at least 74 vendors at the NADA Expo that identified themselves as F&I-related. I also encountered several late arrivals who didn't make the earlier roster.

What they all have in common is what I think of as the "magic multiplier effect" of the F&I office on the bottom line: F&I more than any other dealership department contributes far more to gross profits, in percentage terms, than it gets in revenues. (Service and parts is in second place in that regard.)

For instance, AutoNation Inc., the country's largest dealership group, recently reported it got about 3 percent of its revenues from F&I in 2009 -- and 18 percent of its gross profits from F&I. New-car sales took in 53 percent of the revenues and generated only 20 percent of the gross profit.

F&I made almost as much on 3 percent of revenues as new cars made on 53 percent.

True, you do need both. But that's a good illustration of why everyone in the business should keep up with F&I topics.