Colonnade publishes industry commentary on F&I products.
The F&I products industry is attracting significant interest as the macro drivers are compelling and the industry demonstrates high growth and margins. The F&I products industry totals $77 billion at retail and comprises a significant and valuable part of the U.S. automotive industry. The value chain includes administrators, F&I agencies, direct-to-consumer marketers, payment plan providers and specialty insurance carriers. Since 2011, more than 30 companies in the F&I products industry have changed ownership, and we expect sellers to continue to benefit from strong demand among financial investors and strategic buyers for well-run businesses in the sector.
The pace of acquisitions and investments in the F&I products industry is increasing, driven by demand from financial and strategic investors, low interest rates and availability of capital. Private equity firms have been attracted to the industry by the high margins, strong cash flow, fragmentation and growth of the industry. Private equity firms are making platform and add-on acquisitions to existing portfolio companies. Administrators, seeking to grow revenues and improve margins, are evaluating acquisitions to increase product distribution, improve scale and capture more of the value chain. Insurance companies, looking to preserve books of business or enter the industry, seek the acquisition of administrators. Strong demand for well-run companies in this industry is expected to continue.