Top 5 Tips for Independent Dealers in 2022

Independent dealers have unique needs so finding the right tools and support is an essential component of running a successful car lot. Whether you’re new to the independent dealer space or have been around for several years, it doesn’t hurt to take a step back and evaluate how your business is running. Here are some tips to consider if you’re thinking about making changes to the way you run your independent dealership this year.

  1. Determine Your Current Needs – Do you need to hire additional staff or does your lot need resurfacing? Once your dealership has been in operation for a while, it’s a good idea to take some time to determine any improvements or changes you want to make and prioritize what you’d like to do first before putting a list together.
  2. Examine Your Cash Flow – There are a lot of dealer financing programs available but finding the right one for your dealership can help you take your business to the next level. Floor plan providers like NextGear Capital provide additional funding for independent dealers so they have more flexibility with their cash flow. They also have customized floor plan options available for dealers new to the industry or who specialize in carrying lower priced inventory.
  3. Identify Any Inefficiencies – Do you spend hours on audits or are you having trouble keeping track of all your paperwork? There are many tools available to assist independent dealers in creating more efficient processes to help streamline their daily workflow. NextGear Capital’s Account Portal provides independent dealers with everything from title management to audit reconciliation so they can save both time and money.
  4. Don’t Be Afraid to Ask for Help – Whether it’s accessing data on the types of vehicles in demand in your local market or reaching out to an expert in the industry, finding the right resources can help you become more profitable and grow your business. Even if you’ve been an independent dealer for several years, technology and trends are always changing and having the most up-to-date tools and research can give you a competitive advantage.  
  5. Look to the Future – Do you dream of opening a second location someday or adding a service department? You can start putting those dreams into motion by exploring additional dealer funding options like a floor plan from NextGear Capital. As the top floor plan provider in the industry, NextGear Capital helps independent dealers reach their goals by providing them with additional capital and industry expertise.

Being an independent dealer is hard work but when you have the right floor plan provider by your side, you’ll have more flexibility and a support system that will provide you with solutions to create more streamlined business processes so you can breathe a little easier. 

Dealer Spotlight: Irene Whitesides Making All the Right Moves

When Irene Whitesides started working at a car dealership in 1998, she said that she was the only woman on the sales floor. “The car business used to be a man’s world,” she said. “It was hard because I was a single mother with two kids at the time but I decided that I was going to make it work so I could provide for them. It wasn’t long before I became the top salesperson at the dealership every month and made more money than I ever had before. After a few years, I met my future husband, David Whitesides Sr. and we opened Destiny’s Auto Sales in 2003.”

As soon as the Columbus, OH area dealership was up and running, she knew she wanted to get a floor plan. “When we opened the new dealership, we were basically just starting out with faith, so I needed a floor plan to purchase inventory with,” she said. She started out with a modest $25,000 floor plan through Dealer Services Corporation (DSC) who she had worked with previously at a different dealership.

Irene and David Whitesides

When DSC was acquired by NextGear Capital, Whitesides says that it was a little bit of an adjustment at first but she felt supported by her NextGear Capital representatives. “My Portfolio Manager comes by regularly and he is the best,” she laughs. “In fact, I would steal him if I could! A little over a year ago I was struggling with aging units on my lot. So, I had to find some new solutions to help move my inventory and my Portfolio Manager told me about OVE and reached out to Manheim for me. Now when my inventory gets to a certain number of days on my floor plan, I put them on OVE and that has helped me move them a lot sooner. I also started doing both retail and wholesale sourcing which has also kept my inventory moving.”

Whitesides says that she purchases inventory both in-person at auctions and online. “It’s hard to get inventory right now. We used to have between 60 to 100 vehicles on our lot but we’ve struggled to maintain that amount. I’ve never seen anything like this before.” She says that one thing that hasn’t been a struggle is managing her floor plan through Account Portal. “It’s very user-friendly and it’s very helpful to use for things like reconciling my audits.”

Inventory isn’t the only challenge Whitesides says she’s facing. “You can’t get inventory and you can’t keep staff right now. It’s a whole different world out there right now. Before the pandemic started, I would have between 12 to 14 people on my staff and right now I only have four including me. My husband runs the service department and we used to have a detail shop but it’s not open right now because I haven’t been able to find the staff to keep it going so I’ve been using a mobile detail service instead.”

