According to Protective Asset Protection, it is estimated that auto dealers leveraging a Dealer-Owned Warranty Company structure to sell F&I products are seeing a 20% lift in profits on average for F&I sales.
Background on DOWC:
Many automotive dealers have offset the recent downward trend in vehicle margins through increased F&I profitability. One way dealers have maximized their F&I income is through participation in the underwriting profits on the F&I products sold. A number of structures exist for the dealer to participate in these products – each with varying benefits.
Typical types of F&I products available for dealer participation include extended vehicle service contracts, GAP waivers, and road hazard tire coverage, among others. The profit participation programs typically include guaranteed retrospective (retro) agreements, participating retro agreements, and insurance and reinsurance programs, including dealer-owned warranty companies (DOWC), controlled foreign corporations (CFC), and noncontrolled foreign corporations (NCFC).
Dealership Margins Keep Shrinking
DOWC Offers Larger F&I Profit Potential
Dealer-Owned Warranty Companies enable dealers to tailor and customize their own F&I offerings. For example, an independent dealer can build a portfolio of F&I products that caters to a variety of branded vehicles, not just one. These F&I products can range from service contracts to ancillary products.
Given the fact that most dealers are entrepreneurs, with some even owning their own dealership, a DOWC will feel natural to them since it’s their opportunity to offer an F&I product that is merely an extension of the brand they’ve worked hard to establish within their own communities.
Please let me know if you have any questions, or if you would like to schedule an interview with an executive from Protective Asset Protection to discuss further.
ABOUT PROTECTIVE ASSET PROTECTION
Protective Asset Protection is the originator of the DOWC and provides vehicle protection plans, GAP, and credit insurance through vehicle dealerships. Protective Asset Protection has been serving dealers for more than 55 years and currently provides products and services to automobile, marine, RV and powersports dealers. Protective Asset Protection is part of the financial services holding company, Protective Life Corporation. For more information visit www.ProtectiveAssetProtection.com.