0 10 20 30 40 50 60

F&I FACTORS

30 F & I Management & Technology ■ December 2006

Source: CNW Marketing/Research Inc.

cy 2001% of Time

cy 2002% of Time

cy 2003% of Time

cy 2004% of Time

cy 2005% of Time

cy 2006% of Time

cy 2001Minutes

cy 2002Minutes

cy 2003Minutes

cy 2004Minutes

cy 2005Minutes

cy 2006Minutes

SHOWROOM 36.0% 38.5% 38.0% 40.6% 37.7% 35.3% SHOWROOM 51.8 54.6 51.6 55.7 51.3 46.1

F&I 16.5% 17.7% 17.6% 19.1% 21.4% 25.1% F&I 21.4 25.1 23.9 26.2 29.1 32.8

SALES OFFICE 47.5% 43.8% 44.4% 40.3% 40.9% 39.6% SALES OFFICE 68.2 62.3 60.4 55.2 55.6 51.8

TOTAL 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% TOTAL 143.7 142.0 135.9 137.1 136.0 130.7

17.2 mins. 38.1 mins.

TIME SPENT IN F&I

■ WITH TEST DRIVE

■ WITHOUT TEST DRIVE

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Environmental package(new only)

(new only)

Prepaid maintenance

Theft deterrent

GAP

Credit life/A&H insurance

Extended service contracts

Lease (new and used)

Finance

16.4%

9.1%

9.4%

22.1%

42.3%

26.4%

5.0%

3.1%

59.9%

70.1%

49.3%

33.8%

29.9%

Tire and Wheel 4.6%

F&I CUSTOMER ACCEPTANCE RATESThe statistics were recorded bySuperior Integrated Solutions,provider of DMS integrationand custom programming ser-vices. The statistics represent ablind sample of 500 dealerstaken from multiple softwareand DMS providers, and re-veal that dealers are still rely-ing on finance reserves forback-end profit.

Source: Superior Integrated Solutions

➤

■ NEW ■ USED

• TIME SPENT IN F&I CONTINUED TO RISE IN 2006 AFTERSIGNIFICANT INCREASES IN 2004 AND 2005.

Showroom35%

51.8 Sales Office

32.8 F&I

46.1 Showroom

TIME SPENT IN DEALERSHIP

MINUTES

F&I25%

Sales Office40%

PerGAP

Contract

0

200

400

600

$800

$1,000

Per Retail Unit

$496

$613

Per Financed

Deal

$808

$1,03

5

Per ExtendedService Contract

$599 $600

$279

PerEtch

Contract

$161

$234

$599

32 F & I Management & Technology ■ December 2006

F&I FACTORS

40.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

45.0%

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

F&I SHARE OF TOTAL PROFITS

SERVICE CONTRACT SHARE OF TOTAL PROFITS

2003 2004 2005 2006est.

11.8% 12.1% 11.8% 11.5% 11.8% 12.3% 12.4%13.3% 14.7%

39.4%37.9%

32.1%30.1%

28.0%26.4%

27.3%28.3%28.7%

41.8%

16.5%

42.8%44.3%

16.2%15.6%

43.2%

44.9

46.1%

AVERAGE DOLLARS PERTRANSACTIONFinancing remains the largest profitcenter per transaction, with an aver-age of $808 per transaction on new units and anaverage of $1,035 per transaction onused units. However, for longtimeprofitability on the back-end, dealersneed to focus on product index withthe industry average still hoveringaround one product per sale.

