| | | WEEKLY REPORT | October 31, 2012 |
| | | | | | | CFPB: Service contracts won't be targets
 The Consumer Financial Protection Bureau will avoid going after the financing of aftermarket products such as service contracts or GAP, a bureau official told an audience of auto lenders and a few dealers here last week. “It's not our job to come in and say, 'These are good, and those are bad. You can finance these, but you can't finance those.' It's a competitive marketplace,” said ...  story
| Record F&I revenues still can grow
 F&I income per vehicle still has room to grow, say executives of some publicly traded dealership groups that showed best-ever results. “There's still a little bit of an upside. We can always perform a little bit better,” Group 1 CEO Earl Hesterberg told reporters and analysts last week during the company's third-quarter conference call. ... story
| Subprime lenders get aggressive, race time
 Business conditions are so good for subprime auto loans they can't possibly last, lenders said at an auto finance conference last week. But while conditions are favorable -- including low interest rates, low borrowing costs for auto lenders and high pent-up consumer demand for subprime loans -- lenders are determined to grow, grow, grow. ... story
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F&I BY THE NUMBERS
Borrowers embrace extended-service contracts
Extended-service contract sales penetration is steadily rising for loan customers. Sales penetration for lease customers is much lower and flatter by comparison. Figures show percent of U.S. car buyers who purchased service contracts. | | | | | | | | | Loans | Leases | All types
of sales | | 2012 | | | | | Q3 | 46.1% | 10.8% | 33.1% | | Q2 | 46.0% | 11.3% | 32.9% | | Q1 | 44.9% | 11.7% | 32.1% | | | | | | | 2011 | | | | | Q4 | 43.0% | 11.0% | 30.6% | | Q3 | 42.9% | 11.2% | 30.9% | | Q2 | 42.7% | 10.8% | 30.3% | | Q1 | 42.2% | 11.0% | 29.9% | | | | | | | 2010 | | | | | Q4 | 40.7% | 9.8% | 29.0% | | Q3 | 40.7% | 9.8% | 29.1% | | | | | | | | Source: Power Information Network | | | |
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JAMIE LaREAU
East Coast dealer to captives: Step up after Sandy
| |  | Jamie LaReau covers auto dealers for Automotive News | |
In the aftermath of Hurricane Sandy, an East Coast dealer wants captive finance companies to get creative to help effected dealers sell cars.
Dealer Bruce Bendell would like manufacturers to create finance incentive programs for folks impacted by Sandy. He likens it to when General Motors launched its "Keep America Rolling" incentive plan after 9/11.
"We figure there'll be a lot of flooded cars and damaged cars, but people will wait for their insurance companies. We're trying to get creative in terms of financing deals now to get sales going," says Bendell, co-owner of Major Chevrolet Inc. in New York City. He also sells Chrysler, Dodge, Jeep, Ford, Hyundai, Kia, Toyota and Scion brand vehicles.
Bendell's seven dealerships in New York and one in Pennsylvania were undamaged in the storm. But because the storm hit so close to month's end, he worries most East Coast dealers' October sales will be at least 20 percent below September sales.
"There was a lot of uncertainty out there with the presidential election," Bendell said. "You don't know if that was the reason why the month was as slow as it was, but having this hit just like it did now … hopefully, the manufacturers will support the dealers and help in any way."
Bendell's doing his part to push the idea. One brand's captive finance company representative called to see how Bendell's stores had weathered the storm. Bendell told him his buildings were fine, his staff was unharmed and inventory was good, but an incentive program from the captive finance unit would help his sales recover.
He added: "You need to give people a reason to get out there, and you'd be doing a public service."
JIM HENRY
F&I’s biggest boogeyman
| |  | Jim Henry is a special correspondent for Automotive News | |
Halloween is a good time to inventory the monsters under the F&I bed.
Shining a flashlight under there, we see that credit availability is good. Interest rates are low. The economy is slowly improving. Even housing seems finally to be recovering. No real monsters there.
In the shadows, there’s the so-called fiscal cliff, but most observers seem to think, or hope, that after the election some sort of compromise will emerge. There’s the economic crisis in Europe, but that seems far off.
That leaves government regulation as the biggest, scariest unknown for auto lenders and dealers.
“It scares the hell out of me that they might want to regulate this,” said Kalei Dudoit, general manager of Desert Toyota and Desert Scion in Las Vegas. That is, Dudoit said he’s worried the Consumer Financial Protection Bureau might regulate lenders in a way that will limit how much dealers make for arranging loans.
No matter how much the CFPB tries to reassure lenders and dealers that it will work in consultation with the industry, there still aren’t any specifics. Until then, fear of the unknown makes CFPB a boogeyman.
F&I PRESS RELEASES
» GM Financial Reports September Quarter Operating Results
» FORD CREDIT EARNS $355 MILLION NET INCOME IN THE THIRD QUARTER OF 2012*
DEALER JOB LISTINGS
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F&I BY THE NUMBERS
F&I revenue on the rise at major publics
F&I revenue per vehicle is on the rise, based on third-quarter results reported so far by publicly traded new-vehicle dealership groups. AutoNation, Group 1 and Sonic said they had all-time record quarters for F&I revenue per vehicle. | | | | | | | | | Q3
2012 | Q3
2011 | Change | | Asbury | | | | | F&I revenue per vehicle | $1,242 | $1,169 | 6.2% | | F&I % of revenue | 3.7% | 3.4% | | | F&I % of gross profit | 22.6% | 20.2% | | | | | | | | AutoNation | | | | | F&I revenue per vehicle | $1,290 | $1,213 | 6.3% | | F&I % of revenue | 3.7% | 3.5% | | | F&I % of gross profit | 23.6% | 21.2% | | | | | | | | Group 1 | | | | | F&I revenue per vehicle | $1,220 | $1,156 | 5.5% | | F&I % of revenue | 3.5% | 3.3% | | | F&I % of gross profit | 23.9% | 20.7% | | | | | | | | Lithia | | | | | F&I revenue per vehicle | $1,101 | $1,027 | 7.2% | | F&I % of revenue | 3.5% | 3.1% | | | F&I % of gross profit | 21.6% | 18.6% | | | | | | | | Sonic | | | | | F&I revenue per vehicle | $1,068 | $1,051 | 1.6% | | F&I % of revenue | 3.0% | 2.9% | | | F&I % of gross profit | 21.1% | 18.7% | | | | | | | | | | | |
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