F&I profit per unit rises at 5 of 6 public dealership groups

Editor's note: An earlier version of this story misstated the contribution to Group 1's F&I profits from Val-U-Line, a proprietary brand for older-model, higher-mileage used vehicles.

Five of the six public new-vehicle dealership groups improved average F&I gross profit per vehicle in the third quarter, driven by growing F&I product penetration and F&I training efforts, the companies said.

F&I profit per unit declined slightly for Asbury Automotive Group Inc., of Duluth, Ga., whose average gross profit per vehicle on a same-store basis dipped $16, or 1 percent, to $1,524. Meanwhile, total F&I gross profit was up 5 percent.

Asbury CEO David Hult said on a call with investors last week that some of the profit decline had to do with a heavier mix of used vehicles in the group's inventory.

"We saw the finance penetrations just drop slightly. We have had some pretty solid performance in F&I for a while, but I see us maintaining that range of F&I," Hult said.

AutoNation Inc., of Fort Lauderdale, Fla., ranked No. 1, boosted same-store F&I profit per vehicle 6.4 percent, or $107, to $1,781. CEO Mike Jackson attributed the consistent growth to AutoNation's branded F&I product sales.

The four other public retailers also boosted same-store F&I profit per vehicle:

• Group 1 Automotive, of Houston, rose 7.9 percent, or $123, to $1,685.
• Sonic Automotive Inc., of Charlotte, N.C., rose 2.8 percent, or $39, to $1,444.
• Lithia Motors Inc., of Medford, Ore., rose 10.5 percent, or $133, to $1,399.
• Penske Automotive Group Inc., of Bloomfield Hills, Mich., rose 5.8 percent, or $68, to $1,244.

Sonic President Jeff Dyke told Automotive News that the record F&I profit per vehicle was driven by continued execution of the company's playbooks and training and assistance from JM&A Group, an F&I product provider and training company in Deerfield Beach, Fla.

"I just cannot tout them enough. They do a fantastic job for us. I wish we had been on with them a long time ago," Dyke said. "They've just really done a good job for us, and it's certainly showing up in our performance."

Dyke said Sonic F&I profit per vehicle could reach around $1,600 in 2019 on the strength of the company's used-only EchoPark locations, whose F&I profit per vehicle ranges between $2,000 to $2,200.

At Group 1, financing levels remained steady, but the company has increased its F&I product sales, senior vice president Pete DeLongchamps told analysts and reporters on a call Thursday. The company makes more F&I profit on new-vehicle sales than on used, DeLongchamps said, but added that used-vehicle F&I sales remain consistent.

Val-U-Line -- Group 1's proprietary brand for older-model, higher-mileage used vehicles -- typically generates about a third of the F&I income, on average, that the company realizes on new vehicles, DeLongchamps said.

At Lithia, product sales drove profits. Of the vehicles sold in the quarter, Lithia stores arranged financing on 72 percent, sold a service contract on 46 percent and sold a lifetime oil product on 24 percent, according to executive vice president Chris Holzshu.

Areas ripe for F&I opportunity are recently acquired stores that need time to get up to speed operationally. Newer acquisitions average $800 of F&I profit per vehicle, Holzshu said, compared with others that make about $1,500. "It gives us a real opportunity for us to continue to focus on the upside potential of more F&I growth," he said.

The company's three-pronged approach -- hiring high-performing F&I managers, selling the right products in the right markets and implementing a consistent process from start to finish -- is unchanged from previous quarters.

Holzshu said Lithia's associates "understand what a win looks like, and they're compensated to fulfill the mission of delivering the products that we have."

Melissa Burden contributed to this report.