Publics' F&I push could put pressure on lagging stores
Sonic, Asbury underperformers can expect extra F&I training
 | Sonic’s O’Connor: F&I targets are enforced. |
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Public retailers want more F&I revenue per vehicle, and F&I product sales, they agree, are where they expect to get it.
That could mean added scrutiny for group dealerships with lagging aftermarket sales.
Companies vary as to where the cutoff is for dealerships to get extra support and attention from headquarters -- or extra heat, depending on your point of view.
Some public dealership groups say they concentrate on the stores that produce the least F&I revenue per vehicle.
"How do you grow it from where it is?" said COO Michael Kearney of Asbury Automotive Group. "I think if you focus on the bottom third we will in fact drive that number up."
Richard O'Connor, Sonic Automotive Inc.'s vice president in charge of F&I, said his company has focused on its bottom 25 percent "for years."
Asbury last month reported a record average of $1,200 per vehicle in F&I revenues. That was up 8 percent from a year earlier and 18 percent from two years ago.
In a conference call for investors and analysts, Kearney said F&I product sales are where the biggest growth potential is, as opposed to higher loan or lease penetration.
"I think it is a function of products that are available to protect the consumer," he said. "Extended warranty and prepaid maintenance are bargains. They're convenient for consumers. They are utilized."
GAP, or guaranteed asset protection, insurance "is another product that is very effective at protecting the consumer," Kearney said. "So I think when we continue to educate the consumer and create awareness for that, more of those products are sold, and that does create an enhancement on the PVR [per-vehicle-retailed] line."
Underperforming dealerships can expect an extra dose of F&I training. Kearney said the dealership group does make some allowances based on brand. For instance, he said it's unrealistic to expect dealers to sell prepaid maintenance to customers whose cars come with scheduled maintenance as part of the purchase price.
Sonic's O'Connor said his company's below-average dealerships also can expect extra F&I training and closer attention to executing a "playbook" of best practices.
The group also holds dealership general managers accountable for F&I performance, he wrote last month in an e-mail answer to questions.
Sonic reported second-quarter earnings on July 23. Average F&I revenue per vehicle was $1,055, up 5 percent.
Like Asbury, Sonic also takes into account some variations in F&I targets by brand, O'Connor said. Dealerships also have input into setting their own targets -- but the targets are enforced.
"If they turn in a forecast of 40 percent VSA [vehicle service agreement] penetration," he said, "we expect them to hit it."
You can reach Jim Henry at autonews@crain.com.
