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Finance & Insurance Numbers

F&I should be one of the most profitable areas of your business.

At GSA we track benchmarks through our involvement with dealer groups, such as the Best Operators Club. The BOC group’s by-laws require that all members provide accurate dealership operations data on a monthly basis. Some of the members have kindly consented to let us share their numbers from our real-time, web-based data reporting system.

This column explores the F&I department benchmarks and dealer data. Future columns will address the numbers from the other departments. We will discuss what we measure, and why, as well as examine the current BOC benchmarks.

The charts presented here depict actual December ’07 F&I Department numbers for one of the BOC dealers. This is a fair-sized, multi-line dealership located in a southern town of around 65,000 people. There are no major metropolitan centers nearby. This dealer maintains a high-quality facility and stocks a wide product selection.

Their total unit volume for motorcycles, ATVs, UTVs and PWCs in 2007 was just more than 1,200 units. They have become the dominant dealer in the region, due in large part to their well-trained, professional staff and their commitment to outstanding customer service. This fact is demonstrated by the volume they sell in a relatively small market. What’s more, this dealer is not getting these numbers by discounting his prices. Chart 1 verifies this. He is at or above most of the benchmarks and above the TBOC (which stands for Top Best Operators Club in a category — see "Lingo").

This dealer had one manager and one support person processing all the F&I customers. This is a highly-capable and productive F&I team. They had 312 deals financed inside and only three deals went to outside financing. This means this dealer is exceptional at conversions. They were able to convert customers from financing with banks, credit unions or even paying cash to dealer financing. Why is this important? In the following charts this dealer averaged over $500 in finance profit alone! In addition, customers who finance with you are much more likely to buy additional F&I products as well as clothing and accessories.

Applications submitted, turn-downs and approved applications that did not buy also need to be tracked and monitored. Following up with any customers who were approved but did not buy is extremely important. All this data provides important information that management can use to develop processes that improve the performance of the F&I department.

This dealer is very good at F&I. Just look at the 79% of deals financed and the 68% ESC penetration. As you can also see from chart 2, they have beaten many of the benchmarks as set by the BOC members and are out-performing the TBOC significantly.

So, just how profitable was F&I for this dealer? Look at the details in chart 3. In December they sold $118,657 in F&I products for a gross profit of $72,319. For 2007 they sold over $1 million in F&I! Could you have used $657,000 of additional gross profit on your sales? Incidentally, the YTD PVS of $830 is just that; per vehicle sold, not just per vehicle financed.

How does this dealer do it? One of the biggest factors is the right people with the right training. You can’t put just anyone in the F&I position and expect to see results like this. They must have the aptitude (sales and paperwork skills), the attitude (customer-friendly) and the proper training.

F&I training should be a no-brainer. There are not many areas where the return on investment for providing training for the proper person is so high. F&I should be one of the most profitable areas of your business. As Gart Sutton is so fond of saying, F&I stands for "found income" — so why aren’t you cashing in?

LINGO

CY: current year

PVS: per vehicle sold

TBOC: average of the top five BOC members in this category

* Some rows and columns without data have been removed to reduce table sizes.

Chart 1
  Data Benchmark TBOC
New Sales
M/C Gross Profit % 17.16 17 14.248
ATV Gross Profit % 16.2 16 12.17
UTV Gross Profit % 13.92 14 7.406
PWC Gross Profit % 13.67 15 -7.782
Pre-Owned Sales
M/C Gross Profit % 25.64 18 17.77
PWC Gross Profit % 13.67 15 -7.782
Chart 2
Finance Department Data Benchmark TBOC
Finance Gross Profit Dollars per Vehicle Sold 512.32 500 322.52
Finance Net Operating Profit per Vehicle Sold 333.56 300 174.496
% of Deals Financed 79.44 70 58.344
% of Service Contract Penetration 68.27 50 29.368
% of Pre-Paid Maintenance Penetration 27.31 30 14.63
% of Financed Deals with GAP Protection 15.37 30 10.408
% of Financed Deals with Credit Life Protection 7.28 10 5.502
% of Financed Deals with Credit Disability Protection 6.07 10 5.968
Chart 3
Note: Our data reporting and analysis system is available for any dealership to use for a nominal fee. If you want more info on the Voyager IV data reporting system or BOC, please e-mail [email protected] or visit our website at www.gartsutton.com.

Finance Sales & Gross Profit
  Sales COGS Gross Profit
Dec 2007 118,657 46,338 72,319
PVS 761 267 464
YTD 2007 1,033,469 395,634 637,835
YTD PVS 830 318 512
2007 TBOC PVS 337 40 297

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