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Its my understanding that dealerships maintain no inventory of vehicles, at least not new vehicles, on their books.
by AaronM 12y ago
Its my understanding that dealerships maintain no inventory of vehicles, at least not new vehicles, on their books.
- jcampbell1 12y agoThis is completely wrong. Dealers own the inventory. Dealers take ownership of the car as soon as the car leaves the factory gate - they own the in-transit cars.
- jessaustin 12y agoCompletely wrong? http://en.wikipedia.org/wiki/Retail_floorplan http://en.wikipedia.org/wiki/Retail_floorplan
- KMag 12y agoRead the article you referenced. In a floorplanning agreement, the franchise owners have 100% purchased the inventory and are on the hook for selling the inventory. The purchase money is financed with loans using the inventory as collateral. The dealer fully owns the inventory and (in the absence of side agreements or regulations) assumes all of the liquidity risk. In particular, if a local franchise owner sees the manufacturer opening up its own store down the road, the franchise owner can't (in the absence of side agreements) tell the manufacturer to take back the cars because they want out of the business.
- jessaustin 12y agoThe point is, there is a middle ground between owning everything free-and-clear, and merely acting as a consigning agent for the party that owns everything. Getting a loan for inventory is in that middle ground.