Despite this, she says that she’s never been one to back down from a challenge. “When I went to my first auction to purchase vehicles, it was very intimidating because I was the only woman there. But after a few months I got some guidance from a supportive auctioneer, and I started to feel more confident buying cars and learned how to make good inventory choices. Now when I go to auctions it’s totally different. The same dealers who used to try to bid me up because they underestimated me, now respect me because not only did I survive, I thrived.”

After her longevity as an independent dealer, she says that anyone looking to enter the industry should start small. “You have to crawl before you run. A lot of the new dealers take on too much too quickly and are out of business before they know it. There’s a joke among independent dealers that floor plan companies are loan sharks. But if I didn’t have a floor plan, I wouldn’t be able to get the inventory I need. I think NextGear Capital is different because they look at each independent dealer individually so they can find the best floor plan to meet their needs.”

When thinking about the future, she says that she just wants to keep going. “Our company is strong! We’ve been here for almost 20 years and even with all the changes over the years, we’ve kept growing and I now have a $475,000 floor plan. There’s a small number of independent dealers that have been in business as long as I have and I really think that’s because we don’t bite off more than we can chew and we make the right moves at the right time.”

What is Floor Planning?

You may have heard of floor planning before but might not be sure what it means. Floor planning is simply a revolving line of credit that independent dealers can use for inventory financing to purchase vehicles and free up cash flow for anything from enhancements to the business, to improvements to their car lot. Here are some reasons why you should consider getting a floor plan.

Additional Funding – If you rely on cash to purchase inventory instead of floor plan financing, you won’t have a lot of flexibility when you’re faced with unexpected expenses or fluctuations in inventory prices and market demands. Floor plans provide you with the additional capital you need for any unexpected challenges that arise and give you more breathing room with your cash flow.

Inventory Financing for Independent Dealers – Unlike traditional loans from local lenders or financial institutions, floor plan financing for car dealers is designed to support the unique needs of independent dealers. Whether you’re looking for more cash flexibility or are new to the independent dealer space, floor plan providers like NextGear Capital have you covered with transparent floor plans that are easy to understand. With NextGear Capital, your representative will help you figure out which floor plan will be the best fit for your business and future goals.

floor planning

Access to Tools and Additional Support – Besides providing dealer funding, NextGear Capital provides independent dealers with account management tools and industry expertise so they can run their dealership more effectively. NextGear Capital’s Account Portal provides independent dealers with real-time information on their floor plan while also giving them access to title management, vehicle valuations, payment information, audit reconciliation and more! NextGear Capital clients will also have access to a dedicated Portfolio Manager who can provide them with valuable market information and insights based on their dealership’s activity to help them grow their business.

Floor plans provide you with additional funding to increase your buying power while also giving you access to account management tools and enhancements to streamline your business processes. Finding the right floor plan provider will help you to increase your efficiency while providing you with the insights to become more competitive in your local market.

How to Optimize the Audit Process

Have you ever had a vehicle on its way to an auction when an unplanned audit review occurred? When it comes to running a dealership, most independent dealers will probably say that audits are not their favorite part of the job. From unexpected visits from auditors, to having to track down inventory that’s offsite, it can seem cumbersome at times. But what you might not realize is that audits can help you save money while creating a more efficient business workflow. Here are some ways you can utilize the audit process to help streamline your floor plan process:

  • Keep Tabs on Your Inventory – Do you have multiple lots that you move inventory between or only put some of your vehicles on your floor plan? There’s nothing worse than realizing that you could have paid off a vehicle sooner if you would’ve been informed about a sale that happened earlier in the day by one of your staff members. The audit process can help you take control of your inventory by keeping you updated on the status and location of your floored vehicles, so they don’t get lost in the sales funnel.
  • Invest in Time-Saving Tools – Depending on the number of vehicles you keep on your lot, the audit process can take up to several hours to complete if you don’t have the right tools at your disposal. NextGear Capital has recognized this pain point and created a designated Audits tab inside its Account Portal tool that allows dealers to do everything from Self Reconciliation to vehicle payoff in a few easy clicks. To clear your audits, simply take pictures of your inventory in real-time on your mobile device and upload them to Account Portal without having to leave the Audits tab. You can also delegate your audit reconciliation to someone else at your dealership saving you even more time. 
  • Reduce and Prevent Additional Fees – Audit reconciliation can help you save money by keeping you aware of upcoming fees and compounding interest on your floored units. You can use that information to help support your sales strategy by focusing on moving those units sooner, so you can keep more money in your wallet.  
audit process

Audits will always be a necessary component of managing a floor plan. So, while you may not be able to stop them from happening, you can take control of the audit process by investing in the right tools and technology to help you handle them more efficiently.

