The dealership is completely separate from the dealer reinsurance company. It is a different business entity with different needs. Like all retailers, it profits entirely from selling higher than costs. In every sales or service transaction, the dealership knows whether or not it is engaging in sustainably profitable activity. It's a tough business. As of this writing, average pretax profits of dealerships are less than 1%. A good year for the average dealership recently is about 2.5%.
The costs, features and benefits of all our aftermarket products must meet market standards of customer affordability and provide reasonable dealership profitability. We work with our dealers to develop F&I plans that are sound, affordable, and profitable.
The old game of beating down the costs of the provider of aftermarket products disappears when the dealer chooses Portfolio. It is such a relief, according to our dealers. All of a sudden he or she sees the importance of balancing out the needs of the customer, the dealership, and the reinsurance company, which is the party that takes the risk of taking care of the customer.