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Penske Automotive Group Inc. is testing Reynolds and Reynolds’ docuPAD in five of its U.S. stores to see whether they can help shave transaction times and boost finance and insurance profits.
DocuPAD, a flat screen that nearly covers the F&I manager’s desk, enables the manager and customer to see every step of the process simultaneously.
“We’re trying to pilot it to determine — it’s expensive — whether the cost is worth the outcome,” Penske Automotive Chairman Roger Penske told Automotive News.
Penske said it will cost $4 million to $5 million for the infrastructure to put docuPAD in the dealership group’s 139 U.S. franchised dealerships. The retailer is still negotiating the monthly cost with Reynolds and Reynolds Co., he said.
But he added: “If it takes 20, 30, or 40 minutes off of the process, you have to put that in as some of the gained value.”
Penske: “We’re at the cusp right now of trying to determine what we want to do.”
Slow test
Penske said the pilot on docuPAD started two years ago and that the technology was phased in at the five stores.
Penske Automotive is testing docuPAD slowly “to ensure we understand how it works; that the files are in accordance with manufacturer guidelines, how the customer reacts/accepts the technology and to ensure there is a real benefit,” Tony Pordon, the company’s executive vice president of investor relations and corporate development, wrote in an email.
In the third quarter, Penske Automotive’s average F&I gross profit per vehicle retailed declined to $1,088, from $1,098 in the year-earlier period. Those figures are for operations in the U.S. and overseas. Excluding currency adjustments, the F&I gross profit per vehicle retailed rose to $1,223 from $1,124 in the 2015 period.
On a same-store basis, global average F&I gross profit per vehicle retailed rose 2.5 percent to $1,152.
Penske lags
Both the absolute and the same-store figures lag those of most other public retailers. For example, AutoNation Inc.’s same-store F&I average gross profit per vehicle retailed grew 3.9 percent to $1,617, the highest of any public retailer, in the third quarter. At Group 1 Automotive Inc.’s U.S. stores, the same-store figure increased 3.3 percent to $1,578.
Penske Automotive, the nation’s second-largest new-car retailer, continues to lag its peers in F&I because 55 percent of its auto retail business involves leased vehicles, Penske said.
“A person who has a car for only three years is not usually interested in extended maintenance,” he said. “They might want wheel-and-tire insurance and some of the other things that go with it, but most of these would cost less.”
Penske said dealerships earn flat financing fees on leases. Captive finance companies pay $300 to $400 per leased vehicle. A bank pays about $700, he said.
‘On the cusp’
Penske Automotive will expand the docuPAD test to three additional stores, but Pordon declined to say when. It also has no timetable for how long the test will run before deciding whether or not to go forward with docuPAD in all its U.S. stores.
“We’re at the cusp right now of trying to determine what we want to do,” Penske said.
Among the group’s stores in the Atlanta area, the one testing docuPAD had an F&I per-vehicle gross profit that was ahead of its local peers not using the technology by $100 to $200, he said, adding: “It’s hard to say if it’s all due to docuPAD, but there is a difference.”
Penske Automotive, of Bloomfield Hills, Mich., ranks No. 2 on Automotive News’ list of the top 150 dealership groups in the U.S., with retail sales of 233,524 new vehicles in 2015.
Penske Automotive pilots docuPAD in U.S. stores
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