Issue link: https://read.dmtmag.com/i/164037
2 5 6 8 7 9 6 5 7 3 2 3 5 8 0 2 4 6 0 8 0 € 1 ¥ € € ¥ ¥ ¥ ¥ C F&I FOCUS PSB m www.PowersportsBusiness.com Powersports Business • September 9, 2013 • 15 Service contracts show strength at F&I desk ADP Lightspeed study shows year-long sales data V-TWIN AND METRIC MOTORCYCLE F&I PRODUCTS 76.9% Documentation & Admin Fees Title & Registration Fees Freight, Setup, & Handling Service Contracts Taxes GAP Lender Fees Prepaid Maintenance Insurance Parts and Accessories Road Hazard Other Security Discount OEM Promotion Credit Card Fees Gift Card Labor Loyalty Programs Editor's note: ADP Lightspeed analyst Hal Ethington, an industry veteran of more than 40 years, provides Powersports Business readers with insight into study on F&I sales over the past year. Analysis of more than 648,000 unit sales during the 12 months ended July 2013 reveals the following about finance & insurance products sold with both metric and V-twin new motorcycle purchases: Documentation and administrative fees are the charge most often added to a motorcycle deal. They are included in 77 percent of all deals. Labor sold on a deal (installs, etc.) showed the greatest increase since 2012, rising $179 to $714 per deal. Prepaid maintenance was second, rising $141 to $1,694 per sale. If freight and setup charges are included with F&I products, they account for the largest portion of F&I sales to units. This charge generated $142 million in sales in the 12 months ended July 2013. Service Contracts, at 31 percent, were next in revenue with $128 million in sales. 58.3% 45.5% 22.4% 10.5% 2.5% 2.4% 1.9% 1.7% 1.4% 1.2% 1.0% 0.6% 0.5% 0.5% 0.3% 0.2% 0.2% 0.1% 0% F&I products were grouped into 19 major types and compared for the years 2012 and penetration, with 77 percent of all units carry2013. There was little variance in ing this charge. Title and registration were next ranking of penetration between at 58 percent, followed by freight, setup and the two years. Labor and handling charges on 46 percent of deals. prepaid maintenance are still Service contracts were sold on 22 percent on top, while OEM promoof units. GAP insurance was seen 2.5 pertion credits and insurance cent of the time; prepaid maintenance was decreased considerably in size. present on 1.9 percent of units, and parts Chart A presents the (not sold through the service department on penetration rate which a repair order) were listed on 1.4 percent each of these product of units. groups has reached. The Chart B and Table 1 (Page 18) show rate is expressed as the the change in average sales per unit for HAL ETHINGTON percent of units that each of the 19 extra line groups. The carried a sale of this product. Doc fees and chart shows labor increasing $179 in 2013, administrative charges have the highest rate of while the table shows the amounts for each V-TWIN AND METRIC MOTORCYCLE F&I PRODUCTS CHART B CHANGE IN DOLLAR SALES / UNIT, YEAR 2012 TO YEAR 2013 600,000 DEALS WITH 648,000 UNITS FOR TWELVE MONTHS ENDED JULY 2013 -$150 -$100 P10x21-PSB11-Focus.indd 15 -$50 10% 20% 30% 40% 50% 60% 70% of the two years and the difference between them. Surprisingly, sales of security products (etching, alarms etc.) fell $24. Credit card and lender fees also decreased by about $20. Penetration and average dollars per unit, however, are not an indication of the total effect that these changes have made. Chart C looks at the total revenue returned by each of the 17 groups when the per-unit income is multiplied by the number of units affected. For the year ended July 2013, we see that of the $410 million sold on extra lines, freight and setup accounted for 36 percent. Service contracts are next in size with 31 percent of all extra line income. Doc fees account for 15 percent, and prepaid maintenance contributed 4.7 percent. 90% GAP insurance was barely part of the upper end of sales volume with 1.8 percent of revenue, and surprisingly, road hazard products and insurances were present with 0.8 percent of revenue. All other groups combined accounted for about 10 percent of total F&I sales. Some of the products mentioned here are more specifically "finance and insurance" than others. Among the top generators, freight and setup would not technically be F&I, neither would parts and accessories or security products. These are actual hardware items that have been added to the deal, but could as easily be classified as a parts sales. However, service contracts, doc fees, prepaid maintenance, GAP See ADP on Page 18 V-TWIN AND METRIC MOTORCYCLE F&I PRODUCTS CHART C $410 MILLION IN F&I PRODUCT SALES, BY PRODUCT TYPE 600,000 DEALS WITH 648,000 UNITS FOR TWELVE MONTHS ENDED JULY 2013 Other 4% GAP Insurance 2% Prepaid Maintenance 5% $89.17 $53.65 $52.27 $39.29 $22.21 $20.57 $17.88 $6.18 80% Source: ADP Lightspeed $178.91 $140.63 $124.78 Labor Prepaid Maintenance Parts and Accessories Discount Service Contracts Road Hazard Freight, Setup, & Handling Other Gift Card GAP Doc & Admin Fees Title & Registration Fees Loyalty Programs Taxes Lender Fees Credit Card Fees Security Insurance OEM Promotion CHART A PERCENT OF UNITS SOLD WITH THIS PRODUCT / 600,000 DEALS WITH 648,000 UNITS FOR TWELVE MONTHS ENDED JULY 2013 Title & Registration Fees 7% Freight, Setup, & Handling Documentation & Admin Fees 36% $1.76 $0.72 -$0.65 15% -$17.86 Service Contracts -$20.82 -$23.75 31% -$68.71 -$88.53 $0 $50 $100 $150 $200 Source: ADP Lightspeed 8/28/13 10:50 AM