F&I: Video meetings boost profits

John Eagle Auto Group's most crucial staff meetings are the monthly finance and insurance video conferences for its 12 Texas dealerships.

The meetings are so important to F&I profits that "John Eagle, if he's in the country, he's at the meeting," said Duffy Cummings, CFO of the Dallas group. "It's the most important video meeting we have each month."

That's because at the 90-minute meetings, the group's corporate leaders, general managers, sales managers and F&I staff review each store's performance, problems and best practices to devise ways to keep F&I profits growing.

"We get to share ideas," Cummings said. "If one dealership is having a problem, we can ask another dealership that had that same problem how they solved it. Almost every problem that has come up, we've solved in the past. So it's a great collaboration."

The meetings, led by a trainer, have helped boost the group's F&I revenue per vehicle to $1,700 from $1,200 a decade ago, Cummings said.

They've also helped usher in new F&I products. One such product a few years ago was PegasusPay, which converts a vehicle loan payment from monthly to biweekly to get the customer into an equity position faster.

"We don't make anything off it," but it helps shorten loan terms and keep customers in the buying cycle, Cummings said. "One of the biggest problems we have is our average term keeps stretching longer and longer," he said. "Our average loan term now is 62 months."

'Everybody sees it'

John Eagle Auto Group has stores in the Dallas and Houston areas and in San Antonio, selling Acura, Aston Martin, Honda, Infiniti, Mazda and Toyota vehicles. The group sells about 28,300 new and used vehicles a year. Each of its dozen dealerships has a video conference room that can hold 10 to 30 people, depending on the size of the store, Cummings said. The rooms have a video camera and one or two video screens.

"We don't build a dealership now without a video conference room in it," Cummings said.

It wasn't always that way. About 10 years ago, when Cummings joined the company, an antiquated conferencing system was used to host the monthly F&I meetings across stores. It was "clunky and unreliable," Cummings said. So four years ago, the group invested about $15,000 per store to improve it.

"It doesn't drop out like the old system did," Cummings said. "It gives us a sharper picture; we can do a PowerPoint presentation and show it through the system and everybody sees it."

The improved quality made for more intense meetings, bringing collaboration to a higher level, he said.

Gradual gains

The group's F&I revenue improvement has been gradual, and that's on purpose, Cummings said.

"We don't want to price-gouge our customers. We go over the prices at the meetings and we have [finance] reserve rates that we keep in check so we get a balance between product sales and reserve" in the profit mix, he said.

About 25 percent of the group's F&I income is from finance reserve, Cummings said. F&I managers are permitted to increase the cost of financing they secure for customers by 2 basis points. "We want our F&I portfolio balanced, so we don't have these big chargebacks," he said. "Nobody wins with chargebacks."

Dealerships can be charged back, or asked to repay, commissions received for negotiating car loans that end prematurely, such as through refinancing or default, and for selling F&I products that customers later cancel.

Talk, solve, go

The return on investment from the video equipment, monthly meetings and new products is hard to quantify, Cummings said. But the meetings have contributed to productivity and efficiency.

"We don't have to travel, so we save time there, and we don't have to pay for travel," Cummings said. With no travel, people can work longer before the meetings and immediately return to their jobs when they end, he said.

As for "the cost-saving ideas, the money-making ideas passed from store to store — I don't even know how you'd calculate the return on investment," he said.

But the F&I video conferences inspired John Eagle Auto Group to hold both a fixed-operations video meeting and a used-car video meeting every other week, Cummings said. Video conferencing "just makes it easy to get everyone together at the same time, talk about the problems, solve them and go back to work."