How Finance & Insurance Helped Dealerships In 2018
It looks like Finance & Insurance were great for dealerships last year. In fact, prepaid maintenance programs (38.9%) and vehicle service contracts (43.9%) were their most profitable sellers.
According to Auto News, Protective Asset Protection created a paid survey in December to look at how well dealerships handled Finance & Insurance (F&I) over 2018.
More than 150 dealerships opted in, completed the survey, and reported their gross margins were unchanged from the previous year (35% of dealerships said the same thing). However, 32% of sellers reported their F&I revenue had increased by 10%. While another 30% reported increases between 5% and 10% in comparison to the previous year. Beyond that, 42% of dealerships reported that vehicle service contracts (VSC) and maintenance programs were their biggest hits.
As we move more and more into 2019, experts suggest VSCs will continue to grow in popularity as consumers shift towards purchasing used vehicles. According to NADA, used vehicle sales were 39 million in 2018. Whereas new vehicles sales were 17.3 million. However, the expectation is for new vehicle sales to drop down to 16.6 million. With this change, consumers will need VSCs and other maintenance programs for taking care of their trucks and SUVs.
Senior Vice President of Protective Asset Protection, Rick Kurtz, says: “We believe the demand for many F&I products will continue to grow in the upcoming years, especially as more consumers use pre-owned vehicles to combat the affordability of new automobiles. What’s more, the continued trend of off-lease volume will place additional focus on used vehicles, where VSCs and maintenance programs will significantly help to ensure consumers keep their automobiles on the road and running. Also, we all see dealer-owned warranty company applications, in particular, helping dealers offer top quality F&I products designed to satisfy the needs of their customers.”
With the increase in F&I business, now is the time to evaluate how your business handles service contracts, and what systems you have in place to manage the work. AMT can help. If you’re working with F&I contracts, ReconPro can help you initiate a claim, schedule a repair, and maintain all records associated with the Service Contract. Apply Service Contract terms directly into vehicle records to create correct invoicing and improve customer satisfaction.