Dealers have long feared that the Consumer Financial Protection Bureau would find a way to wreak havoc in dealership F&I offices, even though it has no direct jurisdiction over dealerships except buy-here, pay-here stores.
Now some lawyers representing auto lenders fear the bureau will turn its scrutiny on aftermarket products. The bureau already is investigating dealer reserve -- the profit dealerships make by marking up the interest rate consumers pay on loans arranged at the dealership.
It is telling that AutoNation Inc. CEO Mike Jackson is watching closely to see whether the bureau goes after finance and insurance products next. About two-thirds of AutoNation's F&I revenue comes from product sales and one-third from dealer reserve. For the first quarter, that worked out to an estimated $882 per vehicle in product sales and an estimated $441 in dealer reserve.
Jackson, a self-proclaimed "worrier," says going after add-ons such as extended-service contracts makes little sense because the number of complaints in the industry relative to the volume of such product sales is "minuscule."
That ought to make a difference in Washington, but it probably won't.