F&I managers at new-car dealerships didn’t earn significantly more in compensation in 2014 than sales managers, new data from the National Automobile Dealers Association show.
It’s the second year in a row that’s happened. And one expert familiar with the numbers expects the trend to last.
In 2014, the median same-store compensation for F&I managers was $122,692 vs. $118,388 for sales managers, a $4,304 difference, according to NADA’s 2015 Dealership Workforce Study released Tuesday, the first annual study for which same-store data were tracked.
On a consolidated basis, though, the gap was slimmer. The median salary for F&I managers was $121,482 while for sales managers it was $120,834, a difference of only $648. The figures represent a 4.9 percent increase in F&I managers’ compensation and a 4.4 percent increase in sales managers’ pay.
The gap between F&I manager and sales manager compensation in 2013 was even smaller than in 2014. On a consolidated basis, median pay for an F&I manager declined 3.8 percent to $115,784, while the median for a sales manager rose 2.8 percent to $115,771.
2013 broke the trend of F&I managers’ compensation rising faster than sales managers’ pay, according to Ted Kraybill, president of ESI Trends, the research firm that prepares NADA’s annual work force studies.
In 2012, on a consolidated basis, F&I managers’ pay grew 8.4 percent from the prior year. For sales managers the increase was 6.5 percent. The average pay for an F&I manager in 2012 was $128,434 vs. $122,549 for sales managers.
F&I pay historically higher
F&I managers historically have been paid more than most dealership employees, a trend that continues.
On average, F&I managers’ annual compensation in 2014 was $131,417 on a same-store basis, up 1.1 percent from 2013. Sales managers’ annual compensation increased 1.4 percent to $124,714, $6,703 less than F&I managers’ pay.
The median compensation, however, shows the most accurate depiction of compensation changes, Kraybill said, because it’s the middle of the bell curve.
Dealers have been pushing to improve gross F&I profit margins to replace shrinking new-car sales margins, Kraybill said. And “most F&I manager pay plans are based on some percentage of the typical gross profit they are earning,” he said. “If the percentage the F&I manager is receiving is not changing, F&I managers’ pay will go up with the F&I gross profit margin.”
Similar pay ‘reasonable’
In the past few years, dealers have been giving F&I managers’ compensation plans more attention so F&I managers don’t benefit unduly as dealers’ goals for back-end profit lean in their favor, Kraybill said.
F&I managers’ “closing ability on F&I products may not be changing, but gross profits per unit may be going up with the focus on F&I,” he said.
Kraybill said he would be surprised if compensation returned to the old trend of F&I managers’ pay increasing faster than that of sales managers.
“Sales managers and F&I managers making similar salaries is a fairly reasonable scenario,” he said. “Some would argue sales managers should make more because if sales don’t close, they don’t go to F&I.”
Other F&I findings
NADA’s 2015 Dealership Workforce Study was based on 290,000 payroll records and questionnaires from dealership employees. NADA collected the information during 2014. Among the areas studied were employee turnover rate and the number of women employed.
The study found that in 2014 F&I managers had a turnover rate of 36.7 percent, a 5 point increase over 2013. That compares with a turnover rate of 26.3 percent for sales managers, a 0.2 percent decrease from the year earlier.
But the difference between F&I managers’ turnover rate at luxury dealerships and nonluxury stores is relatively small, at 38 percent for nonluxury and 32 percent for luxury.
The study also found that F&I managers, along with service advisers, had the highest percentage of female employees among their ranks. Women made up about 17 percent of both the F&I manager and service adviser employee pools.
In 2013, 20 percent of employees in the F&I office were women. However, ESI adjusted this year’s study to include only F&I managers, not F&I assistants, who had been part of prior studies. About 17 percent of service advisers in 2013 were women.
Only 5 percent of sales managers in 2014 were women, and in the industry overall, only 18.5 percent of employees were women, an increase of less than one point over 2013.
By the end of 2014, women filled only 8 percent of the nine dealership positions the study focused on: general manager, sales manager, sales consultant, F&I manager, service manager, service adviser, service technician, parts manager and parts consultant. Women represented 91 percent of employees in office and administrative support positions.