Q3 2024
Auto insurance rates rose significantly over the last few years (52% in the last 24 months alone.) However, most of that increase happened in 2023, and rates have largely flattened in 2024. This is good news for dealers and consumers and throws cold water on the narrative in the media this year that insurance rates are continuing to rise.
Yes, average quotes are still up from last year (9.2%), but they have remained relatively steady over the last four quarters. It seems carrier rate requests and Department of Insurance decisions have largely taken effect.
These findings provide some hope that insurance rates will remain steady, and not rise, for the next few quarters. Steady rates give consumers a clearer picture of their total budget when headed to the dealership, and dealers will see fewer insurance surprises when closing deals.
Average Monthly Insurance Quote1
This is 0.4% down from the prior quarter of $200, indicating that insurance rates may have finally peaked.
The current price of insurance is still historically high, which is driving consumer shopping behavior. The latest JD Power data* shows that 49% of auto insurance customers were shopping around in Q1 of this year.
The higher cost of insurance is having a negative impact on consumer spending in the dealership. Until consumers realize that rates have steadied, we expect more shopping, which is an opportunity for dealers who can present competitive quotes and even savings during the car buying process.
Back-end gross remained steady at $1,854 over the past 12 months. It now contributes an average 59% of the per vehicle gross profits.
The trend line is clear. Back-end is more important than ever, and dealers will become more reliant on it for profitability than they have in years.
Back-end gross remained steady at $1,854 over the past 12 months. It now contributes an average 59% of the per vehicle gross profits.
The trend line is clear. Back-end is more important than ever, and dealers will become more reliant on it for profitability than they have in years.
In our Q2 report, our top 10 dealer groups saw higher F&I gross to the tune of 20%. That number dropped slightly in Q3 to 18%. This slight decline was largely a function of normal retail spending fluctuations.
AVERAGE BACK-END GROSS PER DEAL: 10 FRANCHISE DEALER GROUPS 4
When customers received auto insurance quotes at our top 10 most engaged dealerships, those dealers saw 18% higher back-end gross profit on average than dealers who did not offer insurance quotes at the point of sale.
In Q3, the average back-end gross for sales with quotes was $2,329, or $354 higher than the $1,975 average without quotes.
When customers received auto insurance quotes at our top 10 most engaged dealerships, those dealers saw 18% higher back-end gross profit on average than dealers who did not offer insurance quotes at the point of sale.
In Q3, the average back-end gross for sales with quotes was $2,329, or $354 higher than the $1,975 average without quotes.
Predictions for Q4 2024
The embedded insurance opportunity will continue to improve into 2025.
Insurance shopping activity will continue until consumers realize that the market has stabilized.
Sophisticated insurance companies will continue to open up for new auto insurance business, even in tough states like California.
Calculating the total cost of ownership, and insurance in particular, will become the norm for car shoppers and dealers.
Predictions for Q4 2024
The embedded insurance opportunity will continue to improve into 2025.
Insurance shopping activity will continue until consumers realize that the market has stabilized.
Sophisticated insurance companies will continue to open up for new auto insurance business, even in tough states like California.
Calculating the total cost of ownership, and insurance in particular, will become the norm for car shoppers and dealers.
