Floor Plan Companies Can Be a Valuable Asset for Auctions

Auctions and floor plan companies have a mutually beneficial relationship. Creating and maintaining these relationships in the floor plan industry is essential for success, especially for auctions, which face numerous challenges in their day-to-day business, including but not limited to:

  • Dealers lacking funding
  • Slow payment
  • Difficulties in flooring
  • No assistance available
  • No marketing
  • Fewer dealers at sales

Floor plan companies help auctions negate some of these challenges, as they provide a valuable service of fast, timely guaranteed payments for sold units, which allows auctions to focus on what they do best: sell cars. But there are other advantages to auctions having a solid relationship with floor plan companies.

1. Guaranteed funds in the lane

It is in an auction’s best interest to have buying power in the lanes. This is common knowledge, but it is the basis and most important aspect to an auction’s business. As their business is predicated on one thing, selling more cars, having a relationship with a floor plan company provides the auction with a customer that has funds to spend. This leads to more units in the lane, which has a more positive effect on the auction’s available working cash.

2. Higher conversion rates

Generally, more money in the lanes equals more cars sold, resulting in higher conversion rates. Furthermore, with wholesale prices continuing to be volatile, sellers like to sell cars at auctions where dealers have open and available funds. Therefore, they want to go where there is money in the lanes

3. Stronger ongoing relationships

As with any business, auctions want dealers to be recurring customers who purchase vehicles from them again and again. If an auction has a solid relationship with a floor plan company that many dealers use, those dealers will be more likely to become recurring customers.  What’s more, it will provide auctions with word-of-mouth advertising, as those dealers will be more likely to tell other dealers about the auction, attracting even more customers.

To make the most of these advantages, it’s important that auctions leverage their relationships with floor plan companies and equally important to think about the future as well as the present when it comes to these relationships. Transparency and trust are vital to the relationship-building process, making it important that both parties set clear concise goals from the beginning of the relationship. This will allow both auctions and floor plan companies to work together through a relationship that is built on mutual trust and respect.

Where this relationship truly adds value can be measured on many levels in addition to what has been mentioned here. Flexibility, clear and concise goals, ease of use and mutually beneficial relationships are all equally important for the dealer that is looking for a positive buying experience.

Providing all of these tangibles can set businesses apart and promote success. Simply put, when both auctions and floor plan companies come together and act as partners to create an atmosphere that benefits the dealer, all parties can win.