'Tis The Season For A Jolly Review of Your F&I Profit! Is It Time To Change?

 

          By: Myril Shaw - Dealer Profit Services

 

Well, here we are, the heart of the slow season.  Thanksgiving along with Black Friday has now come and gone.

Things are slow.  It is time to evaluate and make decisions about how to be better.

This is the season for change – change to make you better.  This about change to make you jolly!

This is just one blog post.  We can't address everything here.  We can provide some guidance on your F&I performance.

Let's put some real numbers around this that will make it easy for you to adjust as they may fit your store or stores.

Let's say that you sell around $10M in Unit Sales per Year – and let's say that you finance 50% of those (which is less than you should be financing, but that is a different message.)

So, you are financing $5M per year.

Are you delivering at least $400K in F&I Gross Profit on this?  That means, are you seeing Reserve plus F&I Net Profit on Protective Products of at least $400K each year.  If you are not, you are missing a significant profit adder for your store.

Now, let's assume that you are seeing $400K in F&I Gross Profit – once you subtract your F&I salaries, your credit pulls, your storage and disposal costs, your floor space costs and your compliance costs (oh, not really thinking about Compliance – you should be – the costs there could be huge), are you seeing at least $320K F&I Net Profit?

Oh – you don't know – well, that is whole different issue.  F&I should be a significant individual and individually measured contributor to your bottom line.  If that is not the case, talk to your accountant or controller.  F&I profit matters and it matters as it's own profit center.

So, now that that you are looking at F&I as its own profit contributor, if $5M of financed deals per year is not adding $320K in net profit or 6.4%, you are underperforming.  

Time to change!

Here are the metrics you need to be seeking…and if you are missing them, you are losing profit and money:

• 8%+ F&I Profit on the Amount Financed

• 4.0%+ F&I Profit on Unit Sales

• 50%+ Contracts on Finance Applications

• 65%+ Protective Product Penetration on Contracts

Making this work for your store sales and numbers is easy – it is simple math – take your annual unit sales and divide by $10M then take that result and multiply it by our target results:

• $400K times your result is your target Gross F&I Profit

• $320K times your result is your target Net F&I Profit

The odds are that you are not there.  Look honestly at your numbers.

This is the season when change is as easy as it is ever going to be.

If the time to change your profit for the better is now – make the needed changes and DO IT!

Dealer Profit Services - Driving Profit Through Fun and Inspiration 

 Dealer Profit Services, LLC can help you achieve F&I excellence - no matter where you are in the development and/or maturity of your store or stores F&I success model.  As the industry's best Finance Solutions Provider and the only one to take your customer to Fun and Inspiration with a Free and Idyllic lifestyle through F&I, thus driving industry-leading levels of F&I profit, Dealer Profit Services can and will equip you with what you need to take that next step in your F&I success - regardless of what that next step might be.  Whether you want someone to help you take over take over your F&I and with our experienced personnel just help you drive profit to your store, provide help to you some of the time, need some quick advice, or just provide F&I Training/Consulting, we are here to help you.  If you are not fully equipped with all of your Compliance Manuals and Training, Dealer Profit Services can do that too.  Contact us anytime at info@dealerprofit.com or give us a call at (470) 326-0966.