Start-Up Aims to Open Up Auto Dealer Floor Planning

“If we deliver floor plan lending in a more efficient way, we’ll ultimately have more lenders for dealers,” says Vero CEO John Mizzi.

Steve Finlay, Senior Editor

April 25, 2024

3 Min Read
Efficient floor plans can bring dealers more financial lenders.Getty Images

Auto dealers stand to benefit from technology that potentially brings more players to the floor-plan lending market.

That’s how John Mizzi sees it. He is the CEO of New York City-based Vero Technologies, which has developed a floor-plan lending management system for financial institutions.

Some lenders in recent times have left the floor-planning business. Mizzi says Vero’s digital offerings can get more in.

In floor planning, a lender extends a credit line to a dealer who uses it to buy new vehicles from automakers and used vehicles from auctions and other inventory sources. It works something like a credit card dealers use to stock their lots.

But floor planning is not particularly a darling of credit markets, Mizzi tells WardsAuto. “It’s overlooked. There’s almost a stigma. There’s not a lot of competition, which has led to a lack of investment. Some lenders’ systems look like (the ones that were used in) 2004.”

However, by highly digitalizing the process – as Mizzi says Vero has done – he foresees more lenders offering floor-planning services to dealers.

“If we deliver floor-plan lending in a more efficient way, we’ll ultimately have more lenders for dealers, creating a competitive marketplace with more access to capital,” he says.

He adds, “Our hope is if you have the right technology, you’ll have more lender involvement, more lenders playing in this space.”

For lenders, streamlining floor-plan financing “brings folks out of the back office where they are doing manual processes, loans and audits,” Mizzi says. “It reallocates the lenders’ human capital to provide a better experience for their dealer customers.”

Start-up Vero began four years ago. COVID complicated things. But in the past 18 months the company has signed up four community and regional banks that use its software system.

During the pandemic, Vero “decided to… start financing operations ourselves” in addition to licensing its system to lenders, Mizzi says.

The company has a $40 million portfolio that supports 150 franchised and independent auto dealers.

The Vero software system is based on a single platform with modules for underwriting, originations, portfolios and risk management.

The part of the system for dealer use helps them manage their lines of credit and advises them when they should reduce a vehicle’s sticker price to avoid aging inventory.

What has Vero learned about dealers from those 150 relationships?

“Certain independent dealers are perceived as high-risk borrowers, giving the rest a bad name,” Mizzi says. “We learned how to monitor dealers so we can get early warning signs on performance issues.”

For example, Vero’s risk-management tool sends alerts if a dealer’s liquidity drops below certain thresholds.

The company also uses data that monitors title registrations to deter out-of-trust situations in which a floor-plan-financed vehicle is sold but the seller fails to notify the lender and fails to pay off the loan. That is called out of trust.

One of the worst cases of it involved a big Minnesota dealer who in 2011 received a 10-year prison sentence and ordered to pay $31 million in restitution.   

A worst-case scenario is when a lender shows up at a dealership to find it shuttered and the floor-planned inventory gone, says Mizzi, who adds that systematic early warnings are vital.

“It shocked me that some lenders waited for an audit before realizing a dealer was having issues,” he says.


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