Large, publicly held dealership groups use their size and resources to standardize training and speed transactions to produce steady revenue from their finance and insurance departments.
The six largest public groups generated an average of $861 in F&I income per vehicle sold in 2005, according to the Automotive News Data Center.
Lithia Motors Inc., a public dealership group in Medford, Ore., boasted the highest F&I revenue of the largest public groups in 2005 at $1,059 per vehicle. That's up from $1,014 in 2004.
AutoNation Inc., the largest public group in the United States, was second last year with $982 per vehicle, followed by Group 1 Automotive Inc. with $957 and Sonic Automotive Inc. with $926.
Training is key
Large dealership groups often employ regimented training programs, which make workers more effective, says David Robertson, executive director of the Association of Finance and Insurance Professionals in Colleyville, Texas.
Robertson says large groups can use competition among workers and incentives such as trips to spur productivity.
AutoNation is quick to tout its training program, which offers up to five levels of instruction for the more than 1,000 F&I professionals in its stores. "I really think it's the training infrastructure," says COO Michael Maroone. "We've got a very robust training force."
Asbury Automotive has an eight-week training and certification program, as well as a school to turn salespeople into F&I administrators.
"We want it done right," says Charles Robinson, Asbury's F&I vice president.
Lithia tries to bring expertise to local stores with its 10 full-time training professionals who roam the country, CFO Jeff DeBoer says.
"We have very, very extensive training programs," he says, including centralized instruction and on-the-job training.
Robertson says that large dealership groups make F&I a key element of their corporate objectives and says F&I departments often get close attention from upper management.
Pete DeLongchamps, vice president of manufacturer relations and public affairs at Group 1 Automotive, says the company has added staff to ensure compliance with state and federal regulations.
"For anyone in the car business, this is a central topic," he says.
Lithia focuses on making the car-buying process as speedy as possible, says DeBoer.
The dealership group does little negotiating during the deal and none during the F&I segment of it, when menus are used, he says. Menus display all the F&I products and let customers select what they want. Menus also show legal disclosures, which can protect dealers from allegations of hidden payments.
Central to getting customers in and out quickly is simply having enough employees, DeBoer says. Lithia has two or three people per store in F&I and four or five in larger stores, he says. The company aims to have F&I personnel doing about 40 to 50 deals a month, DeBoer says.
"That's why we're successful - we have more staffing," he says.
DeBoer says this translates into 75 to 80 percent of the group's customers using some form of financing through Lithia. He says 43 percent of its customers sign service contracts.
Lithia's numbers align with the industry average.
In 2005, about 74 percent of used-car buyers and 80 percent of new-car buyers used some form of financing, according to Life of the South, a Jacksonville, Fla., insurance company.
It also found that about 41 percent of used- and 33 percent of new-car buyers signed a service contract.
Nonpublic groups also stress training, which is critical in maximizing F&I revenue. Many do it well. According to the Automotive News Data Center, the largest nonpublic groups in its top-100 rankings take in an average $1,048 in F&I income per car.
Dorschel Automotive Group, of Rochester, N.Y., averages $900 to $1,200 per vehicle in a good month.
Uses menu selling
Eric Pappert, business manager for Dorschel, said the approach of the five-store dealership group is similar to that of a public group. It has used menu selling since the late 1990s and uses occasional spiffs to nudge sales.
Pappert also says his group can act like a small store by building customer loyalty, which he says is his biggest advantage over publics.
"I think we have distinct advantages," Pappert says. "I don't think anyone is a lifetime Sonic customer."
Donna Harris contributed to this report
You may e-mail Greg Migliore at [email protected]