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? To your 40-something neighbors with a cabin and a couple driving teenag- ers, Power Ratings carry bragging rights, and anything over 40 would be a good score. Using 1 point per cylinder, that's 8 for the SUV or pickup, 4 for the hybrid, 6 for the 1995 LeSabre, 4 for the 1999 Civic, 2 for the lawn mower and 2 for the snow blower. Then, of course, the toys: 8 more points for the two ATVs, 8 for the two PWC, 4 for the pontoon, and of course, the cruiser counts as double, making a total power rating of 46. So yes, your neighbors can be con- sidered powersports enthusiasts! Power Ratings can also be used as a conversation starter on the show floor. Rather than "Can I help you?" and getting the standard "Just looking for now" response, how about trying some type of interest-drawing catch phrase that relates to the number of members in their family, their lifestyle and, of course, their toys. Once your sales representative explains the phrase, most powersports enthusiasts will be proud of their Power Rating. Give your cus- tomer a nudge for next season, with a goal of trying to get their Power Rating over 50! To F&I departments, Power Ratings will STOCK MARKET WATCH DEALER FINANCIAL SNAPSHOT 2013 V. 2012 U.S. dealers had a positive 2013, with overall sales up 6.7 percent, according to ADP Lightspeed. Major unit sales saw the biggest jump, up 9.0 percent over 2012, while service followed with a 5.2 percent increase. Parts, however, dropped 0.2 percent. The West region saw the most year-over-year improve- ment, with a 13.2 percent overall sales increase led by a 19.8 percent boost in unit sales. All regions increased overall and in unit sales and service. PARTS SALES In parts, 570 dealers were up, and 692 were down. SERVICE SALES 623 were up and 609 were down in service. MAJOR UNIT SALES In major unit sales, 648 dealers were up and 479 were down. NORTHWEST 0.9% Parts Department 9.9% Service Department 10.9% Major Units 8.8% Overall MIDWEST 1.0% Parts Department 2.7% Service Department 6.8% Major Units 5.2% Overall NORTHEAST -2.2% Parts Department 2.5% Service Department 3.2% Major Units 2.3% Overall SOUTH -1.6% Parts Department 3.8% Service Department 6.3% Major Units 5.2% Overall WEST 0.9% Parts Department 9.6% Service Department 19.8% Major Units 13.2% Overall UNITED STATES -0.2% Parts Department 5.2% Service Department 9.0% Major Units 6.7% Overall 80 100 120 140 160 180 200 220 240 260 5/28/13 6/21/13 7/23/13 8/20/13 9/16/13 10/14/13 11/8/13 12/9/13 1/6/14 1/27/14 PSB INDEX VALUE DOW JONES INDEXED S&P 500 INDEXED Stock Price Percent Company Ticker 1/27/14 Change Orbital Engine Corp. Ltd. ADR OE $2.52 4.1% ARI Network Services, Inc. ARIS $3.35 3.5% Spy Inc. XSPY $1.38 3.4% Dover Corporation DOV $89.55 -7.0% Universal Technical Institute UTI $12.93 -7.2% Honda Motor Corp. ADR HMC $38.08 -7.7% Polaris Industries, Inc. PII $132.10 -7.8% General Electric Co. GE $25.07 -9.9% Brunswick Corp. BC $40.66 -11.0% Arctic Cat, Inc. ACAT $42.16 -25.7% MARKET WATCH POWERSPORTS BUSINESS WINNERS AND LOSERS Source: Wells Fargo Securities LLC STOCK MARKET ACTIVITY 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? 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. FOR MORE ON THE SAME STORE SALES DATA For more information on this report and other industry data, contact: adplightspeed.com/dataservices Change 1/27/14 from 1/6 % Change Powersports Business Index 224.306 -29.45 -11.60% Dow Jones Index 137.755 -5.11 -3.58% S&P 500 Index 121.256 -3.08 -2.48% 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 BRIAN GALLMEIER P10x12-PSB3-Finance.indd 10 2/5/14 1:15 PM