September 3, 2007 – Survey: Full-time F&I staff is not the norm

By Neil Pascale
A few years ago, Hinds Performance Motorsports of Lewis Center, Ohio, relied on its sales manager to take care of F&I sales.
Because the manager did not always have time to deal with the additional responsibilities, the dealership’s F&I penetration hovered around 20-30 percent.
Spin forward a few years and the dealership now has a full-time F&I salesperson and additional revenue to prove the extra personnel expense is worth it. Joyce Hinds, who owns the dealership along with her husband Jeff, said the dealership now has a F&I penetration rate of 63 percent, well above a benchmark identified by the RPM Group, a provider of dealership training.
“I can’t imagine a dealership our size not having somebody full-time doing it (F&I sales),” Hinds said.
In fact, according to the National Dealer Survey conducted for Powersports Business, only about half of dealers that have similar-sized annual revenues as Hinds Performance Motorsports employ at least one full-time F&I employee.
Hinds makes approximately $10 million per year in revenue. According to the national survey of 500 dealers, 53 percent of dealers that make $5 million-$10 million per year in revenue employ at least one full-time F&I employee.
The difference between what a dealership makes from F&I is radically different depending on if the store has at least one full-time F&I salesperson or not, the study found. Dealers making $5 million-$10 million annually that have at least one full-time F&I employee said F&I accounts for approximately 4.5 percent of their store’s total annual revenue. Those dealers that do not have at least one full-time F&I employee say F&I represents less than half of that (not quite 2 percent).
Statistics of dealers that have different annual revenues show a similar picture. Consider:
Dealers that have $3 million-$5 million in annual revenue and employ at least one full-time F&I salesperson say F&I represents 5.4 percent of their total revenue. Dealers without a full-time F&I employee make less than one-fourth of that (1.2 percent).
Dealers that make more than $10 million in annual revenue and employ at least one full-time F&I salesperson say F&I represents 4.5 percent of their total revenue. That’s more than double what the dealers who don’t have full-timers in F&I say they make in back-end revenue.
Despite the revenue possibilities, dealers that are smaller in terms of annual revenue than Hinds Performance Motorsports most often do not have a full-time F&I person, the study found.
Only 12 percent of dealerships making
$1 million-$3 million per year have a full-time F&I employee and only one-fourth of stores with annual revenues of $3 million-$5 million have full-time F&I salespeople.
Gregory Pierce, vice president and general manager of GE Money’s powersports division, sees those percentages increasing in the near future.
“The optimist in me sees opportunity there,” he said, “and I would predict directionally that all of these segments would start to show more dedication (for F&I) just for the simple fact that less traffic is driving through a dealership so dealers I talk to are focused on ensuring that they are maximizing the opportunities per customer they encounter.”
Sam Dantzler, president of the RPM Group, the industry’s largest 20-group provider, called the relatively few dealers carrying full-time F&I employees shocking. He also sees that percentage increasing in the near future.
“I see them getting a full-time F&I person or going out of business,” Dantzler said. “The front-end margins are becoming so competitive, certainly on the metric side. The volume needed to provide any kind of horsepower for a dealer who has a weak or zero F&I department is so great that you just can’t stay around in this business if you’re not making it up somewhere.”
Dantzler said the RPM Group has worked extensively with Ducati North America dealers in the past year on this subject. He said many small-volume dealers question if they can afford adding a full-time F&I employee. But industry data from the RPM’s 20 group clubs shows it might not be as difficult as many dealers believe.
Metric dealers on average gain $550 per unit sold — not per financed — just from revenue from F&I products, which include extended warranties, priority maintenance and theft. (Harley-Davidson dealers are closer to $1,100 per unit.) Meaning if a metric dealer sells 100 units, they’ll gain $55,000 from F&I revenue alone. In many regions of the country, that amount would pay the salary of a full-time F&I employee.
“The question is how can you afford not to have it?” Dantzler said of a full-time F&I employee. “That’s a realization that some of our 100-150 unit Ducati dealers are coming to, and they are implementing it.”
The key to remember, Dantzler said, is F&I “affords you, the dealer, the luxury of taking that really thin deal, whether it’s an overinflated trade or you’re just blowing out product on the front-end because you know you’re going to recoup a heavy amount on the back. It allows you to be so much more competitive in the market place.”
Hinds of the Ohio dealership has certainly seen the benefits of having a full-time F&I employee, calling the additional revenue the store now makes through its F&I menu presentation as crucial.
“That’s going to carry us through the winter, through the lean times,” she said. “We need that revenue.”

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