2 factors hurt Nicholas Financial’s quarterly originations


Nicholas Financial acknowledged two elements combined to erode its originations during its most recent quarter that closed on June 30, but the subprime auto finance company is remaining steadfast in its strategy to maintain discipline during challenging market conditions.

The figures Nicholas Financial reported included diluted earnings per share decreasing 73 percent to $0.10 as compared to $0.37 for the three months ended last June 30. The company’s net earnings were $0.8 million and $2.9 million as of that date in 2017 and 2016, respectively.

The company also indicated quarterly revenue dropped 3 percent to $22.2 million.

Nicholas Financial explained net earnings were adversely affected primarily by an increase in the provision for credit losses due to higher charge-offs and past-due accounts along with a reduction in the gross portfolio yield. The company’s total delinquency rate stood at 12.2 percent at the close of the last quarter, up from 7.66 percent a year earlier. The total outstanding balance associated with those delinquent contracts that range from 31 days past due to more than 90 days rose to $58.18 million, which constitutes a jump from $37.05 million a year ago.

And the company’s net charge-off percentage rose from 7.51 percent to 9.54 percent.

“Additionally, several negative factors continue to put pressure on our net earnings, including an extremely competitive market, higher than expected losses and a continuous decline in auction proceeds,” Nicholas Financial said in its quarterly report. “We remain cautious with respect to near-term losses as delinquency percentages remain elevated.”

Meanwhile, originations tumbled in the most recent quarter, too.

Nicholas Financial purchased 2,349 contracts in the quarter that finished on June 30 worth $27.16 million. During the comparable three-month span last year, the company originated 3,517 contracts representing $40.83 million in outstanding balances.

Many of the other metrics associated with the company’s latest originations remained similar year-over-year, including:

—APR: 22.31 percent as compared to 22.39 percent

—Average discount: 7.56 percent as compared to 7.15 percent

—Average term: 55 months as compared to 57 months

—Average balance: $11,563 as compared to $11,609

Nicholas Financial held a total of 36,174 active contracts as of June 30.

“Throughout this past quarter, we continued to experience intense competition from existing market participants. During this same time period, automobile dealerships, which the company conducts business with, have reported declining sales," Nicholas Financial president and chief executive officer Ralph Finkenbrink said, who announced his retirement would come when the company closes its fiscal year on Sept. 30.

“The combination of robust competition, fewer applications received by the company for potential loan approval and recent changes by the company to its underwriting guidelines has led to a 33-percent reduction in contracts acquired during the three months ended June 30 as compared to the three months ended June 30, 2016,” Finkenbrink continued.

“We will not expand the number of contracts purchased by incurring risk that are not priced appropriately and not conducive to providing long-term sustainable value. These ongoing market conditions require us to gain momentum regarding our ability to adapt to a competitive cycle that, for the foreseeable future, gives no indication of subsiding,” he went on to say.

“For us, that involves further evaluation of our current business structure, as well as, our overall operating strategy,” Finkenbrink added.

Credit Acceptance has long-range hopes for sales force


As the company acknowledged an inquiry from the Consumer Financial Protection Bureau, Credit Acceptance leadership discussed its sales force during a good portion of its latest conference call with investment analysts.

Credit Acceptance shared as a part of its second-quarter finance report that the company expanded its sales team by “roughly” 20 percent year-over-year in an effort to broaden its active dealer network, which stood at 7,635 as of June 30. On the same date a year earlier, the figure stood at 7,181.

The company classifies active dealers as ones who have received funding for at least one contract during the quarter.

Chief executive officer Brett Roberts described the volume of active dealers joining the company’s network as “OK,” acknowledging the 910 stores to sign up during the second quarter marked a 13.9-percent improvement versus the same quarter a year ago.

“But sequentially we had a decline in active dealers,” Roberts said. “So I guess the goal, obviously, is to sign up more dealers than we’re losing. We didn’t do that in Q2, but we hope to do that in the future.”

The company also noted its dealer attrition rate deteriorated slightly in Q2, rising to 21.5 percent. A year earlier, the rate stood at 17.5 percent.

