Electric vehicle leases are big business for many dealerships right now, but front-end profits for those transactions fell in July, according to F&I software and analytics company StoneEagle. Elsewhere in the dealership, however, finance-and-insurance profits on EV leases helped make up for the tighter margins.
EV lease volume grew 45.6 percent from June to July and accounted for nearly all of July’s lease growth at more than 8,900 U.S. dealer rooftops, StoneEagle said. But the average front-end gross profit per new EV lease deal — the amount of money a dealership makes on the initial sale — fell more than 140 percent month over month to a loss of about $46.
It is the time of year when dealerships are looking to move inventory ahead of the arrival of new models, said StoneEagle CEO Cindy Allen. Leases are an affordable way to get vehicles off the lot, Allen said. That, combined with EV lease incentives from automakers, likely drove the downward trend in front-end profits. But average F&I profit per vehicle on an EV lease at these dealerships was $1,306 in July, down only slightly from $1,344 in June.
Dealerships are “being very smart about how they are playing those F&I products,” Allen said. They are “a lever that they are pulling to make sure that they keep things profitable.”
Congress voted this summer to end the EV tax credits Sept. 30 as part of a massive tax and spending law. But ahead of that deadline, EVs remain a powerful presence in the leasing market. New EV leases rose 51 percent year over year and penetration remained steady at just over 55 percent, according to StoneEagle.
EV leases sold with F&I products also benefit the dealership long term, Allen said. In the shorter term, protection products keep customers coming into the dealership for service and drive loyalty, she said.
Further down the road, those EVs will come back to the dealership in good shape and young enough to be an attractive used product, Allen said.
“They are leveraging a lot of different things right there,” she said, “to create a really strong big picture.”
