Selling cars is a highly competitive industry. As of 2016, the United States recorded almost 17,000 new car dealerships. Unlike fast-moving consumer goods, cars change ownership roughly every five years.

Companies need reliable metrics to gauge their performance against the competition. Learn the top performance metrics and benchmarks you can monitor internally and externally.

Why Performance Metrics Are Essential for F&I

F&I manager’s role and responsibilities are rapidly evolving. Due to the rising trends in technology, customer expectations are high. Thus, it is essential that the managers understand not only the F&I process but can ensure success in dealing with their clients. To improve their performance, they need to harness their knowledge and understand how they can provide their best practices to their clients.

Average Sales Per Person

Checking the average number of units sold per person tells you whether the business is generating sufficient revenue. At the same time, it can signify staffing problems.

If each staff member sells too many cars, you may be understaffed. A low number may indicate an overstaffing problem. The formula is total vehicles sold monthly (or yearly), divided by the number of salespersons.

Turnover Rate

If you have limited showroom space, then you benefit from selling cars with the shortest sales cycle or lowest inventory turnover rate. A slow-moving car model in your facility is costly, constituting a non-value adding inventory.

To get the car inventory turnover rate, compute the cost of goods by average inventory rate (beginning balance plus ending balance, divided by 2). If the number is too low, then you may need to reconsider stocking other brands or models.

Gross Return on Investment

Multiply gross as sales percentage by the turnover rate, and you get the gross return on investment (GROI). A $30,000 sedan may yield only a $1,000 profit, but if it sells in only 30 days, then its GROI is above 300.

As a benchmark, the minimum GROI the business needs to meet is 120.

F&I Penetration Rate

Not all car buyers purchase F&I products and vice versa. That said, you can treat car sales and F&I insurance sales separately.

Penetration rate measures the total contracts sold over the number of cars sold. A low number is a telltale sign that your sales staff is not effectively marketing insurance products to your car buyers, translating to opportunity loss.

Insurance Cash Conversions

Cash conversion measures the number of days it takes for the insurance product to convert to cash. This metric is critical, especially when the F&I products are from your partners. A low cash conversion rate indicates that a company is efficient at handling its working capital and maintaining liquidity.

You may opt to use other performance metrics and benchmarks depending on your business stage and current goals, including fixed costs (if you’re keen to cut costs) and local market share (if you intend to introduce the brand or expand).

How The ACE Group can Help You with Performance Metrics

If you are looking for F&I training that can provide world-class results, The ACE Group is the right company for you. They can help improve your performance with their training sessions that target specific skillsets for sales development.

By partnering with our company, we can grow your staff’s sales performance.

Contact us today, and we can help you accelerate your team’s performance.