The used-car industry has been full of opportunities this year for dealers who recognize how to seize the moment.
Interest rates dropped twice in 2019, there’s an influx of in-demand used inventory and new technology is now available that provides dealers with data to better understand their business.
With these advantageous market conditions, however, there’s increased competition for used inventory from larger independent used-car sales operations and franchise dealers.
Floor planning can assist dealers in distinguishing themselves from the competition in a tight market, with many lenders able to help dealers regardless of their size or what business stage they’re at.
Whether it’s laying out a plan for first-time independent dealers looking for cash flow or assisting smaller businesses looking to finish Q4 on a positive note, a floor-planning strategy can improve operations.
Moreover, an increased access to cash flow gives dealers extra liquidity to invest in their business.
For dealers who want to improve their floor-plan strategy, there are six key questions to ask:
- What is your average price per vehicle sold?
- How many units are sold per month?
- How many units do you wish to floor?
- What’s your lot’s capacity?
- How quickly are you turning your inventory?
- What’s the historical snapshot of your business?
Knowing the answers not only helps floor plan companies identify how much credit they can offer, it empowers them to assist in the development of a vehicle- turn strategy.
The end result is a customized plan that helps move inventory faster.
A good floor-plan lender looks for dealers who know their business inside and out. It’s a two-way partnership. A floor-plan lender should serve as an extension of a client’s business. (Wards Industry Voices contributor Wendy Gill, left)
As such, it's crucial to identify dealers who have significant skin in the game, want to maximize their floor plans and strive to take their business to the next level.
Wendy Gill is NextGear Capital’s division vice president.