Most big dealership groups lift F&I revenue
Some small players reap hefty per-unit grosses
Finance and insurance revenue is rising at an overwhelming majority of the nation's largest dealership groups.
And while the public groups are the big boys in new-unit retail sales, they generally rank in the middle third of large dealership groups in F&I revenue per vehicle retailed. Some much smaller players get substantially more F&I revenue per vehicle.
Those are some of the insights from data on large dealership groups' F&I revenue, as compiled by the Automotive News Data Center.
Of the 125 largest dealership groups based in the United States, as ranked by new-unit retail sales, 83 increased their average F&I revenue per new or used vehicle retailed in 2013 from 2012, the data showed.
Just 35 of the 125 had a drop in F&I revenue per vehicle retailed. Of those, only eight had a double-digit drop. For seven of the 125, data were insufficient to make a year-over-year comparison.
In contrast, 35 of the top 125 dealership groups posted a double-digit increase in average F&I revenue per vehicle retailed last year -- and seven posted increases of 25 percent or more.
"Seeing where the front-end grosses aren't where they were, maintaining a strong back end is increasingly important," said Jamie Bishton, vice president of Noarus Auto Group in Garden Grove, Calif. To do so, he said, "We have to, in all of our departments, make sure we have good people and good processes."
In 2013 Noarus Auto Group raised its average F&I revenue per vehicle retailed 55 percent -- the largest gain of any dealership group on the list -- to $1,030. The strong gain was the result of "just good management," Bishton said.
"We really have to -- every opportunity we have -- understand who that customer is and what the best options for them are," he said. "Don't leave anything on the table."
The ranking of dealership groups by F&I revenue differs substantially from the ranking of the top 125 groups by new-vehicle retail sales. Only two groups in the top 10 in unit sales cracked the top 10 in F&I revenue: Hendrick Automotive Group ranked No. 6 in units and No. 7 in F&I revenue, and Larry H. Miller Group of Cos., No. 10 in units, ranked No. 10 in F&I revenue, too.
In many cases, the difference in rankings was considerable. Among privately held dealership groups, Van Tuyl Group ranked No. 5 in units and No. 23 in F&I revenue while Staluppi Auto Group ranked No. 9 in units and No. 40 in F&I revenue.
Among the publicly traded dealership groups, AutoNation Inc., No. 1 in new-unit retail sales, was No. 38 in F&I revenue per vehicle retailed. Penske Automotive Group Inc., No. 2 in units, was No. 78 in F&I revenue.
The data are taken from the dealership groups' responses to the survey conducted by the Automotive News Data Center for the annual listing of the top 125 dealership groups based in the United States, as ranked by retail sales of new units.
The data may differ from those found elsewhere.
For example, publicly traded retailer Asbury Automotive Group Inc. posted average F&I revenue of $1,325 per unit retailed, the Automotive News Data Center data show. But the company reported average per-unit F&I revenue of $1,308 -- based on same-store sales -- in its public filings.
In another example, Ancira Enterprises in San Antonio said the Automotive News Data Center's calculations overstated its average F&I revenue per vehicle retailed.
The Data Center's figures, based on data supplied by Ancira, showed Ancira posting average F&I revenue of $2,020 per vehicle, which put it No. 3 on the list of dealership groups in that measure. But Joey Blackmon, vice president of operations, said that figure was inflated by F&I revenue at the group's two RV stores.
For car and light-truck F&I revenue alone, the group was closer to about $1,450, Blackmon said.
That still ranks Ancira in the top 30.
Blackmon said the company prides itself in topping the public dealership groups in F&I revenue per vehicle.
To get there, managers at Ancira's 15 stores practice menu selling -- most of the time.
"About 80 percent follow the menu," he said, while "the others have their own form of it" and often get better results. "So we leave them alone."
More important, he said, "We've pitched for a good spread of business. Try not to hit a home run in any one area. Our cancellations are just minuscule. It's not what you sell. It's what you get to keep."
He added, "If you do business right and don't try to charge an exorbitant amount for it, you'll be successful over the long haul."
Ancira has another advantage: its Texas location. Leasing is traditionally weak in Texas, where consumers know their long-distance drives will quickly put them at risk of a lease's mileage penalties. And leasing customers traditionally buy fewer F&I products.
That may be why the top five dealership groups in F&I revenue per vehicle retailed include one each from Texas, Oklahoma and Utah.
You can reach James B. Treece at email@example.com.