Tag Archive | "F&I Products"

AmTrust to Acquire Wells Fargo’s Warranty Solutions


NEW YORK — AmTrust Financial Services Inc. announced today that it has entered into a definitive agreement to acquire F&I product provider Warranty Solutions from Wells Fargo for $152 million in cash. Pending regulatory approval, the deal is expected to close in the third quarter 2015.

Warranty Solutions was part of Wachovia Dealers Services when Wells Fargo purchased the finance source in a $15.1 billion all-stock deal in October 2008. Prior to that, the Lakewood, Colo.-based F&I product provider operated as GE Money Warranty Services. Today, it administers and underwriters vehicle service contracts through a national network of more than 70 active agencies and 1,500 franchise and independent dealers.

“The acquisition of Warranty Solutions provides an outstanding opportunity for our company to expand our successful vehicle extended warranty operation while also adding to our differentiated service and fee business,” said Barry Zyskind, president and CEO of AmTrust Financial Services, in a company press release. “Warranty Solutions is an excellent fit for our organization and we look forward to welcoming the talented individuals that have built Warranty solutions into a successful business.”

Zyskind hinted that the multinational insurance holding company was closing in on an acquisition during AmTrust Financial’s first quarter earnings call on Tuesday, May 5, noting that AmTrust had raised capital during the quarter and that its balance sheet was on “very solid footing” to both grow through acquisitions and organically.

“We continue to excel, buying, looking for companies that fit within our niche, whether we are buying it below book value and gaining on the acquisitions and getting a book of business, or we’re looking for fee business that will ultimately increase our return and drive profitable premium to the organization.

“So that’s something that we continue to focus on; strengthen the team and grow our acquisition capability,” he said.

AmTrust has been active in the automotive space. In August 2010, the company completed its purchase of Warrentech. It also purchased Ally Insurance’s Car Care Plan, which provides insurance and administrative services to vehicle manufacturers for extended warranties, GAP, wholesale floorplan insurance and other F&I products, in February 2013.

A spokesperson for AmTrust said on Thursday that the company expects to retain Warranty Solutions’ management team and all of the firm’s employees. She added that there are no plans to change the name of company or move it from its Colorado offices.

Wells Fargo issued the following statement regarding the pending sale to F&I and Showroom: “As part of our normal processes, we evaluate our businesses and occasionally make decisions to expand or contract in a particular area. After an evaluation of Warranty Solutions, we determined that — under the ownership of a company like AmTrust that specializes in the aftermarket product business — Warranty Solutions would be better positioned to continue growing. We are happy that existing team members will transition to AmTrust.”

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Larry H. Miller Group to Offer F&I Products Nationwide


SANDY, Utah — Larry H. Miller Groups of Companies will now offer its in-house F&I products to dealerships across the U.S. through its new captive finance administrator, Total Care Auto (TCA).

Last week, the dealer group announced that Bryant Henrie, the president of its captive finance arm, Prestige Financial Services Inc., will step into the role of president of TCA, effective immediately.

“The network of customers and contacts we’ve built at Prestige will help open doors to new business opportunities for Total Care Auto,” Henrie said. Recently, the executive was honored by the Salt Lake Tribune for his Leadership of a large company in the news source’s Top Workplace awards.

Prestige, founded as an affiliate of Larry H. Miller Groups of Cos. in 1994, is a subprime auto finance source. The dealer group’s move to expand TCA’s footprint is similar to what the company did with Prestige, which now offers financing in 46 states

Prior to Henrie’s appointment as president, TCA was overseen by Steve Starks, executive vice president of Larry H. Miller Groups of Cos.

“I’ve truly enjoyed the opportunity to work with TCA and General Manager Robb Enger over the last few years,” Starks said. “With Prestige and TCA both servicing automotive customers, it is important to the growth of both companies that they work closely in providing their financial and insurance services to stores and customers across the country.”

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AutoNation Discusses CFPB, Digital Push


FORD LAUDERDALE, Fla. — In a quarter in which it posted record second-quarter earnings per share (EPS) from continuing operations, AutoNation’s F&I operations realized an 11.5% increase in revenue from a year ago and a $9 million, or 5%, increase in total gross profit.

Average gross profit per vehicle retailed for the nation’s largest auto group rose $23, or 2%, from a year ago to $1,398. For the first six months of 2014, PVR rose $45, or 3.3%, from a year ago to $1,395. The group achieved this during a quarter in which it installed in nine stores the National Automobile Dealers Association (NADA)’s Fair Credit Compliance Program in response to the Consumer Financial Protection Bureau (CFPB)’s scrutiny of rate markups.

“It’s been successfully implemented without much disruption and no impact on results,” Mike Jackson, Chairman and CEO, said of the NADA’s program, which calls on dealers to document variations in rate markups on retail finance contracts. “We will now take it to additional stores on a gradual basis.”