Cox Automotive Products and How They Can Help Independent Dealers

Check out the video above to learn about products from Cox Automotive that can positively impact independent dealers and grow their business.

Here are some of the Cox Automotive products that are beneficial to independent dealers:

 

  • Inventory Acquisition – Whether you’re purchasing inventory in-lane or through your mobile device, when you purchase from Manheim your floor plan will be updated automatically so you can view your inventory and available cash flow in real-time.  Additionally, you don’t have to worry about keepings tabs on your titles as they will be available for you to view inside of Account Portal, making for a streamlined process.

 

 

  • Inventory Insights – It’s difficult to keep up with the pace of market trends such as consumer preferences and pricing. That’s where vAuto helps. By providing you with the most up-to-date market data you’ll be able to avoid inventory mistakes and increase your profits. One of their newest tools, Stockwave, provides in-depth insights into the wholesale market so you know which vehicles to purchase, where to find them, and how to price them. These data-driven insights empower you to make informed decisions about the vehicles you’re putting on your floor plan.

 

 

  • Streamlined Solutions – Are you looking to streamline your current business strategy so you can spend more time focusing on the client experience? Dealertrack’s digital management solutions can help you take your independent dealership to the next level by creating a personal buying experience that works for your needs. It also ensures your tools and technology are working together to create a more efficient sales process.

 

 

  • A Digital Advantage – Selling inventory online is a must, so have you asked yourself if your current website is meeting all your needs? Dealer.com provides a personalized car shopping experience while connecting you with in-market buyers across the country. You can also take advantage of its digital marketing services including social and reputation management, as well as search engine optimization. With Dealer.com you’ll stand out from the competition.

 

 

  • Transportation Solutions – When you’re unable to find the inventory you need locally, you need a logistics supplier that makes it easy to get your purchases to your lot quickly and conveniently. Fortunately, when you use Ready Logistics to transport your inventory, not only will you have the industry’s best on your side, you’ll be able to use your NextGear Capital floor plan for your transportation fees.

 

Smart Solutions from Cox Automotive

Here’s how independent car dealers can navigate and thrive in a volatile used car market with the top tools in the industry.

The average vehicle price has increased almost 25% since a year ago. You can use inventory tools like Manheim Express to find quality vehicles at the best value to gain a competitive edge.

Dealertrack can help you locate inventory, from pickup trucks to speciality, so you can keep up with the high customer demand. you can put your transportation fees on your NextGear Capital floor plan.

Did you know, 64% of car shopper want more of the buying process to happen online? Dealer.com can help you create a seamless online experience.

You can access up-to-date market data from vAuto and Kelly Blue Book to access current pricing and market trends in your area.

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Dealer Spotlight: Bruce Justice Anything but Mediocre

Bruce Justice was working as a technology sales representative when he decided that he wanted to make some additional money on the side by selling a few vehicles. “In the state of West Virginia, you can sell up to four vehicles a year without a dealer’s license, so that’s how I got my start,” Justice said.

It didn’t take long before Justice decided that he wanted to continue to supplement his income by selling more vehicles, so he decided to get his dealers license and purchase a trailer to set up an office where he could interact with his customers. He was still working full-time at his other job when an opportunity to purchase a dealership presented itself. “I found out that the owners of a dealership in Louisa, KY were looking to downsize during the beginning of the pandemic,” he said. “I decided that I was ready to take the leap and leave my current job instead of staying mediocre, and that’s how Justice Automotive got its start.” 

While he was a little hesitant to get a floor plan in the beginning, what he really found challenging was finding a company that would approve him for a floor plan since he was new to the independent dealer space. “I reached out to a few companies but none of them would work with me,” he said. “When I contacted NextGear Capital they immediately helped me through the approval process and I got my floor plan in a couple of days. Even though I have other options now that I’ve been in business for a while, I’ve decided to stay loyal to NextGear Capital because they’ve been there for me since the beginning.” 

Justice Automotive

Now that he’s had his floor plan for over a year, he says that getting one was the right decision. “It’s really simple, the more vehicles I have the more I can sell. I like Account Portal and think it’s more user-friendly than other online account management systems. I also really like my Portfolio Manager, we work really well together and it’s been a good relationship.” 

