Group 1 Automotive Inc., the publicly traded dealership group, today announced that it increased its dividend more than 18% to $0.13 a share. And what might be the driver of Group 1's advancing financial status? Try F&I.
Interestingly, F&I accounted for just 3% of Group 1's $1.74 billion of revenue last quarter, but 19% of its $244 million of net income. Total F&I revenue climbed 7.4% last quarter to $45.3 million compared to the same quarter in 2010. Only the company's used wholesale sales revenue climbed at a greater rate during that period.
The advancing F&I performance can be best seen in Group 1's gross F&I profit per retail unit, which hit $1,126 last quarter, up more than 18% since 2005, despite dips in the profit metric in the 2009 and 2010 recession years.
Prior to the recession, F&I turned into a substantial driver of earnings for dealerships nationwide. A look at Group 1 offers evidence that at least for some dealers that dynamic is returning to the retail automotive sector.