According to the National Automobile Dealers Association’s most recent NADA Data annual report, U.S. auto dealers continue to rely on Finance and Insurance products and services to drive overall revenue. The report indicated that F&I aftermarket income represented 25.5% of gross profit on all sales, up from 24.9% in the previous year.
If you’re like most dealers, F&I is a significant revenue stream for your business. F&I offerings usually consist of two types: one for products and one for protection or services. While service contracts can typically be canceled or refunded, product warranties cannot, which ensures a higher profit return for this line.
The best way, then, to circumvent possible loss of profit would be to increase sales on these non-cancelable warranties. Such warranties cover the appearance of the automobile, the vehicle’s body, and/or windshield protection. While these coverages are typically sold at a lower price-point, the fact that they cannot be canceled provides a more secure profit for the dealership. In the long run, these sales add up to more guaranteed revenue.
Your F&I programs should fit the needs of your dealership. We can help you customize these programs to fit those needs and increase your profits. Contact us today.