AutoNation's PVR Average Surpasses $1,500
For the first time, the public dealer group’s F&I profit per deal average surpassed the $1,500 mark. Officials said the company will continue to emphasize F&I product sales as it preps for the launch of an AutoNation-branded maintenance contract later this year.
FORT LAUDERDALE, Fla. — For the first time, AutoNation reported F&I gross profit per vehicle retailed (PVR) of more than $1,500, an all-time high for the public dealer group.
The group saw an average gross PVR of $1,515 during the first quarter 2015, up $114, or 8.1%, from a year ago. Approximately two-thirds of that profit was related to the sale of F&I products, while the other third was related to finance, officials said during a conference call on Wednesday.
Chairman, President and CEO Mike Jackson attributed the increase to the dealer group’s technology and training initiatives in its stores. He added that AutoNation intends to focus on product sales going forward.
“All of that growth has been on the product side and we intend to take a big step launching a pilot in the third quarter where … we will now offer our own maintenance contracts under the AutoNation brand name,” the executive explained. “And we feel this will be another growth opportunity that has potential to be very beneficial in 2016 as we get through the pilot study.”
Another new initiative currently underway at AutoNation is its Express process, which gives customers the ability to conduct the car-buying process largely online. Now with 120 days of operation under its belt, Express is helping the dealer group realize its goal of cutting down on third-party lead providers.
“So we’ve significantly outgrown and had a crossover as far as our dependence upon third-party sites,” COO Bill Berman told callers. “As far as its transactional capability under the flag AutoNation Express, it’s now active in 84 of our stores. It’s been very well accepted by our customers and by the stores.”
Express will be rolled out to the rest of AutoNation’s storefronts over the course of 2015.
Officials also reported a first quarter net income from continuing operations of $112 million, or $0.97 per share — a 29% improvement on a per-share basis over the same period in 2014. First quarter 2015 revenue totaled $4.9 billion, an increase of 13%, driven by stronger performance in all business sectors — new vehicles, used vehicles, parts and service, and F&I. New-vehicle unit sales increased 10% overall and 9% on a same-store basis, while retail used-vehicle unit sales increased 12% overall and 11% on a same-store basis.
Also during the conference call, Jackson touched on the Consumer Financial Protection Bureau’s crackdown on dealer markup. The executive said he doesn’t sense any impending moves by the banking industry toward flat fees to appease the CFPB. In order to cull discrimination against minority buyers, the regulator has suggested that finance sources eliminate the ability of dealers to mark up an interest rate on retail installment sale transactions in exchange for services rendered.
“… I can certainly speak for our portfolio. There is no sign of disparate impact, let alone discrimination,” Jackson said.
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