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Floorplanning a car is still ownership, the only thing is that you're doing short term financing at very low interest rates. But once that financing is up, you

by ValG 11y ago

Floorplanning a car is still ownership, the only thing is that you're doing short term financing at very low interest rates. But once that financing is up, you still have to account for the $$ of the car. IF you don't sell it, you'll likely take it back to auction and sell it there (usually for a loss), so inventory risk is still present. Franchise dealers have floorplanning for sure, independents not so much. Plus, for USED cars, you usually don't floorplan those (from what I remember). There used to be a saying, if you want to find a Franchsie Dealer that was on it's death bed, look for the one that is floorplanning it's used inventory.

fluxquanta 11y ago
Without getting too specific, my company works almost exclusively with independent used car dealers (on the order of thousands across the country), and a majority of them absolutely floor plan their used inventory. Just look at the sites for NextGear[0] and AFC[1], targeting floor planning of used inventory: "Our credit lines are accepted at over 1,000 auctions and accessible with other inventory sources throughout the U.S." and "Use your AFC line of credit to finance customer trades, dealer-to-dealer transactions and purchases made from auctions, leasing companies and other sources." This is how these services are being used. And I'm not saying they won't eventually have to account for that inventory financially, but the process moves so quickly (at least at successful dealerships) that the dealer's bank statement will probably never even take the hit for the vehicle, because it's acquired and sold within weeks or days if they're buying the right inventory for their customers. The ones who aren't go out of business. You're conflating independent used dealerships with franchise new dealerships who also happen to sell used cars. [0] http://www.nextgearcapital.com/inventory-finance/ http://www.nextgearcapital.com/inventory-finance/ [1] https://www.afcdealer.com/wps/portal/afcd/products/ https://www.afcdealer.com/wps/portal/afcd/products/

by ValG 11y ago

fluxquanta 11y ago

Without getting too specific, my company works almost exclusively with independent used car dealers (on the order of thousands across the country), and a majority of them absolutely floor plan their used inventory. Just look at the sites for NextGear[0] and AFC[1], targeting floor planning of used inventory: "Our credit lines are accepted at over 1,000 auctions and accessible with other inventory sources throughout the U.S." and "Use your AFC line of credit to finance customer trades, dealer-to-dealer transactions and purchases made from auctions, leasing companies and other sources." This is how these services are being used. And I'm not saying they won't eventually have to account for that inventory financially, but the process moves so quickly (at least at successful dealerships) that the dealer's bank statement will probably never even take the hit for the vehicle, because it's acquired and sold within weeks or days if they're buying the right inventory for their customers. The ones who aren't go out of business. You're conflating independent used dealerships with franchise new dealerships who also happen to sell used cars. [0] http://www.nextgearcapital.com/inventory-finance/ http://www.nextgearcapital.com/inventory-finance/ [1] https://www.afcdealer.com/wps/portal/afcd/products/ https://www.afcdealer.com/wps/portal/afcd/products/