September 29, 2020

Q2 F&I profits advance at 6 public groups

Finance-and-insurance profit per vehicle rose for all six publicly traded dealership groups in the second quarter as the industry absorbed the continuing impact of the coronavirus pandemic on operations.

Earnings at the public dealership groups took a hit from the pandemic, though many reported better-than-expected figures for the quarter thanks in large part to early adoption of digital tools. After a swift transition in a challenging environment, retailers say hurdles remain in digitizing the F&I component in particular.

AutoNation Inc., the retailer with the highest same-store F&I profit per vehicle, said its digital F&I product penetration is not yet on par with in-store metrics.

“We have it, I would say, perfected in the stores,” AutoNation CEO Mike Jackson said on a call with investors last month. “There is still work to do in the digital world on those products.”

Jackson said last quarter that the retailer makes about the same on digital deals as it does in store.

More than 90 percent of AutoNation customers prefer to take in-store delivery, Jackson said. CFO Joseph Lower said digitally enabling the F&I process creates efficiencies that will continue to improve over time.

AutoNation, of Fort Lauderdale, Fla., hit an all-time record for F&I profit per vehicle retailed with an average of $2,172, an increase of 12 percent, or $240, from year-ago figures.

Sonic Automotive Inc. of Charlotte, N.C., posted an all-time quarterly record for F&I gross profit per vehicle of $1,946, up 14 percent. On a same-store basis, Sonic’s F&I profit per vehicle rose 12 percent, or $176, to $1,730.

The other public groups reported the following results in same-store F&I profit per vehicle:

  • Group 1 Automotive, of Houston, up 3.2 percent, or $58, to $1,882
  • Asbury Automotive Group, of Duluth, Ga., up 4.8 percent, or $80, to $1,737
  • Lithia Motors, of Medford, Ore., up 9.4 percent, or $136, to $1,590
  • Penske Automotive Group, of Bloomfield Hills, Mich., up 0.7 percent, or $9, to $1,325

Rapid digital adoption occurred in the second quarter as consumers opted to use digital tools in greater numbers, executives said last month.

Nearly 3,000 customers used Group 1’s digital retailing tool AcceleRide, which formally launched in June 2019, to purchase a vehicle online — an increase of 48 percent from the first quarter and nearly triple the figures seen a year ago.

Daryl Kenningham, Group 1’s president of U.S. and Brazil operations, said on an investor call last month that all of the retailer’s dealerships offer a full suite of F&I products through the platform.

About 20 percent of the used cars Asbury sold in the second quarter were transacted online, the company said last month. CEO David Hult said F&I is one of three key areas of opportunity in the company’s online transaction process and that it will be improved upon in a new digital retailing tool that will be announced soon.

“We’re lucky that our F&I numbers are holding up online as they do in the store. But in my personal opinion, our presentation of F&I products online can be a lot better than what it is,” Hult told investors July 28.

Hult said in an interview with Automotive News last month the new tool would emphasize a catered F&I product experience in which customers are presented with different options based on their mileage, driving habits and the exact make and model they’re purchasing.

Another feature Asbury is focused on is a chat function so customers can ask questions about F&I products without leaving the tool.

Melissa Burden contributed to this report.