Car dealers work tirelessly to protect and improve turn times and overall dealership margins. Over time, many dealers develop and implement a variety of strategies and processes to help improve turn times and maintain revenue. Though every dealer can make profitable changes to dealership operations, dealers that utilize a floor plan lending partner may find it’s much easier to improve turn times and margins compared to cash-buying dealers.
Keep Dealership Funds Flexible With A Floor Plan
Purchasing inventory with a floor plan means that dealers don’t have to use their dealership savings to purchase inventory. For dealers looking to improve margins, the up-front cost to put a floor planned vehicle on a dealer’s lot is incredibly minimal. Depending on a dealer’s contracted terms, a first fee—-a small fraction of the original vehicle purchase price—-may not be due until 30 days after the car was first purchased at auction. Since dealership savings weren’t utilized to purchase inventory, those funds can be used for other expenses and priorities which can consequently help to improve overall dealership turn times.
For example, because a dealer utilized a floor plan instead of cash to purchase inventory, they were able to make improvements to their dealership’s service department. As a result, the service department improvements decreased the amount of time spent getting vehicles customer-ready, which in turn, helped to improve overall dealership turn times.
Other Methods of Improving Turn Times
Taking advantage of a floor plan often gives dealers the additional capital and hours needed to refine processes that improve turn times.
Average dealers typically can get a car customer-ready in approximately 10 days, and online in about 13 days. Keep in mind, each day that a vehicle remains unsold, it incurs dealership costs. The top 20 percent of performing dealers can get a vehicle customer-ready typically within a four day window. While that timeline might not be realistic for all vehicles or all dealerships, the overall concept stands: the faster a dealer can get a vehicle customer-ready, the less a dealer has to spend holding on to a vehicle before it sells.
One of the most realistic ways for a dealer to retail vehicles quickly is to list inventory online, perhaps even before leaving auction. Though that timeline may not be realistic for all vehicles or dealerships, the sooner those vehicles are posted, the sooner possible customers can see available dealership inventory, which can consequently help to improve dealer turn times.
Another method to optimize a dealership’s overall speed-to-market is to evaluate current transportation options. How much time does it take to move a vehicle from auction, to a dealership lot? Despite the minimum amount of time it might take to move a vehicle from point “A” to point “B,” dealers that take advantage of services from NextGear Capital and Ready Logistics have the additional ability to floor plan transportation costs, further optimizing dealership cash flow.
For dealers looking to improve turn times and profitability, utilizing a floor plan lending partner can be an effective business strategy.