Industry News

Let em “buy”

Menu’s – Presenting value and all the options, is in fact allowing them to buy.  In 2013 most everyone has a menu “in the deal”.  This doesn’t mean F&I is actually menu selling.  The truth is still most are “Step Selling” and using a menu to do that.  Self-Exam – Is your finance department allowing your clients “to buy” from the dealership?  The answer is likely 100% NO, if any viable product you have is less than 10%.  It doesn’t matter if you tell me or yourself the menu is in the deal.  If less than 10% is a highly probable indicator your manager(s) are likely step selling, using a menu and likely NOT menu practicing buying. Don’t believe me!  Well 10% of the people buy anything, right? (more…)

The End of Truecar? Maybe…

When Truecar first burst onto the scene, some thought it was a good idea. Only paying for delivered customers sounded much better than the ocean of junk leads being sold back then. 

Unfortunately, it wasn’t long before ridiculous pricing practices caused lots of backlash. Then in 2011, for various reasons things got even uglier. I’m talking legal battles and a mass exodus of dealers. It got so bad in fact, the number of dealers using Truecar dropped from 5600 in 2011, to barely 3,600 by March 2012. After taking a $75,000,000 blood bath, CEO Scott Painter was forced to make some major changes.


Raising the F&I bar

Automotive News | March 12, 2014 – 11:00 am EST

It’s getting tougher for the public new-car retailers to post big percentage increases in F&I revenue per vehicle retailed, following a decade of almost continuous growth that, after the downturn, reached new highs.

“The higher the number gets, the hurdle gets a little bit harder to jump over,” Michael Kearney, COO for Asbury Automotive Group Inc., said during a conference call for investors last month.

Along with Asbury, the large publicly traded new-car dealership groups are Group 1 Automotive Inc., AutoNation Inc., Sonic Automotive Inc., Lithia Motors Inc. and Penske Automotive Group Inc.

Asbury’s average F&I revenue per retail vehicle reached $1,308 in 2013, up 46 percent from $896 in 2009. Asbury’s F&I revenue per vehicle has increased 55 percent since 2004, when it was $843, a review of the company’s annual reports shows.


Kearney said Asbury’s improvement in F&I was, as it was at the other public groups, largely a matter of sticking to the basics.

“Our strategy and practice within the F&I segment of our business remains unchanged,” he said during the conference call. “Disciplined execution of F&I sales processes and training create solid, reliable growth in results.”

For the six large publicly traded new-car retail groups combined, the average F&I revenue per retail vehicle reached $1,219 in 2013, up 26 percent from a recent low of $966 in 2009, company reports show.

Three of the groups — Asbury, AutoNation and Group 1 — topped $1,300 per unit, on average, in 2013.

From 2009 to 2013, Group 1’s average F&I revenue increased 35 percent to $1,345 per unit retailed. AutoNation’s growth over that period, at 23 percent, was just below the six groups’ combined average. But AutoNation had the highest per-vehicle average in 2013, at $1,361. AutoNation said its 2013 total was an all-time record.

Lithia lags

A decade ago, Lithia had the highest per-vehicle F&I revenue of the group at $1,014, but its increase has lagged the rest. From 2004 to 2013, Lithia’s average F&I revenue per retail vehicle increased about 11 percent to $1,122.

That’s partly because of a shift in strategy. For the past couple of years, Lithia has concentrated on selling a greater mix of what it calls Value Autos: used cars with more than 80,000 miles on the odometer. Margins may be higher on those cars themselves, but their customers have less of a budget for F&I, the company said.

Lithia CFO Chris Holzshu said that for 2014, the company expects to increase its average F&I revenue per retail vehicle by selling more F&I products, such as lifetime oil-change policies. “We definitely know we have opportunity … compared to our peer group,” he said.