All six public new-vehicle dealership groups improved average F&I gross profit per unit in the first quarter, with AutoNation Inc. setting another record high. F&I training and an increase in product sales drove the overall lift, most of the retailers said.
AutoNation, of Fort Lauderdale, Fla., led the group with a record F&I gross profit per unit of $1,779 on a same-store basis, an 8.1 percent, or $134, rise over the year earlier.
The other five dealership groups also boosted same-store F&I profit per unit:
- Group 1 Automotive Inc., of Houston, rose $83 at its U.S. dealerships.
- Asbury Automotive Group Inc., of Duluth, Ga., rose $44.
- Sonic Automotive Inc., of Charlotte, N.C., rose $58.
- Lithia Motors Inc., of Medford, Ore., rose $71.
- Penske Automotive Group Inc., of Bloomfield Hills, Mich., rose $113.
AutoNation-branded product sales helped lift AutoNation's F&I profit per vehicle, CEO Mike Jackson said.
"We specifically have designed them knowing what consumers want," he said during a call with analysts this month. "We have priced them very attractively for consumers, and we have a higher percentage of consumers choosing those products than a year ago."
Product penetration improvements and training underperforming stores pushed Group 1's F&I profit per unit growth. Pete DeLongchamps, senior vice president of manufacturer relations, financial services and public affairs, said the work of the F&I teams in all three countries where Group 1 does business — the U.S., U.K. and Brazil — bolstered profits.
"At the end of the day, we keep working on the underperforming stores, and it's paid dividends. And, we're doing a much better job of selling products," DeLongchamps said last month.
Asbury's F&I profit gains were driven largely by the highest performing stores in the dealership group, an executive said. According to John Hartman, Asbury senior vice president of operations, training can help the bottom half catch up to stores in the middle of the pack.
Most large dealership groups partner with F&I training companies, Asbury CEO David Hult said last month, but "we have actually written our own curriculum and have our own internal training."
Asbury has relied on internal F&I training for almost four years, Hult added.
Meanwhile, Sonic credited its relationship with F&I product and training company JM&A Group for boosting F&I profit per vehicle in the quarter. F&I growth at Sonic's used-only EchoPark locations also helped lift overall F&I results.
Lithia increased its F&I profit per unit by enhancing the F&I operations at the dealerships it has recently acquired.
When dealerships are acquired by Lithia, the F&I office may not provide a full offering of products, CEO Bryan DeBoer said. The average store purchased by the group sells about $670 per unit, less than half of Lithia's overall average of $1,380 per unit.
"We'll get some of the gains by expanding our product base. We'll be more efficient in our pricing models," DeBoer said. "We may make a couple people changes, which may happen from the sales management, and starting online, where you introduce finance products earlier in the process."
This, combined with partnerships with lenders that allow more competitive pricing, helps increase profit margins on each vehicle, DeBoer said.
Jamie LaReau and Hannah Lutz contributed to this report.