Every F&I department has metrics it must meet every month and, in some cases, every day. They include penetration levels per product, CSI scores, and chargeback rate, among others.

The big one is PVR. That number is the single most important number to watch for every dealer, franchise or independent, when it comes to F&I performance. If that number is low, you really have NO F&I department.

Many factors go into the PVR. How skilled are the F&I managers at key closing skills? Do they ask the right probing questions? Are they masters of the consultative sale? Are they matching the right product to the right buyer?

PVR is the key indicator of how much you are holding on the deal in pure profit. It’s an important KPI for your staff, too. If you are reading this and work in the F&I department, you already know this.

But ask yourself this question? Could your PVR grow as a result of something OTHER than better sales skills in the F&I office?


When was the last time your store took a look at the actual cost of your F&I products? Have you locked in with an administrator that has been there so long that you stopped looking at the costs long ago and just kept them because, well, they have always been with you? Probably.

Your Bottom Line Will Thank You

Two things go into PVR, finance/lease reserve and profit on aftermarket products like GAP and VSC’s. Just like the bank gives you a ‘buy rate’ or cost for the rate, your aftermarket administrator has the same cost for their products.

The argument can be made, therefore, that if you choose an administrator that offers a lower cost for VSC, GAP, tire & wheel, etc. you can effortlessly raise your dealership’s PVR just by making that one change.

It’s not to say, though, that quality training for the F&I managers is not helpful to raise the PVR. It can but that process can take some time.

Hiring experienced and highly successful F&I managers can raise PVR. But that takes time to find and vet them properly to make sure they are a good ‘fit’ for your store.

You can add more products to the menu and hope that raises PVR. But that is not always a positive thing…too many choices can overwhelm your buyer in a situation where they already don’t want to sit in F&I too long.

The point here is that implementing any of those changes will not give you the immediate lift to PVR you need in an uncertain market like we have now dealing with COVID-19.

By changing administrators and finding one that has a robust menu of product offerings coupled with solid financial and reinsurance backing, you can quickly and seamlessly raise that PVR by offering products with a lower cost. And that can be done without sacrificing the quality of those products.

Why Keep Paying More?

Why would a dealer continue to pay for higher cost back-end products at the expense of a lower PVR? No easy answer. Some dealers have entrenched relationships with their providers that may span a decade or more. Understandable, but perhaps the landscape has changed enough that dealers need to ‘shop around’ if they want to increase their profit in F&I to help further support the dealership in general.

F&I is under more pressure than ever to raise PVR and buoy the profits of dealerships that are struggling to make up for lost revenue in 2020 due to COVID-19 shutdowns. Dealerships have to take a hard look at ALL of their fixed costs to see what can be changed to bring in more money.

The easiest place to find that money is in F&I but only if your store has a reasonable fixed cost per product. Starting the process of finding a new administrator is not an easy process but if there are companies out there that are trying to offer an alternative to the bigger players, it may be worth a look.

Did you enjoy this article from Kristine Cain? Read other articles from her here.

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