I love fall! As a native Midwesterner, I find that the crisp air and fall colors bring a sense of energy and enthusiasm for all things outdoors. But as a CPA and reinsurance expert, this time of year also brings another type of enthusiasm for some of us – it’s the time for strategic financial assessments and evaluations and aligning them with our short and long-term business goals.
For retail automotive dealer principals, fall means more time spent on number crunching (versus leaf crunching) to get a clearer picture of their actual personal wealth positions. Given the challenging business conditions this year, taking a closer look at those key positions is an important strategic move that could prove beneficial in the long run. Let’s look at a few factors that will impact overall wealth positions.
According to the head of consumer vehicle lending products at Bank of America (BofA), vehicle affordability constraints likely will ease in 2025. Supply chain normalization and improved inventory levels will enable dealers to reinstate tiered pricing models that drive higher volumes and more profitability. While average vehicle prices are still much higher than before the pandemic, BofA believes vehicle affordability will reach acceptable levels.
Reduced vehicle prices coupled with lower interest rates may give consumers a boost in confidence to make a big purchase. The Federal Reserve announced a 0.5-point cut to its benchmark rate on September 18 and forecasted further reductions before the end of the year. However, experts believe it will take some time for auto loan interest rates to come down, potentially impacting consumer behavior.
End-of-year vehicle OEM incentives may help nudge consumers into a buying mood. Vehicle manufacturers are promoting a range of offers, including cash offers, customer loyalty cash offers, conquest cash offers, discounted financing rates, and Federal income tax credits for the purchase of an electric vehicle. Vehicle leasing is also making a strong comeback as a means of countering vehicle sticker shock. Nissan is even reviving its scorned sales practice of ‘stair-stepping’ dealer sales incentives to boost sales of its Rogue, Pathfinder, and Frontier models.
Finally, the presidential election and some retiring Trump-era tax cuts prompt a close portfolio evaluation. While no one can predict the outcome of the election, history shows that U.S. presidential elections have had little bearing on the trajectory of the economy and business, regardless of which party wins. Through all 46 presidencies to date, the U.S. economy has continued to grow.
Control the controllable
While many of these business indicators are out of our control, dealer principals can absolutely make strategic decisions on their reinsurance platform. The often murky reinsurance market can seem complex to even the most experienced dealership owner. Some providers will tell you it’s difficult to change portfolio options or that making a change puts profit at risk. This fallacy is designed to keep customers in programs that benefit the provider – not the client.
In fact, EFG Companies has put profit at the forefront of its reinsurance portfolio. Our Wealth Builder Profit Participation Suite delivers on the company’s GUARANTEED, PROVEN, PROFIT premise: a guaranteed PRU increase, coupled with proven training that can empirically deliver an F&I profit increase of $206,400 per producer per year, equaling more revenue ceded into the dealer’s reinsurance position. Under our PRU Guarantee* for eligible clients, if revenue goals are not met, EFG will reimburse the difference, ensuring a risk-free path to financial growth.
We are agnostic about the specific reinsurance option chosen, focusing on the business needs and goals of the dealer and recommending the most efficient and appropriate model to best manage their personal wealth creation. EFG offers the following reinsurance options, including premiums ceded as written (versus earned), plus a dedicated team of experts, compliance management, training, and incentives to increase revenue.
- Retrospective Commission Program
- Controlled Foreign Corporation (CFC)
- Non-controlled Foreign Corporation (NCFC)
- Power Controlled Foreign Corporation (Power CFC)
- Dealer-owned Obligor Company (DOOC)
With almost five decades of industry insight, EFG is a leader in creating and managing profit participation programs based on each dealer owner’s unique goals and reinsurance position. We’re also experts in compliance and training and want to be your business partner in the retail automotive industry. Contact us today to learn more about how our team can help you achieve your winning wealth position.
*Must qualify based on Business Development Assessment. See the PRU Guarantee Addendum Agreement for full program terms and conditions.