Carsales And Stratton Finance: Another Knife Into Car Dealers’ Profitability?

The acquisition by carsales of a controlling share in finance provider Stratton Finance will likely be ringing alarm bells in the new car dealer sector.

Carsales yesterday announced a 50.1 percent acquisition in Stratton finance for $60.1million.

The provision to car buyers of finance and insurance - or “F&I” in industry speak - is one of the more profitable activities of new car dealers.

In the case of finance, it is typically provided to customers off dealers’ ‘floorplan’ finance (from the finance provider underpinning the dealership and stock inventory).

Importantly for the business, it enables the dealership to offer a ‘one-stop-car-buying-solution’ to the customer - the car they want, with the finance to complete the purchase.