How To Maximize F&I Profit – Mission, Targets, Processes

 

By Myril Shaw, Chief Operating Officer, Dealer Profit Services

In today’s economic and industry conditions, it has never more important to maximize F&I gross and net profit.  With increasing unit prices, decreasing margins, slowing sales, and increasing inventory (and so, inventory carrying costs), dealership profitability is declining.  The only real way to help offset the loss is to ensure F&I profit is the maximum it can be for now – given that there is always room for continual improvement.

A key role for and duty of dealership leadership is to set/define and communicate the Mission – the Targets – the core Processes for achieving the Targets.  These must be defined for the Dealership as a whole, as well as the key divisions – Sales, Service, Finance, etc.  This not to say that these cannot be adjusted and results and learning occur, nor is it to say, that these define the top of the mountain – there is always room for improvement.

The techniques for achieving the Mission, Targets, and Processes can and should be taught as a separate matter.  These are team matters and individual behaviors and constitutions may influence the techniques.

What follows are suggested Mission, Targets, and Processes for F&I Profit Maximization.  The specific language does not matter – it is the thought that counts – personalization is expected.

Mission

Deliver the maximum F&I Net Profit today while providing a delightful customer experience that enables a ensures a fantastic and protected lifestyle while always focusing on continuous improvement in all areas.

Targets

In order to achieve the defined message, the following Targets must be achieved:

·        Deliver F&I Net Profit of 5%+ on Unit Sales by delivering 6.67% F&I Gross Profit on F&I Sales

·        Deliver 7.5%+ F&I Gross Profit on Amount Financed

·        Deliver the sale of one or more Protective Products on 70%+ Finance Deals

·        Deliver the sale of one or more Protective Products on 35%+ Cash Deals

·        Cap the “all-in” cost of F&I at no more than 25% of F&I Gross Profit – “all-in” means: all salary and burden; cost of bureau pulls and application processing, space allocation cost, equipment/cabinet cost and depreciation, etc.

Processes

In order to achieve the defined Targets, the following Processes must be executed:

·        The message, “Competitive Financing Available”, must be presented with high visibility with every customer touchpoint: ads; website, signage; etc.

·        The customer is introduced to the Finance/Business Manger at the very outset of the inventory/unit shopping/search with the fact that they will meet the Business Manager every time at the conclusion of their search “to ensure a delightful delivery”

·        100% of Customers, Cash or Finance, meet the Finance/Business Manager 100% of the time

·        100% of Customers are offered a full set of Protective Products – with their lifestyle value – 100% of the time

·        Depending on the Dealer Cost of the Protective Products, customers will be offered selling prices at 120% to 400%+ mark-up/profit (except in Florida, where retail prices are enforced)

This Mission, with these Targets and Processes will guide the path to maximizing F&I Profit.  The next step, and the topic of the next post, is identifying and guiding the techniques needed/used to execute these Proceses.

If this seems overwhelming, it does not need to be.  This is where Dealer Profit excels.

Contact us today at info@dealerprofit.com.  We will help!

About Dealer Profit Services

As a premier F&I Services Provider, Trainer, Consultant, and Comprehensive Compliance Program supplier, Dealer Profit Services, a member of the Brunswick family, is about improving a dealer’s F&I profit and then providing the tools to ensure that profit is protected.  As a Service Provider, Dealer Profit Services provides complete F&I services and delivers industry-leading F&I Profit Results.  As Trainers and Consultants, we help dealers improve their in-house F&I departments.  Through the Comprehensive Compliance Program, Dealer Profit Services provides an online, on-demand, Compliance Program with documents, training, and tools to make F&I Compliance a process that helps protect the dealer against potential risks from compliance issues.  Learn how to use Dealer Profit Services F&I Delivery Services – Click here.  Get your Comprehensive Compliance Program here - just click. Learn more by visiting dealerprofit.com, email info@dealerprofit.com, or call (470) 326-0966.