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Public dealer groups keep raising the F&I bar

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It's getting tougher for the public new-car retailers to post big percentage increases in F&I revenue per vehicle retailed, following a decade of almost continuous growth that, after the downturn, reached new highs.

"The higher the number gets, the hurdle gets a little bit harder to jump over," Michael Kearney, COO for Asbury Automotive Group Inc., said during a conference call for investors last month.

Along with Asbury, the large publicly traded new-car dealership groups are Group 1 Automotive Inc., AutoNation Inc., Sonic Automotive Inc., Lithia Motors Inc. and Penske Automotive Group Inc.

Asbury's average F&I revenue per retail vehicle reached $1,308 in 2013, up 46 percent from $896 in 2009. Asbury's F&I revenue per vehicle has increased 55 percent since 2004, when it was $843, a review of the company’s annual reports shows.


Kearney said Asbury's improvement in F&I was, as it was at the other public groups, largely a matter of sticking to the basics.

"Our strategy and practice within the F&I segment of our business remains unchanged," he said during the conference call. "Disciplined execution of F&I sales processes and training create solid, reliable growth in results."

For the six large publicly traded new-car retail groups combined, the average F&I revenue per retail vehicle reached $1,219 in 2013, up 26 percent from a recent low of $966 in 2009, company reports show.

Three of the groups -- Asbury, AutoNation and Group 1 -- topped $1,300 per unit, on average, in 2013.

From 2009 to 2013, Group 1's average F&I revenue increased 35 percent to $1,345 per unit retailed. AutoNation's growth over that period, at 23 percent, was just below the six groups' combined average. But AutoNation had the highest per-vehicle average in 2013, at $1,361. AutoNation said its 2013 total was an all-time record.

Lithia lags

A decade ago, Lithia had the highest per-vehicle F&I revenue of the group at $1,014, but its increase has lagged the rest. From 2004 to 2013, Lithia's average F&I revenue per retail vehicle increased about 11 percent to $1,122.

That's partly because of a shift in strategy. For the past couple of years, Lithia has concentrated on selling a greater mix of what it calls Value Autos: used cars with more than 80,000 miles on the odometer. Margins may be higher on those cars themselves, but their customers have less of a budget for F&I, the company said.

Lithia CFO Chris Holzshu said that for 2014, the company expects to increase its average F&I revenue per retail vehicle by selling more F&I products, such as lifetime oil-change policies. "We definitely know we have opportunity ... compared to our peer group," he said.

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