Across Australia, car dealerships are experiencing a financial boom—not just from selling vehicles, but from the massive growth in finance and insurance (F&I) profits. Some reports suggest that dealerships are boosting their finance department revenues by as much as 500% compared to just a few years ago. Here’s how they’re doing it.
Purchasers have now evolved with more than 62% organising finance up to 30 days before they are ready to purchase.
Shifting Focus to Finance
Australian dealerships like AHG, AP Eagers, and a host of independent smaller dealers have sharpened their focus on finance and insurance sales. Instead of relying solely on slim vehicle margins, dealerships now view F&I as a primary profit driver. It’s common for finance managers to offer tailored packages on-site, ensuring that customers arrange their car loans and insurance before they even leave the lot.
According to Moody’s Analytics Australia, finance now accounts for up to 40% of a dealership’s total profit in some cases.
Strategic Partnerships
Dealerships are either going direct to lenders or setting up their own brokerage in-house.
Some dealerships also offer “rate matching” guarantees, making it harder for consumers to walk away and organise external finance so therefore increasing sales conversions.
Bundling and Add-Ons
Finance managers now bundle extras like extended warranties, and insurance into the finance package itself. By incorporating these add-ons into the loan, the dealership not only increases the overall transaction size but also earns commissions or margins on the bundled products.
Technology and Instant Approvals
Technology has been another game-changer. Many dealerships now use Partners such as Dealer Business Solutions to set up their own finance departments with technology, training, product and support and instantly generate loan approvals while the customer is still at the desk. This immediate access to finance options reduces the likelihood of “buyer cold feet” and dramatically increases finance penetration rates.
Some dealers report loan conversion rates above 70%, up from 30%-40% just a few years ago.
Training Finance Managers as Salespeople
Today’s finance managers are not just administrators—they are top-tier salespeople and generally can build report and retain clients better than a salesperson.
The Bottom Line
Car dealerships across Australia are no longer just selling cars—they’re selling complete ownership packages with finance at the core. By enhancing technology, sharpening finance sales strategies, and creating irresistible bundled offers, dealerships have turned their finance departments into profit powerhouses.
For the Australian consumer, this means finance options are more convenient than ever—but it also pays to shop around to ensure you’re getting the best deal, not just the fastest one.
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