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While in many ways the automotive retail industry has rebounded from the difficulties of 2020, there are some lingering effects. It’s a delicate balance — as inventory pressures ease and prices drop, so do dealership profits.
The latest data indicates a drop in gross profits per vehicle retailed (PVR) for the eighth straight sales quarter. After a peak in 2022, the average new gross PVR has experienced an average quarterly decline of 6.4%.
The decline seems to be steepening, with an average of 8.5% per quarter over the last four quarters, compared to 4.3% each quarter the previous year.
F&I gross profits have also hit a slump. In Q1 2024, the average F&I gross profit PVR was $2,320, a 3.2% decrease from Q1 2023. To underline the importance of F&I sales, in Q1 2023, F&I produced 30% of the total gross profit per new vehicle and 53% of the gross profit per used vehicle.
Any increase in F&I sales boosts the dealership’s bottom line. How can your dealership increase F&I margins?
GPS Location Services
One F&I item dealers often overlook is GPS location services.
Passenger cars made up more than 74% of all stolen motor vehicles in 2023, and those thefts cost vehicle owners more than $8 billion. When you suggest GPS location services during the sales process, you show you care about the safety and security of each customer’s purchase.
GPS location tracking offers new owners:
- On-demand location services: Vehicle location at any time with a pin drop on a digital map.
- Increased operational safety: Alerts when vehicles enter or leave designated boundaries, reach high speeds, experience impact, register low battery voltage, and more.
- Personalized maintenance reminders: Some GPS services offer vehicle-specific, dealership-branded service reminder campaigns that can be sent by text or email, ensuring your customers’ vehicles are in proper working order.
Beyond Dealership F&I Departments
GPS is beneficial in other dealership areas, too. You can preinstall GPS tracking devices on your inventory to protect your own investment from theft, as well as locate vehicles on the lot for test drives or customer inquiries. After the sale, personalized maintenance campaigns based on tracked mileage can help drive more traffic to your service department. And, as mentioned, it’s easy to pass preinstalled devices along to the buyers at the time of sale, with all the safety, theft recovery, and insurance benefits included.
Conclusion
Whatever your dealership’s individual F&I struggles, goals, and processes, having quality products to increase profits helps. Using GPS location services for your business and passing them along to your customer during the sale is a win-win for everyone.
