August 6, 2013

Extended service contracts had a penetration rate of 42% on new vehicles retailed in 2012, up from 40% in 2011.

Finance & Insurance (F&I) represented near 37% of new and used vehicle gross profit in 2012. F&I gross includes extended service contracts and all other products sold in the F&I departments including dealer reserve.

Jim Henry in a recent article for Automotive News said, “AutoNation reported an all-time record for average F&I revenue per vehicle of $1,381 in the second quarter. That was the fifth quarterly record in a row, a string that began with the second quarter of 2012 at $1,282.” AutoNation ranks number one on the top 125 dealer groups and had total new retail sales of 267,810 units last year.

Asbury Automotive Group, ranked number seven in the top 125, had an all-time high for average F&I revenue per vehicle of $1,306 in the second quarter. That average was a remarkable 9.5% increase from the 2012 period.

It’s not only the two dealer groups above but the list goes on and on of more groups reporting increases in profit on the front end (front end refers to the profit on the sale of the vehicle) and the back end (F&I). In fac,t it would seem with all the information available via the internet today for buyers related to the purchase of a vehicle, that this would be a true buyers’ market.