F&I and Showroom, January 2017

www fi magazine com 30 F I and Showroom January 2017 SO HERES THE DEAL T This months question comes from Mike in Ithaca N Y home of beautiful waterfalls Cornell University and the Piggery Ah you can almost smell the bacon from here Mike asks I was wondering if you had some thoughts on how some of these dealers are doing 1600 per car A quick analysis of 100 deals makes it difficult to imagine how theyre achieving those numbers Lets take a look at Mikes analysis on this page so we can see where hes coming from Heres his final comment on his analysis I feel these are excellent numbers yet were not even close to 1600 per car What am I missing Mike based on your assumptions I would agree those are excellent numbers With that said there are many different ways dealers can and do achieve 1600 per copy In fact in 2015 the Top 25 dealer groups according to the Automotive News Data Center averaged between 1686 and 2228 per copy in F I income And they dont make those numbers up I know because some of them are our clients So how do they do it By selling more F I products and charging more for those products You cannot possibly achieve 1600 per copy averaging one product per customer and 1000 in profit per service contract In fact one of the most important indicators of F I department performance today is products per vehicle retailed PPVR In your example Mike your dealership sold 53 F I products on 60 new cars and 43 F I products on 40 used cars That adds up to 96 products on 100 retail units or a PPVR of 96 Top performing F I managers typically own a two plus PPVR Thats why most dealers offer five or six F I products such as environmental protection extended maintenance theft deterrent products key replacement paintless dent repair or windshield chip repair And they package one or more of those products together on their menu Its virtually impossible to hit those numbers if you only offer three products and youre step selling each one To further boost F I income some dealers will also preinstall a theft deterrent product on every vehicle They then include that income in their F I numbers because F I managers are expected to justify and sell it Other dealers have their own reinsurance companies or include an internal pack on F I products Obviously they have to account for that income on their financial statement but not in F I income for commission or performance purposes The same goes for doc fees and accessory sales Other dealers have the sales department include and sell one or more F I products in the initial payment quote from the desk These products are disclosed to the customer explained and sold upfront by the salesperson This revenue is still included on the financial statement as F I income since sales managers are paid equally on front end and back end gross In these stores youll typically see huge F I numbers and minimal sales department gross While this may look good in the rankings the numbers you sent are a much better indication of actual F I department performance Mike I hope this answers your question You can watch my video response to Mikes question and check out the Piggery and its famous bacon by going to my So Heres the Deal blog at www fi magazine com The video includes even more math as well as a goal sheet you can use to figure out what it takes to average 1600 per copy And dont forget to submit your own video for a chance to get your question answered and a free YETI Because its a beautiful day to help a customer and eat some bacon ABOUT THE AUTHOR Got a question or objection for Ron Use your mobile phone to record a brief video shot landscape style of your question and upload it to go reahard com ask ron Achieving 1600 Per Copy An F I manager from New York asks the magazines resident F I pro how achieving a 1600 per copy average is even possible He responds with strategies employed by the Top 25 F I operations in the nation BY RON REAHARD NEW VEHICLES 60 RETAIL UNITS 10 Cash Outside Liens @ 400PVR 4000 12 Leases @ 600 PVR 7200 38 Financed @ 300 reserve flat 11400 24 VSC @ 1000 per VSC 24000 19 GAP @ 600 per GAP 11400 10 T W @ 500 per T W 5000 63000 USED VEHICLES 40 RETAIL UNITS 10 Cash Outside Liens @ 400PVR 4000 30 Financed @ 600 reserve 18000 17 VSC @ 1000 per VSC 17000 15 GAP @ 600 per GAP 9000 11 T W @ 500 per T W 5500 53500 Total Income New Used 116500 Total Income Per Vehicle Retailed 1165