While he took all the precautions necessary to keep his customers safe during the pandemic, he didn’t make any changes to his business model or sales strategy. “I just tried to get on with business as usual and ignore the pandemic,” he said. “I list my inventory on Facebook Marketplace and my sales never declined because I was consistent about advertising my inventory and keeping it updated.”

Justice says that his biggest challenge recently has been finding quality vehicles to buy. “Despite the higher prices, sourcing inventory hasn’t been an issue yet but I’m finding that I have to do more maintenance on the vehicles I’m purchasing. I’ve also found that my customers aren’t concerned about the increased price on my inventory as long as they can make the monthly payments, so I work with them on the financing.”

He currently sources his inventory primarily from local auctions but recently signed up with Manheim. While he currently doesn’t use any other Cox Automotive products, he says he would be open to doing so in the future. “I still have a smaller sized car lot but as we grow, I could see using more Cox Automotive products like Dealertrack to help manage my inventory.”

His future goals include growing into his current location which can hold about 65 vehicles, he currently averages around 25 sales a month. “I also want to open a service department and eventually open another location,” he says. “I’ve talked to one of my friends about buying his dealership in a few years when he’s ready to sell it so that’s an opportunity I’m looking forward to.”

When it comes to providing advice to new dealers, he says to just pace yourself, “Start out slow and put the work in. You’ll eventually figure out how much inventory you should be carrying on your car lot and by having a floor plan, you’ll be able to grow your business off that pace.” 

6 Ways To Enhance Your Dealership Today

Whether you carry 10 or 200 vehicles on your lot, running an independent dealership takes a lot of planning and hard work. From sourcing inventory and marketing your vehicles to answering customer questions and processing paperwork – it can feel like the workday is never-ending. That’s why it’s crucial to use the right tools to help you run your business efficiently. Here are some ways you can use the suite of Cox Automotive Products to streamline your business:

  1. Streamline Inventory Acquisition– Independent dealers know how crucial it is to have the inventory their customers are looking for on their car lot. Manheim has the largest network of used car auctions in the country and offers both in-lane and online sales to independent dealers. You’ll also be able to easily finance your purchases with your NextGear Capital floor plan.
  • Enhance Vehicle Management – Making sure you’re managing your inventory correctly is vital for any successful dealership and vAuto can help. By accessing up-to-date market insights through Stockwave or harnessing data to drive profits with Provision, you’ll know which types of vehicles to purchase based on your inventory needs and more accurately price and appraise them.
  • Create a Personal Buying Experience – As more and more car buyers shift to starting the car shopping process online, having a website that’s easy to navigate will set you apart from the competition. Dealer.com provides you with the tools you need to create a personalized sales experience for car shoppers in your area. You’ll also have access to advertising and marketing resources so you can put your best foot forward.  
  • Reach a Larger Audience – Getting your vehicles exposed to a larger group of car shoppers is one of the fastest ways to move them off your lot. Autotrader’s online inventory platform ensures your inventory is seen by a large audience. It also offers independent dealers digital retailing support at a price that won’t break the bank.
  • Enhance Day-to-Day Support – Are you drowning in administrative tasks? Do you feel your technology is out of date and slowing down your business? Dealertrack is a dealer management system that helps simplify your business processes so you can run your dealership more efficiently. It provides support for everything from building and submitting credit applications to digital contracting, so you don’t have to do all the heavy lifting.
  • Get Transportation Assistance – With all the challenges that come from sourcing vehicles these days, if you need help transporting your inventory from out-of-state, Ready Logistics has got you covered. It also provides you with the option of putting your transportation costs on your NextGear Capital floor plan.

Make running your dealership easier, more efficient and more profitable by equipping yourself with the top tools and resources in the industry through the Cox Automotive network. Not only will you have access to industry-leading insights, but you can also integrate them with your NextGear Capital floor plan giving you a leg up on the competition.

