F&I continues to be a sweet spot for biggest dealers

Even as expenses escalate, margins narrow and sales volume declines, dealers continue to find strength in their finance and insurance departments. F&I revenue per vehicle and overall F&I revenue rose for most of the 150 largest dealership groups in the U.S. in 2018, according to an Automotive News survey.

Average F&I revenue per new and used vehicle retailed increased 4.6 percent, to $1,482, according to the survey. Automotive News' sixth annual F&I survey examined the F&I results of the nation's top 150 dealership groups, as ranked by new-vehicle retail sales in 2018. Of those, the survey looked at 144 groups that provided finance data for 2017 and 2018.

Total F&I revenue for the dealership groups increased 7.5 percent compared with the year earlier. In 2017, F&I revenue rose 6 percent.

In 2018, dealers on average lost money on operations for the first time in at least a decade, the National Automobile Dealers Association said in an April report. Dealers are still reporting pretax net profits, but those are largely driven by automaker incentives, which are excluded from operating results.

But F&I likely will continue to be a sweet spot for dealers, even as vehicles become more expensive, according to Alan Haig, president of Haig Partners, a dealership buy-sell company in Fort Lauderdale, Fla.

"F&I is going to continue to grow," Haig told Automotive News. "It's not necessarily the dealers are getting a lot better, it's just the vehicles cost more. They're picking up some additional profit that way."

Last year, F&I accounted for 3.8 percent of overall revenue for the 144 groups included in Automotive News' survey, a slight uptick from 3.7 percent in 2017.

More than 100 dealership groups lifted F&I revenue per vehicle, and 129 made more than $1,000 in F&I per new and used vehicle on average.

Cavender Auto Family reported the highest average F&I revenue per vehicle at $2,753, up 46 percent, or $870, from 2017. Cavender, of San Antonio, has three stores.

F&I revenue per vehicle dropped at 42 groups, 33 of which averaged more than $1,000 per new and used vehicle.

Per-vehicle F&I revenue at Gee Automotive Cos. declined the most sharply last year, dropping 41 percent, or $871, to $1,255. The Liberty Lake, Wash., group has 24 dealerships.

Car Pros Automotive Group, a 12-rooftop group in Federal Way, Wash., reported the highest share of F&I as a percent of total revenue, at 7.4 percent.

On the opposite end of the spectrum, F&I accounted for just 0.7 percent of total revenue for Ray Catena Motor Car Corp. in Edison, N.J. Ray Catena was the only group on the list with average F&I revenue below $500 per vehicle, at $405.

Thirteen groups pulled in more than $100 million in F&I revenue in 2018, accounting for $4.6 billion, making up about half of the $9.27 billion in total F&I revenue for all 144 groups. Six of those 13 groups are publicly owned.Prime Automotive Group became part of the $100 million club after raising F&I revenue nearly 50 percent from the year earlier. New- and used-vehicle retail sales grew just 6.3 percent for the Westwood, Mass., group. Prime has 57 stores.

Greenway Automotive and Staluppi Auto Group were the only members to lose F&I revenue and still hold spots in the $100 million club. F&I revenue declined 3.6 percent for Staluppi, to $165.2 million, and slid 0.4 percent for Greenway, to $130.3 million.

David Wilson Automotive, of Orange, Calif., dropped out of the $100 million club after F&I revenue slipped 11 percent to $89 million.

Combined, the 13 groups produced an average of $1,702 per new and used vehicle, $220 more than the average of the 144 groups.All six publicly owned groups lifted per-vehicle F&I revenue in 2018. AutoNation Inc.'s was the highest, at $1,789, and Penske Automotive Group Inc.'s was the lowest, at $1,214. Lithia Motors Inc. reported the largest increase in total F&I revenue, which climbed 18 percent to $454.8 million.

Holler Classic Automotive of Winter Park, Fla., lifted average F&I revenue the most from the year earlier, surging 130 percent to $1,119, up from $486 in 2017.

Sixteen dealership groups posted average F&I revenue per vehicle above $2,000, up from 11 in 2017.