Four of the six publicly traded dealership groups in the first quarter posted lower year-over-year average finance and insurance gross profit per vehicle retailed the U.S. The drops were single-digit.
Only two groups showed increases in the first quarter of 2023, with AutoNation up 1.6 percent and Sonic Automotive up 0.1 percent.
Higher interest rates and vehicle affordability negatively impacted F&I sales in the first three months of the year, experts said.
| Asbury Automotive Group | Q1 2023 | Q1 2022 | Change |
|---|---|---|---|
| Avg. F&I gross profit per vehicle retailed | $2,352 | $2,544 | -7.5%  |
| F&I % of revenue | 4.8% | 5.3% | |
| F&I % of gross profit | 23% | 25% |
| AutoNation | |||
|---|---|---|---|
| Avg. F&I gross profit per vehicle retailed | $2,717 | $2,673 | 1.6%  |
| F&I % of revenue | 5.2% | 5.4% | |
| F&I % of gross profit | 26% | 28% |
| Group 1 Automotive | |||
|---|---|---|---|
| Avg. F&I gross profit per vehicle retailed | $2,259 | $2,449 | -7.8% |
| F&I % of revenue | 4.4% | 5% | |
| F&I % of gross profit | 24% | 25% |
| Lithia Motors | |||
|---|---|---|---|
| Avg. F&I gross profit per vehicle retailed | $2,197 | $2,259 | -2.7% |
| F&I % of revenue | 4.6% | 4.7% | |
| F&I % of gross profit | 26% | 24% |
| Penske Automotive Group* | |||
|---|---|---|---|
| Avg. F&I gross profit per vehicle retailed | $1,776 | $1,922 | -7.6% |
| F&I % of revenue | 3.3% | 3.6% | |
| F&I % of gross profit | 20% | 21% |
| Sonic Automotive** | |||
|---|---|---|---|
| Avg. F&I gross profit per vehicle retailed | $2,318 | $2,316 | 0.1% |
| F&I % of revenue | 4.1% | 4.2% | |
| F&I % of gross profit | 23% | 23% |
Asbury Automotive Group reported $2,352 in average finance-and-insurance gross profit per vehicle in the first quarter, up $119 from the previous quarter but down 7.5 percent from the first quarter of 2022.
The group hasn't experienced difficulties arranging auto financing, according to executives.
"Regarding consumer financing in general, we do not see a measurable impact of credit tightening in the quarter," said Dan Clara, Asbury operations senior vice president, during an earnings call April 25.
CEO David Hult said Asbury also wasn't affected by credit-tightening so far in the second quarter. But he noted only about 10 percent of Asbury's business historically is from customers with subprime credit, and in March that proportion fell to about 7 percent. Asbury's "core" consumer has a credit score above 700, he said.
Some lenders had tightened credit, Hult said. But Asbury has a pool of more than 250 partner lenders to pair consumers with on deals and "we just don't have an issue seeking lending," he said.
Asbury also provided an update on its F&I products provider Total Care Auto, which it acquired in 2021 as part of the Larry H. Miller Dealerships transaction. Asbury CFO Michael Welch said the Total Care Auto products had been introduced within legacy Asbury stores in Colorado, Texas and the St. Louis area, but the group still needed to expand to its locations in Georgia and Florida. He called the transition on track with Asbury's expectations.
"We're making good progress on getting that rolled out," Welch said. "It's just a slow process throughout the entire 2023."
Asbury, of Duluth, Ga., is No. 5 on Automotive News' list of the top 150 dealership groups based in the U.S., with sales of 151,179 new vehicles in 2022.
AutoNation saw mixed results in its F&I numbers for the first quarter, with an increase in gross profit per vehicle and a decrease in revenue.
The company booked $2,717 in average same-store F&I gross profit per vehicle, up 1.6 percent from the same period a year ago. That's $13 higher than fourth-quarter 2022.
The results come a few months after AutoNation closed on its purchase of lender CIG Financial, now called AutoNation Finance. The company is happy with the division's performance so far, CEO Mike Manley told investors and analysts on an April 20 earnings call.
"We're pleased with the effectiveness of [AutoNation] Finance and its ability to compete with other financial institutions and meeting our customer needs," Manley said, adding that the company will continue working with other lenders and has "great relationships" with them.
Market penetration for financial product offerings that AutoNation sells remains stable, Manley said, acknowledging that some consumers are sensitive to monthly payments as they deal with higher interest rates.
AutoNation, of Fort Lauderdale, Fla., is No. 2 on Automotive News' top 150 dealership groups list, retailing 229,971 new vehicles in 2022.
Group 1 Automotive generated $2,259 in average F&I gross profit per vehicle retailed in the first quarter, down 7.8 percent from the same period a year ago.
CEO Darryl Kenningham said in the company's April 26 first-quarter earnings call that the business has remained strong. Moving ahead, however, he said he expects continued softening of the business.
"We do expect some continued moderation in F&I gross profit due to pressure on finance penetration rates, driven by existing interest rates and slightly tighter lending requirements for some buyers," Kenningham said.
Group 1, of Houston, retailed 154,714 new vehicles in 2022 and is No. 4 on Automotive News' list of the top 150 dealerships groups.
Lithia Motors' average same-store F&I gross profit per unit retailed was $2,197 in the first quarter, down 2.7 percent. F&I was 26 percent of Lithia's gross profit in the quarter, up from 24 percent in the year-earlier period.
"The design and extension of our F&I product offerings that promote the retention of customers, help us maintain the relationship through the entire lifecycle of the vehicle for consumers at all affordability levels," said Lithia COO Chris Holzshu during the company's first-quarter earnings call on April 19.
Lithia, of Medford, Ore., retailed 271,596 vehicles in 2022 and is No. 1 on Automotive News' list of the top 150 dealership groups in the U.S.
F&I profit of $200 million, down 7.1 percent compared with the same period a year ago.
Excluding Penske's U.K. agency sales, worldwide same-store retail F&I gross profit per vehicle retailed was $1,776. That was down 7.6 percent from $1,922 in the first quarter a year ago.
Higher monthly vehicle payments in the quarter contributed to consumers' willingness to purchase insurance products, Executive Vice President Tony Pordon told Automotive News. That likely put negative pressure on Penske's first-quarter F&I business, the company said.
"Vehicle affordability for consumers is something to consider," Pordon said. "Additionally, we had a mix shift in our financing contracts to higher captive penetration."
Penske, of Bloomfield Hills, Mich., is No. 3 on Automotive News' list of the top 150 dealership groups based in the U.S., retailing 185,831 new vehicles in 2022.
Sonic's same-store average F&I gross profit per unit retailed was up 0.1 percent to $2,318 at its franchised dealerships in the first quarter. Finance and insurance represented 23 percent of Sonic's first-quarter gross profit, the same percentage as the same period a year ago.
"Despite an elevated interest rate environment that has reduced our finance contract penetration rate, F&I performance continues to be a strength, and we want to reiterate our guidance for full year 2023 F&I per unit at or above $2,400 per unit," Sonic Automotive CEO David Smith said during the company's first-quarter earnings call on April 27.
Sonic, of Charlotte, N.C., retailed 101,168 new vehicles in 2022 and is No. 6 on Automotive News' list of the top 150 dealership groups based in the U.S.
Mark Hollmer, John Huetter and Jack Walsworth contributed to this report.
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