Jackson added that he believes banks, dealers and the CFPB will eventually come to some sort of agreement regarding how finances sources compensate dealers in the indirect financing channel.

“And that will unfold over the course of the year, but my expectation will be some sort of agreement and some sort of common ground,” said Jackson, who also responded to a question about reports that the CFPB is turning its attention to F&I product sales.

“We have seen zero real activity in that area,” he said. “All the focus is on the reserve amount.”

In the second quarter, AutoNation posted second quarter net income from continuing operations of $101 million, or a second-quarter record of $0.83 per share, compared to $90 million, or $0.73 per share, in the year-ago period.

The dealer group also reported revenue of $4.8 billion, up from $4.4 billion in the year-ago quarter. That 8% increase was driven by stronger performance in new vehicles, parts and service, and finance and insurance.

Total gross profit for variable operations on a same-store basis was $3,279 per vehicle, a $67, or 2%, increase. Same-store new-vehicle revenue increased $200 million, or 8%, from a year ago to $2.7 billion on the sale of 79,000 units, a 6% increase. The dealer group also posted new-vehicle gross profit of $159 million, up 10 million, or 7%, from a year ago. New-vehicle gross profit per vehicle retailed was $2,008.

Retail revenue for used-vehicle sale was $976 million, an increase of $23 million, or 2%, on 52,000 used vehicles retailed, which was flat with a year ago. Revenue per used vehicle retailed increased $527, or 3%, to $18,836. Retail used-vehicle gross profit was $87 million, up $4 million, or 5%, from a year ago, while gross profit per used-vehicle retailed was $1,687, an increase of $91 per vehicle, or 6%.

Parts and service recorded a posted record revenue and gross profit, with revenue increasing $41 million to $696 million. Total gross profit grew 6%, or $17 million, to $297 million.

Jackson also provided an update on the company’s digital retailing drive, saying the group is ahead of expectations in terms of acceptance of the brand and the amount of traffic being generated by the group’s digital sites. He also announced the group is moving into the next phase of its digital push.

“So we’ve decided to accelerate the new phase, which is increasing our marketing around the brand AutoNation to drive even more customers to our digital sites and, of course, a big investment in the capabilities of the site itself, which the next step would be that the site goes transactional at the end of the year …,” Jackson said, noting that customers will be able to select a vehicle, get a committed price and submit a deposit without ever entering one of the group’s stores.

Jackson said digital sites will be expanded next year to allow the group to appraise and purchase customer trade-ins. They will also be able to provide customers with quotes on financing. “This is our strategic vision, if you will, that we believe today’s customer and future customers want one experience, not an online experience and an in-store experience, but one seamless experience where they can interact and transact both digitally and in the store,” he said, noting that the AutoNation will invest an additional $100 million over the next two years to solidify the brands, increase site traffic and add transaction capabilities to its digital sites.

Jackson, however, stopped short of providing a timetable on how things will play out. “So it’s certainly not the end of the story over the next two years,” he said. “There will be more chapters, but we’re in a very ambitious and exciting phase. I call it an investment phase.”

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RouteOne to Cover Regulator Scrutiny of F&I Products in Upcoming Webinar


FARMINGTON HILLS, Mich. — RouteOne LLC will discuss the forthcoming scrutiny of F&I products by the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) during a complimentary webinar on July 23 at 12 p.m. ET.

During the webinar, entitled “CFPB and FTC Update: All About Add-Ons,” RouteOne Staff Attorney Joseph Karam and National Business Development Manager Jesse Pappas will discuss the cost of compliance, provide a brief introduction to the CFPB and FTC, and look closely into the forthcoming scrutiny of F&I products. Dealers may register for the free webinar by clicking here.

“As the regulatory environment grows increasingly complex, dealerships are contributing a significant amount of time, resources and money in the effort to stay compliant,” said Mike Jurecki, RouteOne CEO. “With separate federal agencies now dedicated to consumer finance and consumer protection, we encourage our dealer customers to take advantage of this opportunity to educate and prepare themselves for the future regulatory environment.”

Karam and Pappas will offer a Q&A session following the presentation. The webinar will be recorded and available for review after the live session on July 23.

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Insights From the Front Lines


At the 2012 Agent Summit, I had the opportunity to serve as moderator of a panel called “Five Ways to Take Your Agency From Provider Rep to Partner.” Our goal was to provide a discussion that would highlight effective ways to become a true partner with today’s dealer — and lead them to record profits.

I was joined by Tim Blochowiak of Protective Asset Protection, David Duncan of Safe-Guard Products International, Garrett Lacour of RoadVantage, John Luckett of First Extended Service Corp. and Ricky Wolfe of Interstate National Corp. These five strong voices in the agent arena shared how they are working through a changing market and providing innovative products and creative ways to maximize dealer profitability.

Let’s take a look at some of the many insights they provided:

Agents must offer new ways to present products.

In the F&I office, the presentation must match the changing behavior of customers. As an agent, bringing that kind of creative change will differentiate you from the competition.

