Dealers who responded to Protective’s paid survey said vehicle service contracts (41.9%) and prepaid maintenance programs (38.9%) were their greatest sellers.
CHESTERFIELD, Mo. — F&I programs, services, and reinsurance provider Protective Asset Protection launched the results of a late-December 2018 paid survey it commissioned to gauge just how dealers leveraged F&I applications and opportunities last year.
The majority of the more than 150 dealerships who completed the survey said their own overall gross margins in 2018 were flat from the prior calendar year, yet sales for F&I products were up more than 10%. In fact, 35% of dealers mentioned their 2018 gross margins had been unchanged compared to 2017 figures.
Roughly 32% of sellers said their F&I revenue were up more than 10% in 2018; another 30% said their own F&I product sales had increased 5% to 10% compared with 2017. Nearly 42% of dealers stated vehicle service contracts were their own biggest seller, followed by maintenance programs (38.9%).
Experts noted that VSC and servicing programs are becoming more popular as more vehicle buyers turn their attention towards used vehicles. Used-car sales are estimated to have reached 39 million in 2018, compared with just 17.3 million new-vehicle sales. In 2019, sales of new vehicles are expected to dip down to 16.6 million, according to NADA forecasts. With cars now representing just 30% of overall vehicle sales, a lot of consumers must rely on VSCs and maintenance programs for upkeep on the higher-priced trucks and SUVs.
“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,” said Rick Kurtz, senior vice president for Protective Resource Protection. “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. ”