Record adoption of digital tools bolstered sales during the challenging environment produced by the coronavirus. Despite working for years on these efforts, public groups say the finance-and-insurance component still requires improvement.
Public retailers credited a portion of their second-quarter rebounds to digital deals and paperless processes. While not every public group posted a profit, F&I income increased across the board among some of the nation’s largest retailers, with two posting records in the period.
AutoNation Inc., the retailer with the highest same-store F&I profit per vehicle, said its digital F&I product penetration is not yet on par with in-store metrics.
“We have it, I would say, perfected in the stores,” AutoNation CEO Mike Jackson said on a call with investors last month. “There is still work to do in the digital world on those products.”
Jackson said last quarter that the retailer makes about the same on digital deals as it does in store.
More than 90 percent of AutoNation customers prefer to take in-store delivery, Jackson said.
CFO Joseph Lower said digitally enabling the F&I process creates efficiencies that will continue to improve over time.
AutoNation, of Fort Lauderdale, Fla., hit a record-high quarterly F&I profit per vehicle retailed on a same-store basis with an average of $ 2,172, an increase of 12 percent, or $ 240, from year-ago figures.
Sonic Automotive Inc., of Charlotte, N.C., posted a quarterly record for F&I gross profit per vehicle of $ 1,946, up 14 percent. On a same-store basis, Sonic’s F&I profit per vehicle rose 11 percent, or $ 176, to $ 1,730.
The other public groups reported the following results in same-store F&I profit per vehicle:
- Group 1 Automotive, of Houston, up 3.2 percent, or $ 58, to $ 1,882
- Asbury Automotive Group, of Duluth, Ga., up 4.8 percent, or $ 80, to $ 1,737
- Lithia Motors, of Medford, Ore., up 9.4 percent, or $ 136, to $ 1,590
- Penske Automotive Group, of Bloomfield Hills, Mich., up 0.7 percent, or $ 9, to $ 1,325
Rapid digital adoption occurred in the second quarter as consumers opted to use digital tools in greater numbers, executives said last month.
Nearly 3,000 customers used Group 1’s digital retailing tool AcceleRide, which formally launched in June 2019, to purchase a vehicle online — an increase of 48 percent from the first quarter and nearly triple the figures seen a year ago.
Daryl Kenningham, Group 1’s president of U.S. and Brazil operations, said on an investor call last month that all of the retailer’s dealerships offer a full suite of F&I products through the platform.
Penske CEO Roger Penske told analysts last month that about 58 percent of the sales in the quarter involved the company’s digital efforts, the highest levels of digital sales for the company. Penske also cited progress with the company’s adoption of Reynolds and Reynolds Co.’s docuPAD interactive tabletop F&I systems.
“In the U.S., our digital F&I process through docuPAD enhanced our ability to sanitize and social distance, no physical exchange of documents,” Penske said. “We also introduced digital signatures by online signing room for key sales documents for a truly virtual transaction when the customer does not want to visit our dealership.”
About 20 percent of the used cars Asbury sold in the second quarter were transacted online, the company said last month.
CEO David Hult said F&I is one of three key areas of opportunity in the company’s online transaction process and that it will be improved upon in a new digital retailing tool that will be announced soon.
“We’re lucky that our F&I numbers are holding up online as they do in the store. But in my personal opinion, our presentation of F&I products online can be a lot better than what it is,” Hult told investors July 28.
Hult told Automotive News last month the new tool would emphasize a catered F&I product experience in which customers are presented with different options based on their mileage, driving habits and the exact make and model they’re purchasing.
Another feature Asbury is focused on is a chat function so customers can ask questions about F&I products without leaving the tool.
Melissa Burden contributed to this report.
