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CLEVELAND — As the largest publicly traded dealer groups
prepare to make their fourth-quarter and full-year financial statements, a KeyBanc
Capital Markets' investor guidance survey gave an upbeat projection of what
these stores accomplished in the finance office.

KeyBanc indicated an overwhelming majority (76 percent) of
respondents said these groups should post continued increases in F&I gross
profit per unit in the fourth quarter.

Another 20 percent of respondents contend the F&I ledge
line will be relatively flat; while the remaining 4 percent think a decrease of
more than $50 on a year-over-year basis.

"We also anticipate an increase in total revenue in the
F&I segment, driven by higher gross profit per unit, higher new and used
vehicle sales, and higher approval rates (particularly in the subprime
segment)," lead analyst Brett Hoselton said.

The groups considered in the survey included Group 1
Automotive, Penske Automotive Group, Lithia Motors, AutoNation, Asbury
Automotive Group and Sonic Automotive.

According to their third-quarter financial statements, here
is a rundown of the F&I gross profit per unit sold by five of these groups:

—AutoNation: $1,290, up $77 year-over-year
—Group 1: $1,220, up $85 year-over-year
—Penske: $969; down $57 year-over-year
—Lithia: $1,072, up $66 year-over-year
—Asbury: $1,242, up $73 year-over-year

Sonic does not break out its F&I gross profit per unit
sold.

Furthermore, KeyBanc's latest investment commentary showed
how these groups could continue to post strong F&I performance in 2013.

"Financing environment remains favorable and a continued
driver of sales growth," Hoselton said. "Subprime approval rates improved 12
percent quarter-over-quarter in Q4 and 33 percent on a year-over-year basis, as
reported by CNW Research.

"We believe this to be generally a catalyst for the overall
volume growth and particularly for Lithia based on its 30 percent Chrysler
exposure who hold a higher percentage of subprime borrowers in the portfolio,"
he added.

Continue the conversation with SubPrime Auto Finance News on LinkedIn and Twitter.


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