| | | WEEKLY REPORT | August 1, 2012 |
| | | | | | |  | | | | F&I revenues climb at Lithia and Group 1, dip at Penske | | F&I results were strong for two of the latest dealership groups to report second-quarter financials. Lithia Motors and Group 1 said increased sales of F&I products such as extended-service contracts and prepaid maintenance accounted for most of the improvement. Penske Automotive, which relies less on F&I for profit than any of its five peers, is the only dealership group to post a decline in F&I revenue per vehicle. | | | Q2 2012 | Q2 2011 | Change | | Lithia | | | | | F&I revenue per vehicle | $1,059 | $1,004 | 5.5% | | F&I % of revenue | 3.3% | 3.1% | | | F&I % of gross profit | 19.7% | 17.8% | | | | | | | | Group 1 | | | | | F&I revenue per vehicle | $1,191 | $1,126 | 5.8% | | F&I % of revenue | 3.5% | 3% | | | F&I % of gross profit | 22.9% | 19.0% | | | | | | | | Penske | | | | | F&I revenue per vehicle | $980 | $989 | -0.9% | | F&I % of revenue | 2.5% | 2.4% | | | F&I % of gross profit | 16.1% | 15.1% | | | | | | | | Source: Company reports | |
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JIM HENRY
A cautionary tale on lending to service members
| |  | Jim Henry is a special correspondent for Automotive News | |
The U.S. Department of Justice has reached a $12 million settlement with Capital One Bank of a lawsuit alleging violations of the Servicemembers Civil Relief Act.
The settlement applied to auto loans as well as mortgages and other accounts.
According to the Justice Department, for a period of slightly more than five years ending in 2011, Capital One improperly denied service members’ requests for interest rate reductions that they were entitled to receive on obligations incurred before they entered military service. According to the settlement, service members, upon written request, can have the interest rate they pay reduced to 6 percent.
Also, some service members’ vehicles were improperly repossessed, the Justice Department said. Under the settlement, Capital One agreed to pay an unspecified number of service members whose cars had been repossessed at least $10,000 each.
For other lenders with significant auto loan business with service members, it’s something to think about.
JAMIE LaREAU
A dealer, Ally and Operation Homefront
| |  | Jamie LaReau covers auto dealers for Automotive News | |
There are cynics who might say some businesses donate to charity for publicity and to increase sales.
Maybe. But so what?
Their donations still help people. And many businesspeople make contributions because their hearts are in the right place.
Just ask Liz Fichtel, the director of morale services for Operation Homefront Georgia. She says Operation Homefront could not assist financially strapped military families without help from businesses.
On July 28, she got that help from Jay Automotive Group and lender Ally Financial.
The Columbus, Ga., dealership donated the use of its Mazda location and served refreshments. Ally donated $10,000 to Operation Homefront Georgia to purchase backpacks and school supplies to give to 100 children of needy military families from nearby Fort Benning.
Last year, Georgia dealer Mike Bowsher, who owns Carl Black Buick-GMC in suburban Atlanta, partnered with Ally, Operation Homefront Georgia and the National Charity League Northeast Atlanta to donate 1,000 backpacks filled with school supplies for children of area military personnel.
Bowsher said he did it as a duty to give back, but he also knew those folks who showed up would probably remember the event when it's time to buy a car.
Ally has partnered with Operation Homefront three times, said Steve Kinkade, an Ally spokesman. The donations help to "strengthen our partnerships with dealers and the charitable partnerships that are important to them. And it increases our recognition in the community as well," he says.
Whatever the reason, Fichtel is grateful.
"These military families we assist range from privates to sergeants, so the lower ranking ones really need assistance; they make like $15,000 a year. It's bad," Fichtel says. "Without these corporate sponsors, we wouldn't be able to do what we're doing."
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DEALER JOB LISTINGS
| | |  | | | | Ford Credit reaps more short-term lease returns | | Ford Credit is seeing more 24-month lease returns, giving dealers a richer stock of late-model used cars to sell. Overall scheduled lease terminations are on track to fall sharply this year from the 2011 level, a ripple effect of the collapse of leasing during the industry sales slide of 2008-09. | | | % 24 mos. lease returns | % 36, 39 mos., other lease returns | Total lease returns | | 2012 | | | | | Q2 | 60% | 40% | 15,000 | | Q1 | 53% | 47% | 19,000 | | | | | | | 2011 | | | | | Q4 | 20% | 80% | 15,000 | | Q3 | 6% | 94% | 16,000 | | Q2 | 0% | 100% | 25,000 | | Q1 | 0% | 100% | 30,000 | | | | | | | Source: Ford Motor Credit | |
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