AutoNation Posts $146 Q3 Increase in F&I Per-Copy Average
FORD LAUDERDALE, Fla. — Strong performances in all of AutoNation Inc.’s business sectors — particularly the group’s F&I operations, which continued to live above $1,500 per copy during the period — drove record third-quarter results for the nation’s largest dealer group.
While F&I accounted for 4.3% of the company’s $5.1 billion in same-store revenue, F&I generated 27.6%, or $222 million, of AutoNation’s $803 million total same-store gross profit for the quarter. That’s up $26 million over the previous year.
The group’s F&I operations also increased its F&I profit per vehicle unit (PVR) average by $146 from a year ago, with the department averaging $1,549 per copy.
“We are pleased with our new-vehicle PVR performance for the quarter,” said Bill Berman, COO of AutoNation, during the group’s Oct. 28 third-quarter investor call. “We expect a sequential increase in PVRs in the $200 range due to the seasonal mix toward Premium Luxury.”
The company posted total revenue of $5.4 billion, up from $4.9 billion in the year-ago quarter. Net income from continuing operations rose 11% from a year ago to $118.5 million.
New-vehicle sales increased 5% from a year ago to 87,407 units, with gross profit on a per vehicle retail basis staying relatively flat from last year’s $1,877 average.
Used vehicles, however, did not see the same improvement thanks to the open safety recall policy the group announced in early September. It led to a slight 275-unit drop in sales during the quarter, with used-vehicle sales totaling 55,875 units. Gross profit on a per vehicle retail basis decreased 7% from a year ago to $1,509.
“… We set an auto retail industry standard and decided not to sell, lease or wholesale any new or used vehicle that has an open recall,” Berman said. “As of September, 30.6% of our inventory, which represents less than 2% of our new-vehicle inventory and approximately 16% of our used-vehicle inventory, was not available for sale due to open recalls.”
“Our used-vehicle sales were slowed by our recall policy and we expect to see an impact in the fourth quarter as well,” he added.
Officials also commented on AutoNation’s July decision to drop TrueCar as one of its third-party lead providers, with Berman noting that moving away “from less profitable providers” helped offset new-vehicle PVR pressures.
“New-vehicle PVRs from our self-generated sales, including Customer Financial Services, are approximately $800 higher than new vehicle PVRs from third-party sales,” he said.
In the third quarter, the AutoNation Express website generated more than 25% of the company’s unit sales. Sales from third-party lead websites represent less than 9% of the company’s unit sales, officials said.
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