Auto Dealership F&I Metrics That Boost Sales
Use F&I Services To Increase Your Value Proposition
By Justin Ward of Autosweet & Terry Schwer of Encompass
In a market where car sales are slowing down, it’s crucial for dealerships to find ways to upsell wherever possible. One effective strategy is to focus on Finance & Insurance (F&I) products & services. By doing so, dealerships can generate additional revenue and stay competitive.
Here’s a look at the F&I metrics that our dealership experts believe are essential to growth.
Key Auto Dealership F&I Metrics to Track
Per Vehicle Retail (PVR)
PVR measures the average gross income earned from F&I products per vehicle sold. The current national average ranges from $1,700 to $1,900. Understanding your PVR in comparison to the industry standard can help identify areas for improvement.
Products Per Deal (PPD)
PPD tracks the average number of F&I products sold with each vehicle deal, typically between 1.3 and 1.7 products. Segmenting PPD data by deal type (finance, lease, used, and EV) and by individual F&I managers can provide valuable insights into sales strategies and performance.
Product Penetration
Product penetration measures the percentage of vehicle deals that include at least one F&I product. Industry averages are 46% for service contracts, 45% for GAP insurance, and 17% for prepaid maintenance. These benchmarks help you assess how effectively you’re selling F&I products.
Tracking F&I Metrics: Why It Matters
Benchmarking Against Competitors
Tracking F&I metrics helps you compare your performance with that of your competitors. This comparison ensures that you’re not leaving money on the table by charging too little or driving customers away by charging too much.
Revenue Optimization
By knowing what your competitors are doing, you can adjust your pricing strategies to optimize revenue. Accurate benchmarking prevents missed opportunities and helps you strike the right balance in your pricing.
Enhancing Value Proposition
When you enhance your value proposition by offering well-priced, attractive F&I products, you can increase your sales. A strong value proposition resonates with customers, making them more likely to purchase additional products and services.
More Strategies to Boost Auto Dealership F&I Sales
Customized Selling Menus
Tailoring the F&I selling menu for each manager can help in offering the most relevant products to customers, increasing the likelihood of sales.
Customer Interview Processes
Implementing thorough customer interview processes ensures that F&I managers understand customer needs, enabling them to offer personalized product recommendations.
House Deals Accountability
Ensuring transparency and accountability in house deals helps maintain trust and adherence to standards, preventing potential issues.
Monitoring Claim Rates
Tracking claim rates, especially within the first 45 days after a sale, provides insights into product performance and customer satisfaction. High claim rates might indicate the need for product evaluation and process adjustments.
Maximizing Sales in a Changing Market
As car sales decline, focusing on F&I products is a viable strategy for dealerships to maintain profitability. By tracking key F&I metrics and implementing targeted strategies, dealerships can optimize their revenue, enhance their value proposition, and remain competitive in a challenging market.
Justin Ward is your main contact for dealership digital marketing, crafting strategies that drive engagement and boost sales. Together, they ensure your dealership thrives, offering comprehensive support from financial consulting to digital marketing.
Dealership Experts
Terry Schwer is an experienced dealership consultant specializing in operational efficiency, financial strategy, and dealership profitability. With years of hands-on experience working alongside automotive dealers, Terry helps clients navigate industry changes, optimize their fixed operations, and prepare for market uncertainties. His practical, data-driven approach helps dealerships stay resilient and profitable through shifting economic landscapes.