Service-contract penetration rates were up slightly for new-vehicle sales and down slightly for pre-owned units in NADA Data’s 2018 report. 
 - Photo by Taras Makarenko via Pexels

Service-contract penetration rates were up slightly for new-vehicle sales and down slightly for pre-owned units in NADA Data’s 2018 report.

Photo by Taras Makarenko via Pexels

TYSONS, Va. — The National Automobile Dealers Association’s latest NADA Data report finds U.S. dealers continue to rely on their finance departments to drive dealership revenue and profitability. Profit per retailed unit grew by only $17 to $2,354 for used vehicles and declined by $15 to $1,944 for new units in 2018, analysts said, but F&I aftermarket income represented 25.5% of the gross profit on all sales, up from 24.9% in 2017.

F&I income as a percentage of new-vehicle sales remained flat at 2.9% but ticked up from 3.7% to 3.8% for pre-owned sales. Penetration rates for any F&I product were down slightly from 90.3% to 89.6% for new and flat at 73.2% for used. Service contracts penetrated at a rate of 45.7% for new (down from 46.9% in 2017) and 47.6% for used (up from 47.4%).

In March, FICO reported that U.S. and Canadian dealers lead the globe in dealer-arranged financing, accounting for 63% and 66% of all new auto loans, respectively.

Earlier this month, NADA released “Voluntary Protection Products: A Model Dealership Policy,” a new, optional policy-building and enforcement plan available for free to association members. Paul Metrey, NADA’s vice president of regulatory affairs and chief regulatory counsel, will offer an insider’s take on the policy at the upcoming Agent Summit.

To learn more about NADA’s VPP guidance, click here.

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