Public retailers top $1,000 F&I per vehicle

F&I revenues rose at all six publicly traded dealership groups in the third quarter as their ongoing efforts to sell more F&I products, especially extended-service contracts, paid off.

All six topped revenues of $1,000 per vehicle. A year ago, Penske Automotive Group and Sonic Automotive Inc. were both below $1,000. AutoNation had the highest per-vehicle dollar amount in the latest quarter at $1,213, up 7.3 percent.

Group 1 Automotive Inc. reported its average F&I revenues per vehicle hit a record for any quarter at $1,156, up from $1,006 a year earlier. The previous record was $1,154 in the first quarter of 2008, just before the collapse of the car market.

The company said it got favorable pricing from auto lenders and F&I product vendors in return for doing more business with fewer companies. Group 1 is also concentrating on improving its subpar dealerships, CFO John Rickel said in an Oct. 25 conference call.

Specifically, he said selling service contracts in the service drive has helped.

"Bank fees have not fundamentally changed. We've taken a different tack. We are driving more market share to our key lenders,'' Rickel said. "We have taken a look at our operators who are below average. We are bringing the bottom half up to the middle, if you will."

Michael Kearney, COO for Asbury Automotive Group Inc., reported in a separate conference call last week that his group's high F&I results are sustainable. Asbury's F&I revenues per vehicle were up 15.2 percent from the year-ago quarter to $1,172.

To boost its F&I sales, Asbury has invested in F&I training, including extra training for F&I managers who don't hit their sales targets.

"As we stated a number of times, we started this retraining and implementation process about eight quarters ago and we will continue on it," Kearney said. "There's always a bottom third, so I think the margins, the F&I PVR (per vehicle retailed), are absolutely maintainable."

Lithia Motors Inc. said its sales penetration for extended-service contracts held steady at 40 percent. However, F&I revenues went up 23.6 percent overall from the year-ago quarter to about $23 million because Lithia's unit sales increased. F&I revenues per vehicle rose only slightly, to $1,017, from $1,002 a year ago. Within that number, finance reserves, in effect the dealer markup on loans, increased per vehicle to $395 from $340, Lithia said in an Oct. 26 presentation.

CFO Chris Holzshu said that's partly because Lithia is seeing fewer customers who finance through credit unions.

Said Holzshu: "We're moving away from credit unions and back to our traditional lenders, which pay us more transaction fees for the loans that we actually find for them."