Credit Acceptance defines attrition according to the following formula: Decrease in consumer loan unit volume from dealers who have received funding for at least one dealer loan or purchased loan during the comparable period of the prior year but did not receive funding for any dealer loans or purchased loans during the current period divided by prior year comparable period consumer loan unit volume.

Roberts pointed out that Credit Acceptance’s current sales team is double the size of what it had been a few years ago, and the company is expecting to “increase it a little bit more.”

Roberts told conference call participants, “I think if you look at the last time we increased the sales force, it took us about two years to roughly double the sales force, and really, almost three years before productivity got to where it was before we started the expansion. So it was overall about a five-year process to double the sales force.

“We’re not trying to double it this time, and hopefully, we’ve learned a little bit from the first time. But it’s still more of a long-term driver than a short-term driver,” he continued.

With a larger team comes more expenses. Credit Acceptance reported for Q2 that its 11.9 percent or $6.5 million increase in operating expenses stemmed from an increase in salaries and wages expense of $2.6 million, or 8.6 percent. This was primarily related to our servicing function as a result of an increase in the number of team members along with an increase in sales and marketing expense of $2.5 million, or 21.0 percent, due to an increase in the size of its sales force.

Roberts explained that having a robust sales force can help Credit Acceptance navigate the challenges of a competitive auto-finance landscape.

“Our outlook is that we're planning on the current difficult environment lasting for the foreseeable future,” Roberts said. “And if that turns out to be too pessimistic, then that’s great. But that’s what we’re planning for. And so I guess we look at the numbers. We feel like our chances of growing are a lot better if we have a little bit larger sales force, so that's what we're working toward.

“We had two quarters of negative unit volume change. And this quarter was up, but it was only up 1 percent,” he continued. “I don’t think that the additions to the sales force really added much to that at this point. They’re very new. They’re still getting up to speed. And I think, again, the increase in the sales force is something that will pay off next year or the year after. Probably not this year.”

Overall performance

As Roberts mentioned, Credit Acceptance generated a 1-percent year-over-year lift in origination volume during the second quarter. The amount financed grew by a larger amount, 7.1 percent year-over-year.

“Dollar volume grew faster than unit volume during the second quarter of 2017 due to an increase in the average advance paid per unit,” the company said. “This increase was the result of an increase in the average size of the consumer loans assigned primarily due to an increase in the average initial loan term and an increase in purchased loans as a percentage of total unit volume, partially offset by a decrease in the average advance rate due to a decrease in the average initial forecast of the consumer loans assigned.

“While we were able to grow unit volume modestly during the most recent quarter after two quarters of declines, our overall progress in growing unit volumes has slowed considerably over the last six quarters,” Credit Acceptance officials continued. “This trend reflects the difficulty of growing the number of active dealers fast enough to offset the impact of the competitive environment on attrition and per dealer volumes.

“In addition, in response to the decline in forecasted collection rates experienced in 2016, we adjusted our initial collection forecasts downward during 2016. While the adjustments have been modest, we believe these adjustments have had an adverse impact on unit volumes,” the company went on to say.

All told, Credit Acceptance reported that its Q2 consolidated net income came in at $99.1 million, or $5.09 per diluted share, up from $84.9 million, or $4.17 per diluted share, for the same period in 2016.

After seeing the top-line metrics, the investment community pushed Roberts for some clarity on how Credit Acceptance portfolio vintages are performing in an effort to spot future trends.

I think that the clearest number to start with if you're trying to understand loan performance is the net cash flow change for the quarter that’s disclosed,” said Roberts, who noted that the company’s Q2 total net cash flow change was $8.8 million. “It’s a positive number, but it’s obviously a very small one.

“The total undiscounted cash flows that we’re attempting to forecast are somewhere around $5.8 billion,” Roberts continued. “So when you have an $8.8 million move, that’s basically flat.”

