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Asbury’s Q Auto Stores a Work in Progress

The tablet-driven, fixed-price F&I process at Asbury’s Q Auto stores didn’t perform as well as the traditional F&I process employed at the group's core stores, but officials said they are happy with the new format’s progress.

April 21, 2015
3 min to read


DULUTH, Ga. — While it’s traditional F&I process realize a $35 increase in F&I profit per vehicle retailed (PVR) from a year ago, the tablet-driven process Asbury Automotive Group employs at its standalone, used-vehicle outlets remains a work in progress, the dealer group revealed this week during its first-quarter investor call.  

Compared to the first quarter 2014, F&I revenues were up 7% on a same-store basis, while F&I PVR at the group’s core stores rose to $1,365. “Our F&I strategy remains unchanged, disciplined execution of F&I sales processes and training creates a solid sustainable growth and results,” said David Hult, the group’s executive vice president and COO.

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F&I PVR at the group’s three Q Auto stores, however, wasn’t as high, group officials revealed. The standalone used-vehicle outlets use a fixed-pricing strategy for both sales and F&I. They also employ a table-driven F&I process.

“… Cars are fixed price, the F&I products are fixed price,” said President and CEO Craig Monaghan. “It’s a selling process that runs off of an iPad. There is not a traditional F&I office. So it's an environment where we would expect to potentially see lower front end grosses, but we also have a lower cost structure.

“I would say … it’s working,” he added. “We are still learning, but we are very happy with the direction that it’s at.”

Monaghan said the group was satisfied with overall progress of its Q Auto stores, noting that they are slightly ahead of the group’s expectations. “As you saw in the result of this quarter, we had a three cent loss,” the executive said. “We are anticipating a loss of one to three cents next quarter, so we think we will continue to make progress.

“I think we continue to look at this as a tremendous opportunity for us to utilize today's technologies and some of our in-house expertise, and figure out if we can retail some portion of the 35,000 cars that we are sending to auction every year,” the executive added. “And I think we are making progress in that direction. Our objective is to achieve run-rate profitability by the end of the year. We think we are heading in that direction, and I think, at this point, we'd just ask for some patience while we continue to work on it and see where we can get.”

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For the first quarter 2015, the dealer group posted income from continuing operations of $35.9 million, or $1.30 per diluted share — a 26% increase per diluted share from first quarter 2014. Net income was $35.9 million, or $1.30 per diluted share, compared to $31.4 million, or $1.02 per diluted share in the prior-year period. Total revenues increased 14% from a year ago to $1.5 billion from the prior year period, and total gross profit was up 11%.

As for vehicle sales, Asbury saw an increase in new-unit sales of 6% during the quarter, with revenue increasing 9% and gross profit increasing 4% compared to the prior year. Used-vehicle unit volume increased 3%, while used-vehicle gross profit remained flat over last year.

“Our stores continued to produce excellent operation results by maximizing new- and used-vehicle sales opportunities, improving F&I PVR, pursuing incremental service pops and controlling expenses,” Monaghan noted. “Looking forward to the remainder of 2015, we believe automotive sales will remain healthy, as we continue to plan our business for a high 16 million SAAR.”

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