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.
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.
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.
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.
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