After the analyst rephrased the question, Roberts added, “Again, I think the main takeaway is if you’re looking at $5.8 billion in cash flows we’re trying to forecast, if you look at the results for this quarter or really over the last six quarters or even longer than that, the cash flows have been remarkably stable. So I think that's a good thing, and that’s really the main takeaway

CFPB matters

Credit Acceptance stated its quarterly filing with the Securities and Exchange Commission that the company now is contending with an inquiry from the CFPB along with ongoing actions involving the Federal Trade Commission and Maryland’s attorney general.

“As of June 2017, we were informed that the Consumer Financial Protection Bureau’s Office of Fair Lending and Equal Opportunity is investigating whether the company may have violated the Equal Credit Opportunity Act and Regulation B,” Credit Acceptance said in its SEC filing.

“We are cooperating with the inquiry and cannot predict the eventual scope, duration or outcome at this time. As a result, we are unable to estimate the reasonably possible loss or range of reasonably possible loss arising from this inquiry,” the company continued.

During the conference call, Wall Street observers asked Roberts to elaborate about what the CFPB inquiry is entailing.

“We don’t have a lot to add to what's in the (filing),” Roberts said. “The CFPB is fairly sensitive regarding disclosures of ongoing matters, so we try carefully to walk the line between our obligations to the SEC and to shareholders and the sensitivities of the CFPB. So I won’t try improve upon what we put in the (filing).”

The filing indicated that the inquiry from the FTC stems from Credit Acceptance allowing dealers to use GPS and starter interrupt devices while Maryland’s attorney general is looking into the company’s repossession and sale policies and procedures within the state.

Why CPS is going through a ‘painful process’


Consumer Portfolio Services chairman and chief executive officer Brad Bradley described how the subprime finance company is going through what he called a “painful process.” While the company’s originations are down from last year, its delinquencies didn’t spike to alarming levels.

Rather, Bradley is leading CPS with patience even though Q2 originations edged up slightly on a sequential comparison but softened by nearly $100 million compared to a year earlier.

During the second quarter, CPS reported that it purchased $233.9 million of new contracts compared to $229.6 million during Q1 and $319.1 million during the second quarter of last year. The company's managed receivables totaled $2.343 billion as of June 30, an increase from $2.323 billion as of March 31 and $2.254 billion as of the end of last June 30.

“I think people probably at this point understand what we’re trying to do,” Bradley said during closing comments of CPS’ latest conference call. “I mean people who know the company and certainly know me know that we would rather be aggressive. We would rather be actively growing the company and moving forward in the world. So this is a bit of a painful process for us right now.

“But to the extent you go back to 2007 when we had a huge problem, these times that are being a little more conservative might give you a huge home run later,” he continued. “And so what we don't want to do is stick our neck out with the rest of the folks and have a problem. So we've been pretty good at avoiding them. We think we've done a lot of things right now. As we mentioned in the call, it may take a few minutes or little while to prove that out. But we have some time to do it.

“And with any luck, we’ll position ourselves very well for the next couple of years, if we just staying in there patiently for the next few quarters. And that’s what we’ve been trying to do, and certainly we are achieving that goal today. Painful hurt, maybe for some of us, who like to see the company moving surging forward rather sitting in idle. But that’s the course we’ve chosen, and we think it’s a life course, and we’ll see what happens in the next few quarters,” Bradley went on to say.

CPS generated nearly a 5 percent year-over-year increase in revenue as it rose by $5.1 million to $110.1 million. However, the company’s total operating expenses jumped 10.3 percent or $9.5 million to $102.1 million. As a result, CPS watched its Q2 earnings drop to $4.6 million, or $0.17 per diluted share, down from $7.3 million, or $0.25 per diluted share a year earlier.

While all of those metrics shifted, CPS still managed to posts its 24th consecutive quarter of positive earnings.

Overall industry view

As he often does, Bradley shared his candid assessment of how the market is behaving. His view of competition focused a bit on the strides credit unions have made in gaining market share, especially as some finance companies are backing off their origination aggression.

According to the latest information from Experian Automotive, credit unions held 20 percent of the total auto finance market after the first quarter, up from 18 percent a year earlier.

