Beyond PVR — dig deeper for greater F&I success

What does success look like in the F&I department? How should it be measured? PVR (per vehicle retailed) is currently the most examined metric used to judge whether or not F&I holds its own as a profit center for the dealership.

But is PVR the right thing to lean on, or is there a better way to measure success in F&I? Is this general number still okay in today’s F&I department? Are there more important metrics to drill down to for a better picture of what’s working and what’s not?

In today’s changing F&I climate, it’s fair to say that it’s more important than ever to look at more than just PVR. Looking at specific data points helps optimize performance through more focused training, more efficient menu presentation, and improvements in compliance. More data = more profit.

Let’s take a closer look and see what additional data points can be analyzed each month to better understand how the F&I department is doing. 

VSC penetration

The bedrock of all F&I deals, the VSCs sold, can tell you a lot about how the plans are sold, the perceived value for customers, and the trends in customer adoption. As prices for both new and used have risen to record levels in the last year, so too have VSC penetration numbers, with customers increasingly worried about being out-of-pocket on repairs while making the higher payments necessary to make the deal work. If penetration is high, this helps dealerships that participate in reinsurance programs and adds enormous back-end profit. Tracking this is critical.

VSC term length

Some dealerships overlook this metric, but this number is nothing to ignore if your F&I is tied to a reinsurance plan for a future profit-driven income stream. Staying aware of how long the VSC term length is per deal will give you a gauge on future profits and how long you must wait for them. Pushing the earn-out date on longer-term delays critical profits your dealership or group needs to reinvest. Watching this number closely and training your F&I staff to dial back when possible, the term length on VSCs will give a shorter turnaround to the growth funds all dealers need now.

Total finance reserve

What was once the primary driver of PVR, finance/rate reserve, is still important to track, but it’s not the most significant indicator of F&I success anymore. Decades ago, before captive deals on rate, it represented the most significant slice of the PVR. Today holding too much rate per deal can uncover the possibility that F&I may be simply content to live off holding the rate and little else. 

For many dealerships, a high finance reserve per deal could be seen as problematic. If everyone is leaving the office with a higher rate and few products, your staff is taking the easy way out on PVR. Watch this number and use it as a teachable moment to refocus them on menu selling. 

Products per deal

All of these metrics are important, but perhaps none more important than PPD. Suppose you are not looking at the amount of product being sold per deal. In that case, you’re missing one of the most powerful indicators of the strength of your F&I managers. Customers who buy multiple products see the value proposition right away. Skill and professional ability shine here and result in a high PPD. 

By looking closer at this metric, your dealership can easily clean up a cluttered menu and focus on exactly what sells on a consistent basis and how to keep delivering value to the customer better on every deal. High PPD means your staff is a well-oiled selling machine. Low PPD is the glaring red flag that means something is not working and it needs to be fixed immediately. No F&I department can survive long with low PPD and high rate reserve. It’s all about the products that drive long-term profits, customer loyalty, and a better ownership experience.

PVR is okay to look at in a general sense, but it should by no means be the only barometer of F&I success. It may take more effort to look at the metrics shown here if your dealership doesn’t already, but chances are your F&I administrator can crunch these numbers for you every month so your management team can see apparent trends and help steer the F&I ship more effectively month after month.