The recent recession has made dramatic change in how consumers view their money. They are more resistant than ever to what they perceive as “extras.” Most customers who have bought a vehicle before have already experienced an F&I presentation. If the products and the way they are presented is the same as their last experience, they’re more likely to be resistant.

Great companies have used a changing environment as an opportunity to examine the way they do business and make creative changes that move more customers to buy.
Take Apple Computer, for example. In 1997, everyone was writing the company’s obituary. Then they re-launched their company with creative ideas and products and have since become a leader, and not just in home computing. Apple has become a new standard bearer for designing and marketing products that customers are motivated to buy.

On the flip side, companies like Kodak are going under because of their lack of urgency to change. Kodak introduced us to film photography and remained a market leader for decades. However when the market demanded digital photography, Kodak stalled. Now, they’re in bankruptcy. The message was clearly defined: Change and innovation today will lead to record profits tomorrow.

Adding underperforming dealerships to your roster will not lead to long-term and sustainable growth.

Successful agents have learned that it’s not about adding dealerships; it’s about selling products. Dealers need and demand income development. A well-trained and focused F&I team can change to meet the new perspective of customers and provide record profits in a challenging market. The bad news is that most dealerships cut or even eliminated their training budgets during the recent recession. The good news is that they’re turning to their agents to provide new training.

You have the opportunity to take a hands-on approach to growing the overall skill level of your dealers’ F&I teams. Your toolkit should include role-playing exercises, benchmarking and accountability. Certification through off-site training also will be valued and sought after by dealers.

The next step is establishing a new F&I process that utilizes the finer points of your training. Customers have already seen the high pressure, memorized sales pitch many F&I managers still swear by. Introduce your dealers to a customer-focused process that will provide an environment where customers feel someone is trying to help them make good decisions, rather than just trying to sell them something they don’t want or need.

Also, there is real opportunity to sell service contracts in the service drive. Many dealers have tried and failed in the past. But there are better approaches out there than there were 10 years ago, and it may be worth another shot. Providing your dealers with a new revenue stream will definitely help set you apart.

“How are you different than other agents? What can you provide that they don’t?”

Agents that are in a growth mode today have heard those questions from dealers more than once. Those who have the answer will see their stock soar.

Dealers are possibly the most sophisticated consumer in the market today. They have heard every sales pitch for just about every product on the market. What they really need is a true partner who can provide training, processes and the ability to bring the change needed to their organization to sell those products in today’s market.

There is a shift taking place in the dealerships that survived the downturn. Dealers can no longer afford to have an untrained and unfocused F&I team presenting the products at their stores. Why not take a leadership role? The gentlemen who provided the insights listed above know that the agent segement will see record growth in 2012 and beyond. In other words, our best days are still ahead of us. Let’s help our industry change to see unprecedented growth and profits!

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F&I and New-Vehicle Profitability Drive Profit Gains for AutoNation


FORT LAUDERDALE – AutoNation Inc. reported increased profitability in each of its business sectors for the first quarter, with revenue up 10 percent and gross profit up 6 percent. Officials attributed the healthy profit gains to F&I performance and new-vehicle sales.

Net income from continuing operations rose almost 6 percent to $74 million for the quarter compared to the year-ago period. Revenue rose from $3.3 billion last year to 3.7 billion, with new-vehicle unit sales increasing 8 percent on a same-store basis and 10 percent overall, according to F&I and Showroom magazine.

Driven by increases in F&I and new-vehicle gross profits, overall gross profit for the dealer group increased 6 percent from the year-ago period to $603 million in the first quarter. F&I gross profit increased 7.2 percent per vehicle retailed to $1,213.

Officials also attributed the company’s gross profit gains to the $4.6 million, or $82 on a per new-vehicle retailed basis, related to additional incentives on premium luxury vehicles previously sold.

“The renaissance in auto retail is well underway, reflected in a seasonally adjusted U.S. industry annual selling rate of 14.5 million units for the first quarter of 2012,” said Mike Jackson, Chairman and Chief Executive Officer. “We have increased our 2012 U.S. industry new-vehicle sales forecast to mid-14 million units, as we see continued momentum in U.S. auto sales.”

During the first quarter of 2012, AutoNation repurchased 11.7 million shares of common stock, or 9 percent of the shares outstanding as of Dec. 31, 2011, for an aggregate purchase price of $405.4 million. From April 1 through April 24, 2012, the company also repurchased 2.1 million shares for an aggregate purchase price of $70.8 million. As of April 24, 2012, there were approximately 122 million shares outstanding.

By segment, AutoNation’s domestic-brand stores experienced a 16 percent increase in new-vehicle unit sales, with income ($50 million) up $7 million from the year-ago period. The group’s import stores, which income of $62 million, also increased new-vehicle unit sales by 6 percent. New-vehicle unit sales for the group’s premium luxury stores were up 14 percent. Net income for those stores increase by $1 million to $59 million.

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