“Credit unions have done a big job of moving into the spaces in the bottom of the spectrum, and been relatively competitive in growing in this sector in the last year or two,” Bradley said. “Some of the companies are pulling back,. Some of the companies are slowing down, and a lot of that gap is being filled by some of these credit unions.”

Another topic Bradley touched on was income verification. He emphasized that CPS’ underwriting department checks consumers’ income sources before finalizing the contract.

“We do verify income in every single deal,” Bradley said. “Job verification or income verification obviously was a hot topic in the news last few quarters. It’s ironic that that isn’t more the norm in the industry, but for us it is. It’s not bad when people ask questions, and we have a really good answer.”

Other company metrics

In other parts of CPS’ latest financial statement, the company reported annualized net charge-offs for the second quarter were 7.62 percent of the average owned portfolio as compared to 6.94 percent a year earlier.

CPS also reported delinquencies greater than 30 days (including repossession inventory) stood at 9.64 percent of the total owned portfolio as of June 30, up from 8.58 percent on the same date in 2016.

And if contracts do not mature, Bradley mentioned the loan-to-value ratios CPS is pushing into its portfolio are improving. After hitting a high of 115 percent, Bradley mentioned the stat dipped to 112.74 percent in Q2.

CPS chief financial officer Jeffrey Fritz also mentioned the company enjoyed a slight year-over-year improvement in its recovery rate through its wholesale endeavors after repossession, watching the rate tick up to 35.6 percent from 35.2 percent.

In the second quarter, the company’s board of directors approved an increase to the aggregate authorization to repurchase outstanding securities by $10 million. In Q2, CPS purchased 540,793 shares of stock in the open market at an average price of $4.54. Through the first six months of the year, CPS purchased 1,102,410 shares at an average price of $4.74.

New credit tool from CoreLogic & Equifax aims to enhance dealers’ leads

IRVINE, Calif. - 

Both consumers and dealers likely want to know potential buyers’ credit standing in order to facilitate delivery, and a new product fueled by CoreLogic and Equifax rolled out on Wednesday aims to accomplish that objective.

Analytics and data-enabled solutions provider CoreLogic launched BuyerConnect; a solution powered by Equifax that can be posted on a dealer’s website to help convert anonymous web traffic into qualified leads.

BuyerConnect can allow consumers to receive a free Equifax Risk Score directly from a dealer’s website and instantly see if they likely meet minimum credit requirements for auto financing.

To start the credit scoring process, the consumer only enters their name, address, email and phone number — no social security number. This basic information is sent to the dealer as a lead generation tool, whether or not the consumer completes the process.

Once the consumer receives their score, they can decide if they want to send their credit score range to the dealer to facilitate the shopping and financing processes by simply consenting to share the information. This process posts a soft inquiry to the consumer’s credit report so there is no impact to the consumer’s credit score, according to the companies.

In addition, the dealer’s website administrator can attach information regarding the page where the customer engaged with BuyerConnect. This information can include what vehicle the consumer is interested in, what advertisement the consumer responded to, or information about trade-ins.

“As more and more consumers do their research online, automotive dealers need a tool that gives them a competitive advantage by helping them convert website traffic into showroom floor traffic,” said Andrew Price, vice president of transportation services at CoreLogic.

“BuyerConnect helps dealers not only better engage with these potential customers, but also verify the identity and credit range of prospects that visit their website, so they know they are contacting leads that are interested and super-qualified.”

Equifax vice president dealer services John Giamalvo, “With auto finance incentives at all-time highs, driving new-car sales and continuing to accelerate in used and CPO programs, CoreLogic’s BuyerConnect gives dealerships the ability to engage customers by offering them an Equifax Risk Score, which provides an early gauge of meeting those credit requirements.”

700Credit to offer instant income and employment verification solution


With contract holders’ ability to pay paramount, 700Credit now is offering Income PreCheck, an instant income and employment verification solution that can help dealerships verify buyers' stated income and employment.

The verification is derived by accessing The Work Number, a database of employer-provided income and employment information from Equifax Workforce Solutions.

