Elevation Insights Newsletter: Closing 2024 with Optimism and Preparing for a Successful 2025

As we approach the end of 2024, it’s the perfect time to reflect on the year’s progress and look ahead to 2025 with optimism and strategy. Cox Automotive is forecasting growth for the upcoming year, making this an opportune moment for dealerships to evaluate their partnerships, educate themselves, and gear up for success.

At Elevation Dealer Services, we believe that preparation in three key areas—relevant F&I products, front-loaded products of value with compliance, and investment policy statements for your reinsurance program—will position you to thrive in the evolving market. Let’s break these down.

1. Relevant F&I Products That Drive Customer Retention

The F&I landscape is more competitive than ever, and customers are increasingly savvy. Offering products of true value not only enhances customer satisfaction but also ensures long-term retention. Consider:

• ID Theft Protection & “Why Buy Here” Products: These not only add peace of mind for your customers but also differentiate your dealership in a crowded market.
• Bundled Preloads: Products like maintenance packages and tire & wheel coverage that keep vehicles in top condition while boosting service department traffic.
• Premium Paint Protection: High-quality solutions that make maintaining a vehicle’s appearance effortless, ensuring customers associate their excellent ownership experience with your dealership.

Avoid fly-by-night offerings that leave customers disappointed when claims are denied. Instead, align with trusted, proven programs that enhance your dealership’s reputation and customer trust.

2. High-Mileage Vehicle Service Contracts (VSCs): A Strategic Tool

With inventory challenges still affecting some segments, selling older or higher-mileage vehicles can be a critical strategy. Offering high-mileage VSCs that complement your reinsurance program ensures profitability while giving customers confidence in their purchase. These contracts also open the door to retailing vehicles with more than 70,000 miles at the time of sale, an often-overlooked market segment.

3. Investment Policy Statements for Your Reinsurance Provider

A well-structured investment policy statement (IPS) can unlock staggering long-term wealth-building potential for your dealership. Consider this:

We’ve analyzed different IPS strategies based on varying equity-to-bond ratios over the past 20 years for dealerships ceding $100,000 in premium net per month. The results are eye-opening:

• 5/95 (5% equities, 95% bonds): Total investment income of $4.9M, resulting in a total fund value of approximately $35M.
• 20/80: Investment income of $6.7M, growing the fund to over $40M.
• 50/50: An impressive investment income of $17.2M, with a total fund value nearing $60M.

The majority of this growth occurred in the last 10 years, demonstrating the power of compounding and a balanced investment strategy. For dealerships, the implications are profound: aligning your IPS with your long-term goals can transform your reinsurance company into a robust wealth-building tool.

Your Opportunity for 2025

As we prepare for Q1, take time to:

• Evaluate the relevance and value of your F&I product lineup.
• Partner with trusted providers to ensure compliance and claim satisfaction.
• Work with advisors to craft an IPS that maximizes your reinsurance program’s potential.

By aligning your strategy with these principles, 2025 can be a year of unparalleled growth—not just for your dealership’s bottom line, but for customer satisfaction and long-term wealth-building as well.

Jake Withnell, CPA, CFP? Tim Arthun Shawn Mikesh Luke Redini Christian Guy Athina Sweigard Kambri Hall Alex Oregel Ryan Young

We’d love to hear from you! What strategies are you considering to position your dealership for success in 2025? Let’s connect and discuss how Elevation Dealer Services can help.

Here’s to ending 2024 strong and building an exceptional 2025 together!

- The Elevation Dealer Services Team