The strategy has helped employee retention and profitability, Cravo said. Finance employees who stayed with Royal transitioned to sales roles, in which they walk a customer through the entire purchase process and also sell F&I products. Buying center positions pay between $16 and $19 per hour, with the possibility of earning bonuses, said Jennifer Hurley, the center’s director.
An F&I manager who previously might have earned $120,000 wasn’t likely to move into an hourly role at the buying center, Cravo said. But in a sales role, he said, “if they sold cars at a high level and F&I products like they were probably doing, then they could make that kind of money on the sales floor and be their own kind of F&I manager, because they really would sell it themselves.”
Cravo declined to provide specific numbers but said F&I profit per vehicle retailed has more than doubled from its average eight to 10 years ago. The group’s reserve, or the money it receives from auto lenders for arranging indirect financing for customers, has tripled, he said.
Royal also reduced the time for contracts in transit to an average of five or six days from more than 10 before the change, Hurley said.
Also, transaction times have plunged. The group, which sells an average of 700 new and used vehicles each month, can complete all purchase steps through delivery within 60 minutes of a customer agreeing to a deal, Cravo said. Subprime buyers’ purchases are completed on average within 17 minutes from the time their credit is pulled — down from an average of an hour and 15 minutes before the change at the Kia store, Cravo said.