To help dealers gain a more accurate understanding of a customer's financial standing, 700Credit explained instant income and employment verifications provide information such as employer name, employment status, job title and an annualized income calculation.

The Work Number, which includes payroll records from more than 8,500 employers nationwide, including more than 82 percent of the Fortune 500 and the majority of federal government civilian employers, is a proven verifications solution in the auto industry.

“Being able to verify income and employment information at the front end of the finance process improves the consumer experience by making the transaction process seamlessly with fewer roadblocks to financing,” said Ken Hill, managing director of 700Credit.

“Knowing a consumer’s exact income helps determine their eligibility for financing. A dealership's F&I Manager can work with the buyer to come up with the appropriate terms and conditions of a loan that meet lender guidelines and fit the buyer’s budget,” Hill added.

In addition to confirming basic income and employment information, dealers can use verifications to view job tenure, which can provide additional insight into repayment risk beyond what a credit score alone reveals. Equifax research shows that consumers whose job tenure is one year or less are almost twice more likely to go delinquent on a vehicle installment contract than consumers who have a job tenure of 10 or more years.

For more information about instant income and employment verifications, visit www.700credit.com.

Down payments for used & new models on the rise


New auto finance analysis from Edmunds shows increases in term length and monthly payments. These metrics have made headlines for some time now as potential buyers focus on what they can fit into their budgets.

But Edmunds also noticed an increase in another data point that might help to illustrate the work completed within the F&I office and finance company underwriting department — a significant rise in down payments for both used- and new-vehicle deliveries.

According to information released on Tuesday, the average down payment connected with used-vehicle financing came in at $2,468 in July, representing a 6.6-percent lift year-over-year and a 12.7-percent climb during the past five years.

On the new-model side, the average down payment in July stood at $3,621, marking a 7.3-percent increase year-over-year and a 10.0-percent rise since 2012.

The down-payment movement is likely especially positive for the industry on the new-car side since Edmunds reported the average transaction price for a new vehicle was $34,558 in July, which is 2 percent higher than July of last year.

Kelley Blue Book spotted a similar development as analysts there reported prices for new models rose by $573 year-over-year to land at $34,721 in July.

“Once again, the declining sales of cars and the growing popularity of SUVs is driving up the average transaction price,” Kelley Blue Book analyst Tim Fleming said. 

Edmunds also noticed that interest rates on new-vehicle financing fell to a six-month low in July as automakers ramped up summer's zero-percent finance deals.

The annual percentage rate (APR) on new financed vehicles averaged 4.77 percent in July, down from 4.96 percent in June. And 11.3 percent of purchasers who financed took advantage of zero-percent financing, up from 9.47 percent in June and 10.2 percent a year ago.

“Zero-percent finance deals are common in the summer, but car buyers can save even more this year,” said Jessica Caldwell, Edmunds executive director of industry analysis. “Even though interest rates were lower on average in July than at any time in the past six months, they’re still hovering at highs not seen since 2009.

“These higher interest rates make zero-percent financing a big carrot for dealers seeking to lure car shoppers,” Caldwell continued as Edmunds’ data also indicated days to turn new metal in July was 76 days, the highest since July of 2009.

 Overall, interest rates on new-model financing have been higher in 2017 than in recent years. July’s average APR is up 5.6 percent year over year and is 14.2 percent higher than it was five years ago.

 “In today’s declining market, every sale counts,” Caldwell said. “We anticipate automakers will continue to ramp up zero-percent finance offers as we get deeper into the summer sell-down season.”

For used-vehicle financing, the average APR in July stood at 7.46 percent, which marked a 2.3 percent rise year-over-year. However, the latest reading also represents a 7.7 percent slide since 2012.

And when it comes to contract term length, Edmunds reported the average for used-vehicle contracts in July came in at 66.90 months. For new-model financing, the July average stood at 69.45 months.

3 new features of GrooveCar’s vehicle-buying platform


GrooveCar added three new features to its vehicle-buying platform for credit unions; enhancements the company says are designed to continue to support the platform’s mission of boosting credit union engagement and lead generation.