Source: Superior Integrated Solutions

➤

■ NEW$ ■ USED$

■ TOTAL PROFITS ■ F&I

TOP 20 U.S. AUTO LENDERS*RANK LENDER NAME TTL FIN PERCENT NEW LOAN PERCENT LEASE TTL PERCENT

1 GMAC 156,718 7.90% 109,519 14.09% 30,487 15.56%2 Ford Motor Credit 123,540 6.23% 82,848 10.66% 22,141 11.30%3 Toyota Financial Services 107,190 5.40% 62,433 8.03% 22,265 11.36%4 American Honda Finance 89,955 4.54% 59,705 7.68% 18,025 9.20%5 Daimler Chrysler Financial Services 82,011 4.13% 39,122 5.03% 29,786 15.20%6 Chase Auto Finance 74,480 3.75% 42,768 5.50% 3,015 1.54%7 Wells Fargo Auto Finance 60,714 3.06% 13,872 1.14% 2,097 1.07%8 Wachovia / WFS Financial 51,449 2.59% 13,919 1.15% 45 0.02%9 Nissan Infiniti Financial Services 45,951 2.32% 19,830 2.55% 20,663 10.54%10 Citifinancial Auto 33,604 1.69% 8,194 1.05% 63 0.03%11 Capital One Auto Finance 33,027 1.67% 11,690 1.50% 13 0.01%12 Bank of America 29,004 1.46% 13,255 1.70% 146 0.07%13 AmeriCredit Financial Services Inc. 28,033 1.41% 6,294 0.81% 9 0.00%14 Citizens Auto Finance 20,869 1.05% 7,444 0.96% 42 0.02%15 HSBC 20,307 1.02% 6,033 0.78% 25 0.01%16 US Bank 19,394 0.98% 6,246 0.80% 6,264 3.20%17 Volkswagen Credit Inc. 18,691 0.94% 7,185 0.92% 7,575 3.87%18 BMW Bank of North America 18,629 0.94% 1,707 0.22% 12,673 6.47%19 5th 3rd bank 15,184 0.77% 4,749 0.61% 534 0.27%20 USAA Federal Savings Bank 15,075 0.76% 6,976 0.90% 13 0.01%

*BY VEHICLES FINANCED, AUGUST 2006. INCLUDES FRANCHISED AND INDEPENDENT DEALERS. EXCLUDES DC, DE, RI, OK AND WY.

Source: AutoCount Inc., an Experian company

F&I CONTRIBU-TIONS TO DEALER-SHIP PROFITSAfter experiencing slightdeclines in 2005, F&I’s con-tribution recaptured someground in 2006 and stillrepresents close to half oftotal profits. Lower grossmargins on the sale ofnew units has helpedincrease the importance ofF&I contributions.

Source : CNW Marketing/Research

➤

13.7% 14.1%15.1%

F&I FACTORS

Captive33%

Credit Union20%

Finance18%

Banks29%

2006 OUTSTANDING FUNDS(IN MILLIONS)

OUTSTANDING FUNDSWhile captives retain the largest portion of themarket, their share has consistently decreased withfinance companies and credit unions taking onincreasingly larger portions of lending share.

Source: Experian Information Solutions Inc. ©2006

➤

RATES % CAPTIVES BANKS CREDIT UNION FINANCE

PRIME 6.99% 8.63% 6.76% 8.5%

NONPRIME 11.14% 11.55% 8.93% 12.83%

SUBPRIME 14.77% 13.75% 10.87% 15.68%

BELOW SUBPRIME 17.86% 14.67% 11.94% 16.71%

TOTAL 10.89% 10.42% 7.79% 12.94%

AVERAGE INTEREST RATESInterest rates remain highly competitive in the prime

space with increased opportunities for differentiationamong leaders in the subprime and below prime space.

Source: Experian, June 2006

➤

20.00%

18.00%

16.00%

14.00%

12.00%10.00%

8.00%

6.00%

4.00%

2.00%

0.00%

AVERAGE INTEREST RATE ON NEW ORIGINATIONS

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

40%

35

30

25

20

15

10

F&I FACTORS

18%

27%

<10 min

18%

11-20 min

9%

36%

18%

21-30 min

27%

46%

21-30 min

■ SMALL/MEDIUM ■ LARGE

5%

16%

34%

12%

21%

6%5%

20050

10%

20%

40%

50%

30%

Overall nonprime credit score distributions continuedto outpace the prime and super-prime ranges in 2005.Source: NAF Association

➤

■ no score ■ < 500 ■ 500 - 549 ■ 550 - 619 ■ 620 - 679 ■ 680 - 719

■ 720+

SERVICE CONTRACTPENETRATION RATES

After approaching highs not seen since 1986(35 percent), penetration dipped from 34.1

percent in 2004 to 31.2 percent in 2005. TheNADA said penetration could see increases

with gross margins on the sale of new unitscontinuing to decline.

Source: NADA Industry Analysis Division

➤

DISTRIBUTION OF CONTRACTSBOOKED BY CREDIT SCORE

AVERAGE PROCESSING TIME FOR APPLICATIONSThose with less than 30-minute application turnaround timesare more likely to use custom credit scoring models.Source: NAF Association

➤