| | | WEEKLY REPORT | January 30, 2013 |
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Q&A
Why F&I bundling has 'exploded'
 Pitching auto customers a package of F&I products for one price, called bundling, speeds up the F&I sales process and helps dealerships shoehorn more products into a limited menu. It also gives customers fewer chances to object to pricing for individual items. ...  story
| Dealers see rise in F&I profit per vehicle
Seventy-five percent of car dealers responding to a survey by KeyBanc Capital Markets in December said they expected their gross F&I profit per vehicle to rise in the fourth quarter. ... story
| Subprime lenders expect strong 2013
Three subprime auto lenders say strong growth should continue in 2013. “We expect to be just short of doubling our number of dealers this year,” said David Satterfield, co-COO for First Investors Financial Services of Houston. He said the company is adding roughly 100 dealers a month by entering new markets and by adding dealers in existing markets. ... story
| Ally Financial needs 'concrete plan' to unwind from U.S., watchdog says
 The Treasury Department needs a “concrete plan” to unwind the 2009 bailout of Ally Financial, the former auto-finance arm of GM, an administration watchdog says in a new report. Taxpayers still own 74 percent of Ally, which owes $14.6 billion for the infusion of public dollars that enabled the former GMAC Inc. to avoid bankruptcy. ... story
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F&I BY THE NUMBERS
Retailers bullish on F&I gross profits
Three-quarters of auto retailers polled in December by KeyBanc Capital Markets expected fourth-quarter 2012 F&I gross profit per unit to increase by more than $50 compared with the 2011 fourth quarter. The monthly survey, launched in 2012, asks respondents to project their store's results for the current quarter vs. the same quarter the year before. | | | | | | | Monthly poll | Greater than $50 | Relatively flat | Less than $50 | | Dec. | 75% | 25% | 0% | | Nov. | 67% | 22% | 11% | | Oct. | 86% | 14% | 0% | | Sept. | 70% | 30% | 0% | | Aug. | 60% | 40% | 0% | | July | 54% | 15% | 31% | | June | 57% | 29% | 14% | | May | 73% | 13% | 13% | | April | 64% | 29% | 7% | | March | 77% | 23% | 0% | | | | |
| | Note: Totals may not add to 100% because of rounding. | | Source: KeyBanc Capital Markets Inc. |
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JIM HENRY
Private equity likes the F&I space
| |  | Jim Henry is a special correspondent for Automotive News | |
Investor interest shows that F&I is an attractive business to be in.
The acquisition of F&I administrator Safe-Guard Products International in December by yet another private-equity firm, this time an affiliate of Goldman Sachs, shows the ongoing trend of private-equity firms to invest in auto finance and related business.
Private-equity firms have been snapping up subprime auto lenders of late. In 2011, for example, New York's Blackstone Group bought Exeter Finance Corp., and funds affiliated with Warburg Pincus, Kohlberg Kravis Roberts & Co. and Centerbridge Partners bought 25 percent of Santander Consumer USA of Dallas for $1 billion. In September 2012, a company controlled by Aquiline Capital Partners bought First Investors Financial Services.
Private equity has been interested in the F&I products space, too. There was a wave of investor acquisitions in 2006 and '07, before the latest recession, including deals for service contract providers Life of the South, Warrantech Corp., Interstate National Dealer Services and Safe-Guard, which was acquired by H.I.G. Capital in 2007.
Now H.I.G. has sold Safe-Guard to Goldman Sachs. Safe-Guard, of Atlanta, develops, markets and administers extended-service contracts, GAP and other F&I products.
Safe-Guard President Dave Duncan said this week that this is Goldman's first investment deal in F&I products.
For dealerships, sharper competition for their business could mean better bargaining power.
F&I PRESS RELEASES
» 17th Annual NAF Association Conference to Have CFPB Assistant Director Richard P. Hackett As Keynote Speaker
» Ford Credit Earns Full Year 2012 Pre-Tax Profit of $1.7 Billion, Net Income of $1.2 Billion
» Automobile Consumer Services, Inc. Announces Partnership with LendingTree Autos and CreditSmarts.com
» Ron Sachs Communications Named Agency of Record for Service Contract Industry Council
DEALER JOB LISTINGS
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F&I BY THE NUMBERS
Dodge No. 1 in Santander loan sales
Dodge has replaced Chevrolet as the most represented brand in pools of auto loans sold off by Santander in asset-backed securities transactions. Through a relationship with the Chrysler Group, Santander started buying below-prime loans for new and used vehicles from Chrysler dealers in 2010. According to published reports, Chrysler may expand the relationship and name Santander a preferred lender. Each pool of sold loans has its own number. | | | | | | | ABS
transaction
no. | Year | No. 1
brand | % of
total loans | | 6 | 2012 | Dodge | 15% | | 5 | 2012 | Dodge | 18% | | 4 | 2012 | Dodge | 17% | | 3 | 2012 | Dodge | 15% | | 2 | 2012 | Dodge | 15% | | 1 | 2012 | Dodge | 15% | | | | | | | 4 | 2011 | Dodge | 15% | | 3 | 2011 | Dodge | 14% | | 2 | 2011 | Chevrolet | 14% | | 1 | 2011 | Chevrolet | 15% | | | | | | | 3 | 2010 | Chevrolet | 14% | | 2 | 2010 | Chevrolet | 14% | | 1 | 2010 | Chevrolet | 15% | | | | | | | | Source: Santander SEC filing | | | |
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