Issue link: https://read.dmtmag.com/i/258703
FINANCIAL 10 • February 17, 2014 • Powersports Business www.PowersportsBusiness.com Is your F&I 'Power Rating' on the rise? STOCK MARKET WATCH www.PowersportsBusiness.com FINANCE Powersports Business • February 17, 2014 • 11 That's one product sold on average PVR. Manager A in the example above sold 28 products on 40 deals for a Power Rating of 70. Manager B sold 20 products on 40 deals for a Power Rating of 50. In the Manager B example with charge- backs at 25 percent of total department rev- enue, a couple things can be assumed — either reserve revenue is too high as a percent of total revenue (not enough products sold), or total revenue is significantly lower than previous months or years. Finance reserve has been significantly higher in the not-too-distant past. Only the best F&I managers are able to create reserve without chargebacks. Less than 20 years ago, finance reserve was as much as 80 percent of F&I revenue. What is your reserve as a percent of your F&I income today? A COMPENSATION PLAN BASED ON POWER RATINGS Most dealerships have their own set of targets and objectives that are most important to them. If the F&I manager can achieve some specific results for the dealership, then place them at the higher end. Using the examples of Managers A and B above, 20-25 percent for Manager A would have been $4,000-$5,000 after chargebacks. Manager B would have been the same if you didn't look at the chargebacks; however count- ing the chargebacks of $5,000 would give Man- ager B compensation of $3,000-$3,750. PSB Brian Gallmeier, founder of Income Develop- ment Partners, trains F&I departments. He can be reached at bgallmeier@charter.net or 612/616-8611. FOREIGN CURRENCY EXCHANGE 1/28/14 1 Month Ago 6 Months Ago Year Ago Annual Price Price %Change Price %Change Price %Change High Low Australian Dollar 1.14 1.12 -1.6% 1.08 -5.3% 0.96 -16.2% 0.95 1.15 British Pound 0.60 0.61 0.5% 0.65 7.8% 0.63 4.9% 0.60 0.67 Canadian Dollar 1.11 1.07 -3.3% 1.03 -6.9% 1.01 -8.8% 1.00 1.11 Euro 0.73 0.73 -0.8% 0.75 3.1% 0.74 1.5% 0.72 0.78 Indian Rupee 63.24 61.92 -2.1% 58.98 -6.7% 53.69 -15.1% 53.12 68.14 Indonesian Rupiah 12,230 12,260 0.2% 10,265 -16.1% 9,653 -21.1% 9,620 12,260 Japanese Yen 102.44 104.97 2.5% 98.13 -4.2% 90.98 -11.2% 90.64 105.11 Malaysian Ringget 3.35 3.29 -1.8% 3.21 -4.2% 3.04 -9.0% 2.96 3.35 Phillipine Peso 45.36 44.38 -2.2% 43.31 -4.5% 40.67 -10.3% 40.58 45.36 Singapore Dollar 1.28 1.27 -0.7% 1.26 -0.8% 1.23 -3.2% 1.23 1.28 South Korean Won 1,084 1,054 -2.7% 1,111 2.5% 1,074 -0.9% 1,050 1,161 Taiwan Dollar 30.40 29.97 -1.4% 29.91 -1.6% 29.13 -4.2% 29.13 30.40 Thailand Bhat 32.90 32.86 -0.1% 31.13 -5.4% 29.90 -9.1% 28.61 33.13 Note: A positive percent change reflects a weakening of the U.S. dollar and a strengthening of the foreign currency. Source: Wells Fargo Securities LLC POWERSPORTS BUSINESS STOCKS Stock Price Price Percent 52-Week Company Ticker 1/27/14 12/27/13 Change High Low Arctic Cat, Inc. ACAT $42.16 $56.77 -25.7% $61.13 $33.62 ARI Network Services, Inc. ARIS $3.35 $3.24 3.5% $3.51 $1.51 Assurant, Inc. AIZ $64.68 $66.08 -2.1% $68.95 $37.87 Brunswick Corp. BC $40.66 $45.71 -11.0% $47.08 $29.92 General Electric Co. GE $25.07 $27.83 -9.9% $28.09 $21.11 Harley-Davidson, Inc. HOG $64.22 $69.05 -7.0% $70.04 $49.15 Honda Motor Corp. ADR HMC $38.08 $41.25 -7.7% $42.96 $35.15 Orbital Engine Corp. Ltd. ADR OE $2.52 $2.42 4.1% $7.00 $1.99 Polaris Industries, Inc. PII $132.10 $143.33 -7.8% $146.99 $82.80 Stock Price Price Percent 52-Week Company Ticker 1/27/14 12/27/13 Change High Low ArvinMeritor ARM $9.48 $9.79 -3.2% $10.90 $4.11 ADP ADP $76.50 $80.72 -5.2% $83.82 $59.26 Bridgestone Corp. ADR BRDCY $18.55 $19.01 -2.4% $19.17 $12.67 Carlisle Companies CSL $74.74 $79.44 -5.9% $80.21 $60.34 Cooper Tire & Rubber CTB $22.64 $22.96 -1.4% $34.80 $20.55 Dover Corporation DOV $89.55 $96.32 -7.0% $97.00 $66.86 Intl. Speedway Corp. Cl. A ISCA $35.19 $35.76 -1.6% $38.01 $26.02 Deere & Company DE $86.01 $90.70 -5.2% $95.60 $79.50 MarineMax, Inc. HZO $14.91 $15.83 -5.8% $16.95 $10.17 Spy Inc. XSPY $1.38 $1.33 3.4% $2.25 $0.50 Speedway Motorsports, Inc. TRK $19.55 $19.93 -1.9% $20.75 $16.01 Universal Technical Institute UTI $12.93 $13.93 -7.2% $15.16 $9.96 POWERSPORTS BUSINESS INDEX COMPONENTS INTERNATIONAL STOCKS OF INTEREST Source: Wells Fargo Securities LLC Stock Price Price Percent 52-Week Company Ticker 1/27/14 12/27/13 Change High Low BMW AG BMW-ETR 80.44 € 85.42 € -5.8% 86.88 € 63.27 € BRP, Inc. DOO-TSE $28.80 $29.97 -3.9% $30.81 $23.41 Kawasaki Heavy Industries 7012-TKS 453 ¥ 436 ¥ 3.9% 496 ¥ 260 ¥ KTM Powersports AG KTM-WBO 76.80 € 61.70 € 24.5% 80.02 € 49.00 € Michelin ML-PAR 77.50 € 76.61 € 1.2% 84.71 € 57.23 € NGK Sparkplug 5334-TKS 2402 ¥ 2481 ¥ -3.2% 2643 ¥ 1079 ¥ Suzuki Motor 7269-TKS 2714 ¥ 2813 ¥ -3.5% 2982 ¥ 2049 ¥ Yamaha Motor 7272-TKS 1398 ¥ 1572 ¥ -11.1% 1825 ¥ 1025 ¥ Yokohama Rubber 5101-TKS 933 ¥ 1019 ¥ -8.4% 1312 ¥ 662 ¥ DOMESTIC STOCKS OF INTEREST also carry bragging rights, though the term refers to something quite different. Your F&I managers should be just as proud of their Power Ratings as your powersports enthusiast customers are of theirs. For your F&I department: Power Rating = # of F&I products sold per vehicle retail (PVR) Long-term Power Ratings drive PVR Let's take a look at an example: Finance Manager A: • 40 deals • 20 finance/20 cash • $200 average finance revenue per finance deal, or $4,000 total • 28 products sold at $600 average, or $16,800 • Reserve revenue for finance deals is $17,000 • Revenue for cash deals is $3,800 • Total income excluding chargebacks was $20,800 • Chargebacks were $800, for two product cancellations, none for finance • Department gross income less chargebacks is $20,000 • PVR on 40 deals is $500 Finance Manager B: • 40 deals • 20 finance/20 cash • $500 average finance revenue per finance deal, or $10,000 total • 20 products sold at $600 average, or $12,000 • Reserve revenue for finance deals is $17,000 • Revenue for cash deals is $3,800 • Total income excluding chargebacks was $20,800 • Chargebacks were $800 for two product can - cellations, and $5,000 for finance • Department gross income less chargebacks is $15,000 • PVR on 40 deals is $375 Summary: Manager A grossed the same as Manager B, however sold 40 percent more products that may be valuable to the dealership's customer retention and future service revenues. Manager B had higher finance reserve, how - ever in the end, it created 25 percent in charge- backs to the department. Both managers saw significantly more rev- enue on finance deals vs. cash deals. Prior to chargebacks, both managers show the same PVR at $520. So, what's the Power Rating of each finance manager? A perfect power rating score is 100. F&I SOLUTIONS P10x12-PSB3-Finance.indd 11 2/5/14 10:20 AM