On the Dash:
- F&I PVR and product penetration finished Q3 ahead of last year, even as front PVR slipped.
- Cash deals rose and finance deals fell as rates hit 11.32% used and 8.07% new.
- Dealers need consultative sales skills and clear answers on the car loan interest deduction.
Dealers leaned harder on F&I to cover for softer front-end gross in the third quarter, and it paid off, with F&I PVR and product penetration both finishing ahead of last year JM&A Group reported. Front PVR slipped modestly and stayed below last year, so the back end carried much of the load while affordability and negative equity kept shaping buyer behavior.
That’s according to JM&A Group’s Q3 2026 Automotive Trends Report, which draws on data from more than 2,000 dealerships. It only reflects stores that currently offer JM&A products and doesn’t represent nationwide dealer performance, but it still gives dealers a benchmark to compare against their own numbers heading into the new year.
Product penetration climbs
F&I PVR finished ahead year over year across the quarter even though it dipped month to month in July. Front PVR opened with a double-digit decline in July, rose in August and fell modestly in September.
Product income made up 61.7% of F&I PVR, with finance reserve covering the other 38.3%, and product income’s share rose 0.3 percentage points from the third quarter of 2025. VSC penetration and PPD stayed ahead of last year too, though both slid month to month in August.
GAP penetration also remained ahead year over year despite slight dips in July and August. JM&A noted that VSC and GAP help buyers manage unexpected costs and protect their investment, which matters when monthly payments are already the main worry.
Higher rates, rising costs and a lower SAAR
Average rates reached 11.32% for used vehicles and 8.07% for new vehicles after the Fed raised its benchmark rate by 25 basis points in September, with speculation about another increase before year end. Cash deals rose slightly while finance deals declined and lease penetration dipped.
Monthly payments averaged about $765 for new vehicles and $542 for used vehicles in the second quarter, and insurance costs were up 18% in July from a year earlier. Negative equity is adding strain too, since it affects nearly 30% of new-vehicle buyers and can make trade-ins and approvals harder to structure.
New-vehicle SAAR fell to 16.2 million units in September, the lowest since April, though the comparison was skewed by the EV tax credit surge in September 2025. JM&A expects the mix to keep shifting toward new vehicles through the fourth quarter as manufacturer incentives and subvented financing pick up.
What it means for dealers
Dealers should lean into a consultative approach, since every customer’s finances are different and the right mix of vehicle, financing and protection can decide whether someone buys at all. Buyers are weighing the full cost of ownership and want reassurance they’re making a smart financial decision, said Alex Soto, Director of Dealer Performance at JM&A Group.
The federal car loan interest deduction is another conversation to prepare for. Teams should know how to identify vehicles with U.S. final assembly and that interest tied to rolled-in negative equity doesn’t qualify, while interest on certain financed F&I products may qualify depending on the customer’s situation.
