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Why Penetrations must be broken into Cash, Finance, Lease categories

Updated: May 9, 2023

Why a higher VSC penetration sometimes points to a less talented manager.

Let's Break It Down!


Recently I interviewed a number of F&I managers to talk about VSC penetration goals. Typically, I heard managers talking in terms of 50% to 60% penetrations. However, some were quite a bit lower at 40% and 45%.


When I questioned the lower goal setters, I got an earful. What they were upset about was how unfair it was to compare VSC penetration between stores. I asked them why they thought a penetration comparison was unfair. Here’s what they said:


It’s simple. Your comparison is too blunt. At my store, 20% of my deals are leases, 25% of my deals are cash. My VSC penetration on finance deals is as high as another manager’s. Our gross per VSC is the same. But look at how different our overall penetration is. You critique my VSC penetration when I think I am doing a better job than a guy who enjoys a high finance penetration.”


I did the math and he was right! He is doing a better job, even though his overall VSC penetration is lower. Look at the table below and you will see what I mean:


Which Manager is doing a better job? You Decide!


If I asked you which manager was doing a better job, what would you say? Yep, you would say Manager B at the low finance store. He does as well with finance customers but he is 4 times better with cash customers. From this perspective, the low finance store manager is doing a better job.


But watch what happens when I factor in the count to the penetrations. Each manager is delivering 100 deals.


If I asked you which manager was doing the better job on VSCs, what would you say looking at this table?

Yea. You would say the manager at the high finance store was doing a better job. His

VSC penetration is 12% higher.

What did I learn from my finance managers? Simple. Break down the deals via cash, finance and lease. Each segment has very different expectations. Finance managers can’t control their mix of business. They can only control how well they do in each segment. Thus, each segment needs to be broken out in the reporting to make fair comparisons.

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