Dealership Path to Profitability – F&I Products to the Rescue
New vehicle sales are rebounding. New light vehicle sales increased for the fifth straight month in September. The September SAAR of 16.3 million units is the first time that monthly sales have topped 16 million units since February 2020, though it represents a 4.3% decrease from September 2019.
Selling F&I products with new and used vehicles is a proven path to increasing dealer profits. F&I profit per vehicle has increased considerably year over year, especially in the recent downturn. Each of the six public dealership groups increased F&I profit per vehicle on a same-store basis over the past year by 11%, reaching an average of $1,767.
Dealers typically sell more F&I products in a downturn. F&I penetration has grown markedly over the past two decades and remains high. Attachment rates on new vehicles total nearly 88% in 2019, more than double the rate two decades ago.
M&A Activity remains strong. M&A activity continues, with five transactions in the third quarter of 2020. Several more deals have closed in October, promising a busy fourth quarter.
Colonnade Securities LLC (“Colonnade”) released a quarterly update on F&I Products for Q3 2020. The report can be accessed here.