Today’s automotive market doesn’t look anything like it did a few years ago for dealerships. With new and used vehicle prices skyrocketing, interest rates rising, and increasingly cautious buyers, dealerships are seeing their front-end margins increasingly shrink. Among this “new normal,” one thing is clear: maximizing Profit Per Retail Unit (PRU) is more important than ever. In this article, we will discuss how your dealership can navigate these rising car prices to increase overall F&I profitability.
Dealerships today are facing an automotive market with rising prices and increasingly tight margins. With the average new car price around $49,000, affordability has become a growing concern for consumers. Additionally, buyers are further stretched with their budgets, as it isn’t uncommon to see interest rates above 7%. On the business side, high acquisition costs, specifically for used cars, are narrowing already tight margins, leaving dealers with less room to maneuver on front-end pricing. As front-end sales become increasingly less profitable, dealers must turn to back-end opportunities to maintain profitability. Because of this, your F&I department becomes the cornerstone that can keep your dealership profitable.
As front-end gross profit continues to shrink from higher vehicle costs and tighter consumer budgets, F&I PRU has become an essential indicator of a dealership’s overall profitability. The difference between a dealership with a high PRU and one that is struggling? A well-trained F&I team, high product penetration, and a focus on customer value. Contact our team to see if you are eligible for a complimentary Business Development Assessment (BDA)* valued at $20,000, and start increasing your dealership’s F&I PRU today.
The first step to boosting your dealership’s PRU is to focus on high-margin products that offer real value to both the dealership and its customers. Vehicle Service Contracts (VSCs) remain the top-performing F&I product with high penetration rates and good margins. GAP coverage is becoming increasingly popular as loan-to-value ratios rise and buyers opt for longer financing terms. Lastly, ancillary products like Key Replacement, Tire & Wheel protection, and Windshield protection provide value-based protection based on each consumer’s specific needs. When customers are educated and understand the value of these protection products and how the products protect their investment, they are more likely to purchase them.
If you’re looking to take the first steps into boosting your dealership’s F&I PRU to Make More Money in 2025, now is the best time to do so. We’re offering a complimentary, no-pressure Business Development Assessment (BDA)* valued at $20,000 to help your dealership identify ways to maximize performance. This non-intrusive assessment reviews your business’s policies, processes, and procedures to identify any potential profit leaks. Let’s work together to boost your dealership’s F&I PRU today.
*Business Development Voucher available to franchise dealers only who meet the required unit volume.
