As expenses rise and front-end margins shrink, dealers are examining some of the personnel they pay the most: finance and insurance managers.
Eight-rooftop dealership group Friendship Automotive Enterprises in Bristol, Tenn., is re-evaluating how F&I managers are compensated after a spike in F&I profitability drastically altered the status quo in the stores.
"Don't get me wrong, the top producers should be compensated more than fairly, but it's just gotten out of whack a little bit," Friendship COO Dustin Walters told Automotive News.
In 2017, F&I managers made $142,048 on average nationally, a 3 percent increase from the year prior, according to National Automobile Dealers Association data obtained by Automotive News. That compares with an average salary of $134,625 for sales managers and $121,918 for service managers. The only dealership position earning more on average than the F&I manager is the general manager, at $328,150.
F&I manager compensation rises by thousands of dollars on average each year, according to the data. A drastic pay disparity between F&I managers and their management peers could disrupt the traditional career path and make dealers question the value of the F&I position. Still, slashing or minimizing F&I pay could drive away talent, particularly if managers know they can make more down the street.
Industrywide, Walters said, depending on the store's sales volume, sales managers often make 3 to 4 percent of the gross profit on all transactions. If a customer finances through the dealership and buys F&I products, the F&I manager typically makes 10 to 15 percent of the F&I gross profit. But if a dealer wanted total manager compensation to be around 30 percent, Walters said, there's only so much gross to go around.
"For there to be so much gap in relation to the F&I manager ... who ultimately owes all their opportunities to the sales team — I have a little bit of a problem with that. Nothing happens until you sell a car, right?"
Inflated F&I pay also dismantles Friendship's traditional career path of salesperson to F&I manager to new-car manager to used-car manager to general manager. Who wants to rise through the ranks, Walters argues, if it means taking a pay cut?