increasing Profit Margins Through Floor Planning

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Dealer walking between carsSkeptical dealers don’t always understand that a floor plan can be leveraged to help increase a dealership’s profit potential. The general sentiment from these dealers is that because your dealership doesn’t own the vehicles and will owe additional fees on a floor plan, your dealership won’t be able to profit. However, dealers have to consider the other benefits of improved cash flow, the ability to stock additional inventory, and the auxiliary benefits that come with a floor plan that can be used to help increase your dealership’s potential profitability.

Stock Additional Inventory
The hallmark benefit of using a floor plan loan is getting extra buying power to stock more inventory on your dealership’s lot. For the most part, dealers with more inventory have more opportunities to sell. When dealerships have more inventory to sell, you have more opportunities to profit.

Improved Cash Flow
Another key benefit of a floor plan is improved cash flow. When dealership savings aren’t tied up in inventory there’s additional flexibility in how you can disperse funds. If additional investment is needed in another department, it can be much easier to make funds available for those expenses.

Spend Time Where It Really Matters
When dealers use a floor plan line of credit there are a number of auxiliary tasks that a floor plan provider can assume. For example, floor plan lenders frequently help dealers manage titles, and can often help dealers complete additional title work in select states, saving a trip to the local DMV branch. Letting a partner step in and handle those additional tasks gives you the opportunity to save time, and subsequently allows you to focus on the activities that matter the most to your dealership.

Make Money When You Buy and Know You Buy Right
It’s said that most dealers make money when they buy a vehicle, not necessarily when it gets sold. Not only does a floor plan provider help dealers buy inventory due to increased buying power, but some offer the extra ability to figure out if you’re making a good buy.

For example, NextGear Capital dealers have the ability to access Manheim Market Report and Kelley Blue Book valuations from the convenience of the Account Portal.

Give your dealership extra fuel to succeed by considering how a floor plan can positively affect your potential profitability. Feel free to give us a try by applying for a line of credit, or letting us know if you have any questions or hesitations by contacting us, or reaching out to your region’s representative.