Fi2005 Statistics

F&I FACTORS TIME SPENT IN F&I

TIME SPENT IN DEALERSHIP Showroom 35%

Sales Office 40%

F&I 25%

■ WITH TEST DRIVE ■ WITHOUT TEST DRIVE

MINUTES

51.8 Sales Office 32.8 F&I 38.1 mins.

17.2 mins.

46.1 Showroom 0

10

20

• TIME SPENT IN F&I CONTINUED TO RISE IN 2006 AFTER SIGNIFICANT INCREASES IN 2004 AND 2005.

30

40

50

60

cy 2001 cy 2002 cy 2003 cy 2004 cy 2005 cy 2006 % of Time % of Time % of Time % of Time % of Time % of Time

SHOWROOM 36.0% F&I

38.5%

38.0%

cy 2001 Minutes

cy 2002 Minutes

cy 2003 Minutes

cy 2004 Minutes

cy 2005 Minutes

cy 2006 Minutes

40.6%

37.7%

35.3%

SHOWROOM

51.8

54.6

51.6

55.7

51.3

46.1

25.1%

F&I

21.4

25.1

23.9

26.2

29.1

32.8

16.5%

17.7%

17.6%

19.1%

21.4%

SALES OFFICE 47.5%

43.8%

44.4%

40.3%

40.9%

39.6%

SALES OFFICE

68.2

62.3

60.4

55.2

55.6

51.8

TOTAL

100.0%

100.0%

100.0%

100.0%

100.0%

TOTAL

143.7

142.0

135.9

137.1

136.0

130.7

100.0%

Source: CNW Marketing/Research Inc.

➤

Environmental package

F&I CUSTOMER ACCEPTANCE RATES

16.4%

(new only) 9.1%

Prepaid maintenance

9.4%

Theft deterrent

The statistics were recorded by Superior Integrated Solutions, provider of DMS integration and custom programming services. The statistics represent a blind sample of 500 dealers taken from multiple software and DMS providers, and reveal that dealers are still relying on finance reserves for back-end profit.

22.1%

(new only)

42.3%

GAP

26.4% 5.0%

Credit life/A&H insurance

3.1% 49.3%

Extended service contracts

33.8%

Lease (new and used)

29.9%

Tire and Wheel

4.6%

Source: Superior Integrated Solutions

59.9%

Finance 0%

30

■ NEW

70.1%

10%

20%

30%

40%

F & I Management & Technology ■ December 2006

50%

60%

70%

80%

90%

■ USED

F&I FACTORS 45.0%

46.1%

40.0%

42.8%

■ TOTAL PROFITS ■ F&I

37.9%

39.4%

43.2%

41.8%

35.0% 30.0%

30.1% 28.7%

28.3%

27.3%

25.0%

32.1%

28.0% 26.4%

20.0%

F&I SHARE OF TOTAL PROFITS 15.0%

16.5% 11.8%

10.0%

12.1%

11.8%

11.8%

11.5%

12.3%

12.4%

13.3%

16.2%

14.7%

15.6%

15.1% 13.7%

14.1%

2005

2006 est.

5.0%

SERVICE CONTRACT SHARE OF TOTAL PROFITS

➤

44.9

44.3%

F&I CONTRIBUTIONS TO DEALERSHIP PROFITS After experiencing slight declines in 2005, F&I’s contribution recaptured some ground in 2006 and still represents close to half of total profits. Lower gross margins on the sale of new units has helped increase the importance of F&I contributions. Source : CNW Marketing/Research

0.0% 1993

1994

1995

1996

1999

2000

2001

2002

2003

2004

■ NEW$ ■ USED$

$808

$800

$161

200

$234

$279

$496

$600

AVERAGE DOLLARS PER TRANSACTION $599

$613

600

400

1998

$1,035

$1,000

1997

➤

1992

0 Per Retail Unit

Per Financed Deal

Per Extended Service Contract

Per GAP Contract

Per Etch Contract

Financing remains the largest profit center per transaction, with an average of $808 per transaction on new units and an average of $1,035 per transaction on used units. However, for longtime profitability on the back-end, dealers need to focus on product index with the industry average still hovering around one product per sale. Source: Superior Integrated Solutions

