F&I Drives Earnings at Group 1

Group 1 Automotive Inc., the publicly traded dealership group, today announced that it increased its dividend more than 18% to $0.13 a share. And what might be the driver of Group 1's advancing financial status? Try F&I.

Interestingly, F&I accounted for just 3% of Group 1's $1.74 billion of revenue last quarter, but 19% of its $244 million of net income. Total F&I revenue climbed 7.4% last quarter to $45.3 million compared to the same quarter in 2010. Only the company's used wholesale sales revenue climbed at a greater rate during that period.

The advancing F&I performance can be best seen in Group 1's gross F&I profit per retail unit, which hit $1,126 last quarter, up more than 18% since 2005, despite dips in the profit metric in the 2009 and 2010 recession years.

Prior to the recession, F&I turned into a substantial driver of earnings for dealerships nationwide. A look at Group 1 offers evidence that at least for some dealers that dynamic is returning to the retail automotive sector.

Tags: 1, F&I, Group, dealer, dealership, earnings, group

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Comment by Frank Rauscher on August 18, 2011 at 12:18pm: Volume solves most problems and profits solve all the problems. The good news is that we are back to historical facts. The F&I income at car dealerships has historically equaled the net income of the dealership. Now if we can just get car sales volume back to a more successful pace the economy can move forward. Here is where the auto finance industry simply needs to provide leadership; hopefully, it is leadership with an "innovative" twist even if it a new spin on a historical tactic. It will require something dramatic to overcome the lack of "Trust" and the lack of confidence in the economy; but, that is why the heads of those business units get paid the "big bucks". I am anxious to see what they can do!