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More car dealers capping finance and insurance products amidst ethics concerns

Posted Dec 28th 2012 11:01AM

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Automotive News reports a larger number of dealers are scaling back the markup on their finance and insurance products as well as aftermarket service plans in an effort to avoid the ire of American regulators.

There are no industry numbers on how many dealers use self-imposed caps on how much they can charge their customers for these services, but Automotive News polled dealers in an independent survey. Of those who responded, around two-thirds say they use caps, with two-thirds of those who do attributing the restrictions to ethical concerns. Gouging a customer invariably has a negative impact on store reputation, and dealers aren't keen to encourage an increase in government oversight.

Some dealers can mark up financing and insurance products by 100 per cent, but most prefer to use sales volume to boost their bottom line. Doing so builds consistency and credibility among new buyers by eschewing large discounts or markups. Even so, several of the respondents in the AN survey reported record finance and insurance revenue through the third quarter of 2012, with dealers seeing over US$1,200 per vehicle.






Jean Knows Cars: The Dealer Sticker

News Source: Automotive News - sub. req.

Image Credit: Kevork Djansezian / Getty

Category: Car Buying

Tags: dealer, dealer cap, dealers, finance, finance and insurance, insurance

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