TOP 20 U.S. AUTO LENDERS* RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

LENDER NAME GMAC Ford Motor Credit Toyota Financial Services American Honda Finance Daimler Chrysler Financial Services Chase Auto Finance Wells Fargo Auto Finance Wachovia / WFS Financial Nissan Infiniti Financial Services Citifinancial Auto Capital One Auto Finance Bank of America AmeriCredit Financial Services Inc. Citizens Auto Finance HSBC US Bank Volkswagen Credit Inc. BMW Bank of North America 5th 3rd bank USAA Federal Savings Bank

TTL FIN

PERCENT

NEW LOAN

PERCENT

LEASE TTL

PERCENT

156,718 123,540 107,190 89,955 82,011 74,480 60,714 51,449 45,951 33,604 33,027 29,004 28,033 20,869 20,307 19,394 18,691 18,629 15,184 15,075

7.90% 6.23% 5.40% 4.54% 4.13% 3.75% 3.06% 2.59% 2.32% 1.69% 1.67% 1.46% 1.41% 1.05% 1.02% 0.98% 0.94% 0.94% 0.77% 0.76%

109,519 82,848 62,433 59,705 39,122 42,768 13,872 13,919 19,830 8,194 11,690 13,255 6,294 7,444 6,033 6,246 7,185 1,707 4,749 6,976

14.09% 10.66% 8.03% 7.68% 5.03% 5.50% 1.14% 1.15% 2.55% 1.05% 1.50% 1.70% 0.81% 0.96% 0.78% 0.80% 0.92% 0.22% 0.61% 0.90%

30,487 22,141 22,265 18,025 29,786 3,015 2,097 45 20,663 63 13 146 9 42 25 6,264 7,575 12,673 534 13

15.56% 11.30% 11.36% 9.20% 15.20% 1.54% 1.07% 0.02% 10.54% 0.03% 0.01% 0.07% 0.00% 0.02% 0.01% 3.20% 3.87% 6.47% 0.27% 0.01%

*BY VEHICLES FINANCED, AUGUST 2006. INCLUDES FRANCHISED AND INDEPENDENT DEALERS. EXCLUDES DC, DE, RI, OK AND WY. Source: AutoCount Inc., an Experian company

32

F & I Management & Technology ■ December 2006

F&I FACTORS 2006 OUTSTANDING FUNDS

AVERAGE INTEREST RATE ON NEW ORIGINATIONS

(IN MILLIONS)

Credit Union 20%

Finance 18%

20.00%

Captive 33%

18.00% 16.00% 14.00%

Banks 29%

12.00% 10.00% 8.00% 6.00% 4.00%

➤

2.00%

OUTSTANDING FUNDS

0.00%

While captives retain the largest portion of the market, their share has consistently decreased with finance companies and credit unions taking on increasingly larger portions of lending share.

RATES %

CAPTIVES BANKS

CREDIT UNION FINANCE

PRIME

6.99%

8.63%

6.76%

8.5%

NONPRIME

11.14%

11.55%

8.93%

12.83%

SUBPRIME

14.77%

13.75%

10.87%

15.68%

BELOWSUBPRIME 17.86%

14.67%

11.94%

16.71%

Source: Experian Information Solutions Inc. ©2006

AVERAGE INTEREST RATES ➤ Interest rates remain highly competitive in the prime space with increased opportunities for differentiation among leaders in the subprime and below prime space. Source: Experian, June 2006

TOTAL

10.89%

10.42% 7.79%

12.94%

F&I FACTORS SERVICE CONTRACT PENETRATION RATES ➤ After approaching highs not seen since 1986 (35 percent), penetration dipped from 34.1 percent in 2004 to 31.2 percent in 2005. The NADA said penetration could see increases with gross margins on the sale of new units continuing to decline. Source: NADA Industry Analysis Division

40%

35

30

25

20 15 10 1994

DISTRIBUTION OF CONTRACTS BOOKED BY CREDIT SCORE

40% 34%

30% 21%

20% 12%

10%

5%

■ no score ■ < 500 ■ 500 - 549 ■ 550 - 619 ■ 620 - 679 16% ■ 680 - 719 ■ 720+ 5%

➤

1997

1998

1999

2000

■ SMALL/MEDIUM

2001

2002

2003

■ LARGE

2004

2005

46% 36%

27%

27% 18%

18%

18%

9%

6%

<10 min

0

2005

Overall nonprime credit score distributions continued to outpace the prime and super-prime ranges in 2005. Source: NAF Association

1996

11-20 min

21-30 min

21-30 min

➤

50%

1995

AVERAGE PROCESSING TIME FOR APPLICATIONS

Those with less than 30-minute application turnaround times are more likely to use custom credit scoring models. Source: NAF Association