The inventory shortage of 2021 fostered higher finance and insurance gross profit per vehicle as customers borrowed larger amounts and sought to protect the vehicles they could find.
But at least some of the elevated F&I profitability dealerships experienced could be sustainable even when inventory returns and vehicle prices fall, experts say. F&I managers have been increasing vehicle protection product penetration — and that gain might endure.
"That is a little more structural," J.P. Morgan autos analyst Rajat Gupta said. "That is a little more permanent. And maybe it can even go higher."
But Elliot Schor, vice president of sales operations for F&I products provider JM&A Group, said a decline also is possible.
"As supply increases, we can expect that downward pricing pressure on overall [profit per vehicle] will exist — on front-end gross, finance reserve, and on F&I income," Schor said in a statement this month.