Finance-and-insurance profits surged in the third quarter for all six publicly traded retailers as consumer demand and short supply pushed up pricing on new- and used-vehicle sales.
In a record-setting quarter amid the coronavirus pandemic, all six retailers raised same-store F&I profits by more than $100. Several public groups reported record-high F&I profit per vehicle, and two earned more than $2,000 on average in F&I profit per vehicle sold. New leadership, ongoing training and technology improvements in the finance office were among reasons given for the growth.
Group 1 Automotive, of Houston, raised average F&I profit per vehicle retailed in the U.S. in the third quarter to $2,041, the second retailer to do so after AutoNation Inc. F&I profit per vehicle retailed rose 17 percent, or $290, the most improved profit growth among the public groups.
Companywide, including dealerships in Brazil and the U.K., average F&I profit per vehicle was $1,655. Daryl Kenningham, Group 1 president of the U.S. and Brazil, told investors in a call last week that F&I was a major profit driver in the quarter.
"Despite the decline in same-store unit sales, our record same store F&I performance of $2,041 allowed us to maintain prior-year F&I gross profit levels," he said, attributing the gain to higher F&I product penetration.
The other public groups reported these results in same-store F&I profit per vehicle:
- AutoNation, of Fort Lauderdale, Fla., up 11 percent, or $213, to $2,154
- Asbury Automotive Group, of Duluth, Ga., up 13 percent, or $208, to $1,830
- Sonic Automotive Inc., of Charlotte, N.C., up 7.6 percent, or $122, to $1,722
- Lithia Motors, of Medford, Ore., up 9.8 percent, or $144, to $1,617
- Penske Automotive Group, of Bloomfield Hills, Mich., up 11 percent, or $139, to $1,416.
Sonic President Jeff Dyke said on an Oct. 29 call with analysts and investors that continued growth in F&I per vehicle sold was among the reasons for the record quarterly results based on adjusted earnings per share. Still, Dyke sees room for improvement.
"We get it a little better and a little better as an organization. And October is no different," he said. "There's a lot of upside, and when you place that upside — a couple of hundred dollars a car on the kind of volume that we do — that's a big number."