The highly responsive design has made the additional new features easy to use for the multi-device user. These new features include:

—Market value pricing: A tool that can let members know what other consumers are paying for similar pre-owned vehicles in the area that they are researching.

—Finance calculator: A solution that now has the option for credit unions to include their life and disability insurance and GAP products within the monthly payment, allowing the member to find the loan payment they are most comfortable with while helping credit unions capture more revenue.

—Cloud storage: A platform for credit unions to access reports through their password-protected log-in area and use the extensive and most recent marketing materials designed specifically for them. This process can allow them to unlock the marketing potential of engaging members at any time without taking any resources (money and staff) away from the credit union.

“Our engineers have been busy, and we are excited to roll out several new features that will enhance the user experience while benefiting the credit union in terms of member engagement and loan activity,” said Robert O’Hara, vice president of strategic alliance at GrooveCar.

O’Hara continued that innovation in website design has provided new auto buying tools that deliver the best way for credit unions to reach members during the vehicle buying cycle. Websites require different features needed to deliver success; the GrooveCar platform continues to introduce next-generation technology to support the credit union's sales and marketing strategy.

“Designed with a wide-screen display supporting the multi-device user, we live in a world where sites are being visited by a variety of different devices, on-the-go, and at any given time, a website must be responsive to every changing need,” O’Hara said.

“We never want a member to visit the website and not find what they are looking for, on all devices. If this happens, there's a good chance you will lose them. Our features are compatible to optimize the experience across all platforms," O'Hara added.

“Meeting the needs of members, along with access to cloud-based messaging to deploy marketing strategies on the fly, is the ultimate in responsive digital marketing."

GrooveCar offered a way to learn more about how to use and promote the auto buying platform in a new training video that is available in the window at the top of this page or by following this link.


PointPredictive secures funding to enhance fraud solution


With interest gaining steam toward combating fraud, PointPredictive landed funding from Mosaik Partners, an expansion-stage venture capital fund, to enhance its efforts as a provider of fraud solutions to banks, lenders and finance companies.

PointPredictive announced on Wednesday that the company finalized the successful closing of Series A funding earlier this month. While no specific figures were disclosed, Mosaik Partners led the funding round as part of its initiative to invest in commerce-enabling technology companies.

“With fraud losses reaching historically high levels here in the U.S., we believe PointPredictive’s technology and consortium approach will become the standard in lending fraud detection,” said Miles Kilburn, a partner at Mosaik.

“What interested us in PointPredictive is that they have a proven management team, differentiated technology, a working solution that delivers a compelling ROI to their clients, and explosive growth potential with lenders lining up to participate. This fits right in with our investment profile,” Kilburn continued in a news release.

As part of the funding, Mosaik will take a minority interest in PointPredictive. Additionally, Kilburn will join the board of directors of PointPredictive to help the company continue to grow strategically.

PointPredictive will use the funding to respond to the growing demand for Auto Fraud Manager and Dealer Trace — solutions that can help finance companies uncover fraud patterns through a collaborative data consortium and machine learning. PointPredictive estimates between $4 to 6 billion in auto loan applications may have misrepresentations that lead to default and chargeoff. Auto Fraud Manager and Dealer Trace can help curb those losses by leveraging sophisticated algorithms that scan and score applications prior to loans being funded.

“Auto lenders want to collaborate to stop fraud,” PointPredictive chief executive officer and president Tim Grace said. “In the last six months, we’ve seen tremendous interest in our solution and we need to respond now to help lenders stop auto lending fraud. 

"Mosaik Partners is the perfect investor — they understand our technology and have worked in our space for years,” Grace continued. “We’re using the funding to increase our team of fraud scientists, fraud experts and industry thought leaders that will help us revolutionize fraud detection in auto lending and beyond.”

2 reasons for possible subprime rebound


The sentiment from dealers who participated in the latest survey from KeyBanc Capital Markets matched up with what CarMax executives recently shared about how potential subprime buyers are behaving.

