Benchmarking Study

F&I Performance

Tracking

The magazines reader survey reveals that the average profit per retail unit sits below the $800 mark. The study also provides a glimpse into how F&I departments are contending with todays Internet-driven sales environment. By Gregory Arroyo
port, aftermarket income combined gross from F&I and service contracts fell from 30 percent in 2008 to 25.7 percent last year for new- and used-vehicle gross profits. Acceptance rates for service contracts came in at 32.4 percent, below the 35 percent and 34 percent highs seen in 1986 and 2004, respectively. Additionally, finance penetration for new vehicles inched up to 55.7 percent. Gross profit margin on the sale of new units increased 4.5 percent, but that was less than a per-

iven the credit crisis, F&I results from the National Automobile Dealers Associations annual membership study werent surprising. The recessions effects resulted in declines in aftermarket income, F&I and service-contract acceptance rates. Wanting to get a glimpse into how things are faring this year, the magazine conducted its own survey between July 20 and Aug. 16. According to the 2010 NADA re-

centage point difference from the 10-year low seen in 2008. Providing a snapshot of F&I performance this year, the magazines online survey garnered 176 responses. It compared results from the first-half of 2009 to the first two quarters of 2010, and took a close look at service contract, GAP and prepaid maintenance performance. The survey also asked respondents how their F&I departments handle Internet and phone-in customers.

Profit Per Retail Unit? 1 What Is Your Average

The average profit per new vehicle sold was $737.32, compared to $840.61 for used. The median for both used and new were identical at $875.50.

GAP Penetration 2 What Is YourRate?

Survey results show that GAP is becoming more widely accepted by consumers. The average acceptance rate for the first half of 2010 was 36.9 percent, compared to 34.6 percent in 2009.

$500 or less

15.2% 9.6% 31.1% 13.6% 25.6% 29.4% 28.0% 47.5% New vehicles Used vehicles

Less than 30%

32.6% 36.3% 26.3% 28.1% 16.0% 16.4% 9.7% 8.8% 15.4% 10.5% 1Q/2Q 2010 1Q/2Q 2009

$501 to $750

31% to 40%

$751 to $1,000

41% to 50%

$1,000 or more

51% to 60%

61% or more

18 F&I and Showroom October 2010

Benchmarking Study
Contract Penetration Rate? 3 What Is Your Vehicle Service
Service contracts remain a hot item on F&I menus these days. The average acceptance rate among respondents for the first half of 2010 was 39.1 percent, compared to 34.4 percent last year.
23.3% 31.8% 26.7% 30.6% 25.0% Other 17.9% 14.8% 12.1% 10.2% 7.5% 1Q/2Q 2010 1Q/2Q 2009 43.7%

Are Your Most 4 What Popular Terms?

The 6-year/72,000-mile and 5-year/100,000-mile terms were most popular, but terms in the Other category varied, with the 6-year/100,000-mile term leading the way among respondents.

Less than 30%

6 years, 72,000 miles

21.8%

31% to 40%

5 years, 100,000 miles

34.5%

41% to 50%

51% to 60%

61% or more

What Is Your Prepaid Maintenance Penetration Rate?

The average acceptance rate for prepaid maintenance for the first half of this year was 20.8 percent. The average rate for the first two quarters of last year was 18.9 percent.
78.4% 85.0% 12.3% 9.4% 5.6% 3.8% 2.5% 0.6% 1.2% 1.3% 1Q/2Q 2010 1Q/2Q 2009

Which Sells Better, Aftermarket Service Contracts or Your OEMs Coverage Plan?
Aftermarket plans led the way among respondents. The disparity could be attributed to the restrictive environment for new financing, which has pushed more consumers to the used side.
Aftermarket service contract OEM coverage plan

Less than 30%

31% to 40%

54.0%

46.0%

41% to 50%

51% to 60%

61% or more

20 F&I and Showroom October 2010

Benchmarking Study
Are You Currently Selling? 6 What Types of Plans
Bumper-to-bumper plans led the way among respondents in the first half, with the percentage of those who sell wrap coverage only slightly outpacing those who sell powertrain coverage.

for Each Type of Plan? 7 What Is Your Penetration Rate

Bumper-to-bumper coverage continued to lead the way in acceptance rates, but the disparity in acceptance rates between wrap and powertrain coverages widened among respondents.

Bumper-tobumper

91.4%

Bumper-tobumper

68.5%

Wrap coverage

69.5%

Wrap coverage

30.0%

Powertrain

68.4%

Powertrain

17.1%

Other

3.4%

Other

21.5%

Once an Agreement to Purchase Is Made Over the Phone, When Does Your F&I Manager Make Initial Contact With the Customer?
Respondents said a small percentage of their customers agree to buy over the phone. When it does happen, more than half said customers are contacted before arriving at the dealership.
Prior to arrival at dealership After arrival at dealership

Once an Agreement to Purchase Is Made Via the Internet, When Does Your F&I Manager Make Initial Contact With the Customer?
The percentage of customers who agree to buy over the Internet was equally small. When they do, less than half of respondents said buyers are contacted prior to arriving at the dealership.
Prior to arrival at dealership After arrival at dealership

51.4%

48.6%

47.0%

53.0%

22 F&I and Showroom October 2010