Then, KeyBanc analysts projected what these same potential subprime customers could do during the second half of the year based on a pair of expectations.

First, KeyBanc described how softening subprime activity is impacting new-vehicle sales, which the firm thinks should produce another weaker new vehicle seasonally adjusted selling rate (SAAR) this month, settling in the mid-16 million range.

“Anecdotal commentary continued to suggest subprime traffic remained down despite intact credit availability, which we believe is weighing on new vehicle sales at the moment, but is likely to improve in the back half of the year, which leads us to believe the 17.2 million SAAR outlook is still appropriate,” KeyBanc said in its survey report that was shared with SubPrime Auto Finance News.

The analysts arrived at what CarMax conveyed during its latest conference call. CarMax reported that its subprime mix was down again in the quarter to approximately 10 percent of its sales volume. A year earlier, the level came in at 11.2 percent.

KeyBanc recapped that the drop by CarMax “appears driven by lower subprime consumer traffic as its subprime lenders’ behavior remained unchanged.”

Analysts returned to their May survey responses that touched on subprime credit availability. They explained the availability remained “consistently favorable” as 83 percent of respondents reported intact or improving subprime credit availability in May and only the remaining 17 percent reported a tightening in subprime availability.

So what does this mean as dealerships and the rest of the industry turn their focus on the second half of 2017 in less than a week?

“We believe subprime consumers will return to the market in the back half of the year as unemployment claims remain low and the mix of subprime lenders is shifting toward smaller, more competitive lenders, which should drive marketing efforts and subprime consumers back into the showrooms,” KeyBanc analysts said in the report.

Whether the customer is subprime or prime, the KeyBanc dealer survey showed 83 percent of respondents reported intact (33 percent) or increasing (50 percent) gross profit per unit in the F&I office.

“Favorable trend in F&I gross per unit (GPU) should continue to largely offset pressures in new and used vehicle GPU,” analysts said.

When it comes to used-vehicle gross, the dealer survey splintered evenly in three directions, with 33 percent of dealers seeing gross increase by $50 or more in May, another 33 percent watching gross tumble by $50 or more during that month and the remaining 34 percent noticing the metric stay flat year-over-year.

While acknowledging the ongoing pressure, dealers ended up almost evenly divided on the new-car side with about half watching gross soften by $50 or more and the remainder producing a gross rise of $50 or more.

Also of note, the KeyBanc survey mentioned parts and service gross profit continues to be a dealership highlight with 83 percent of respondents saying that margins in this department remain at near-record levels.

defi SOLUTIONS & eOriginal to tackle 4 digital topics during free webinar


Leaders from defi SOLUTIONS and eOriginal are looking for the auto finance industry to take another significant evolutionary step. Just like when participants moved away from using fax machines to complete applications, Georgine Muntz and Theodore Papilliou want finance companies to go completely digital to reduce paper consumption and generate other benefits.

“There are lots of obstacles for many lenders who are considering going paperless that can seem insurmountable,” said Muntz, who is the chief operating officer at defi SOLUTIONS. “But I’ve seen firsthand how technology and process can overcome even the longest list of objections, and in the long-run create more time, accuracy and customer satisfaction.”

On Wednesday at 2 p.m. ET, Georgine Muntz is joining with Papilliou, who is eOriginal’s director of value engineering, for a discussion about the benefits of digital financing. During the free webinar, titled “Decoding Digital Lending for Vehicle Finance,” topics will include:

• How post-signature technology can provide critical visibility into the dealer/finance company transaction.

• How dealers and finance companies can strengthen partnerships with digital technology.

• How to leverage the secondary markets in a fully digital contract environment.

• How to make compliance your competitive advantage.

“With less paper we’ll all take a giant leap toward a better future,” said Muntz, who elaborated more about the potential of saving costs and improving experiences when going paperless in a blog post available here.

“Whether you’ve implemented certain digital lending processes or you’re new to the concept altogether, we invite you to join the webinar,” Muntz went on to say.

Registration for the webinar can be completed here.