Inventory Financing Provides Solutions During Market Changes

With market fluctuations causing vehicle shortages and high prices, independent dealers have found themselves looking for new ways to keep high-demand inventory on their lots. Floor plans provide car dealers with financing that can be used to help secure inventory and more. Here are some ways the cash-flow provided by inventory financing can help when dealers need it most:

  • Inventory Flexibility – If certain makes or models on your car lot aren’t moving due to sudden shifts in your customers’ preferences, you need to react quickly. With inventory financing through a floor plan, your additional capital allows you to pivot so you can make the needed changes to your inventory line up. The additional funding gives you peace of mind knowing you can acquire the vehicles car buyers are looking for and move more metal off your car lot.
  • Increased Buying Power – When vehicle prices are on the rise, a cash-only strategy may cause some concern with your available cash flow. Not having access to inventory financing can really take a toll on your business. By having access to additional funding through a floor plan line of credit, you’ll have the breathing room you need to cover any sudden price increases.
  • More Sourcing Options –If you’ve typically relied on getting your inventory from a known and trusted source but vehicle shortages and higher prices are causing you to consider looking at other sources, you can rest assured that your NextGear Capital floor plan has you covered. Your floor plan provides you with the flexibility to floor both auction purchases from over 1,000 live and online auctions, as well as non-auction purchases from dealer-to-dealer purchases, trade-ins and more. With a NextGear Capital floor plan, you can cover nearly any type of remarketed unit. This ensures you not only secure the vehicle you need, but that you do so at the most competitive price.
  • Supplemental Services –In addition to extra cash flow, a NextGear Capital floor plan gives you access to a dedicated account manager who can provide critical advice and resources like market data, title services, access to Account Portal, and exclusive programs like NextGear Capital’s Consumer Loan Payoff Program. These additional tools can be used to help you streamline your business, so you have more time to focus on running and growing your business.  
Dealer using inventory financing

While you may not be able to control the market, you can take charge of and overcome sudden changes or shifts by having access to inventory financing. Having the right resources by your side will help you navigate through any inventory challenges so you can keep your lot stocked with the vehicles your customers are looking for.

Dealer Spotlight Blaine Adair: Keeping the Cash Moving

Blaine Adair dipped his toes in the automotive industry when he was just 19, working at a small Ford dealership. It was only a two-person operation, but he enjoyed the work, especially selling cars. After he got engaged, he wanted to be able to provide more for his family so he decided to leave the dealership and took a job at a factory.

After a few years, the factory fell on some hard times and Adair was itching to get back into the automotive industry. He decided to take the severance he received from the factory and try opening his own dealership. “I really wanted to get back to doing something I loved and that’s when I decided it was time to open Shoals Truck Center,” Adair said.

In 2015, his first year, he sold about 80 cars. He was cautiously optimistic about being able to bump that number up to 100 cars the following year, but he was operating on a cash-only basis, which was limiting. “If your cash is tied up in your inventory, you don’t have the cash flow for things like reconditioning or maintenance at your lot, so your cash flow is limiting,” he said. “In order to carry more inventory and sell more cars, I realized that I had to have access to more capital.”

Image of Adair dealership, Shoals Truck Center

He had heard negative things about floor plans from other dealers in the past so he wanted to make sure he picked one that wouldn’t put him out of business. The research was a little overwhelming, but NextGear Capital always rose to the top when he talked to other dealers who had success with floor planning. “What I’ve come to realize is that it’s not floor plans that put you out of business but mismanaging your funds,” he said.

With his floor plan, he now averages about 30 to 35 units on his lot each month. He says that he’s still old school when it comes to purchasing inventory. “I still prefer purchasing in-person versus online but if an online auction has a good post-sale inspection process and policy, I feel comfortable buying online because I know I won’t end up with a bad vehicle,” he said.

Adair said his experience working with NextGear Capital has been fantastic. He especially appreciates the high level of customer service he receives from his Portfolio Manager if he has any questions and the tools are second-to-none.

“Account Portal is always open on my browser,” he said. “It’s very easy to reconcile units, and I love being able to floor non-auction purchases. Another tool I use a lot is the Consumer Loan Program. If someone’s paying off a car that still has a lien on it, NextGear Capital handles the process for me, making it a breeze.”

Like other independent dealers, Adair said his biggest issue is a shortage of inventory. Before COVID, he used to visit only one auction a week and had a couple of wholesalers whom he would source from. Now he’s shopping at every auction he can. He’s also had to adjust his vehicle pricing due to inflation. The inflated prices at first gave him pause, but he nearly ran out of inventory and only had about six trucks left on his lot. Similarly, it took some of his customers awhile to come to grips with the higher prices but once they did, they were ready to sign on the dotted line.

Adair is looking to continue his steady growth over the next few years and said in hindsight he wishes he would have signed up for a floor plan sooner. He now offers advice to new dealers on the advantages of floor plans and how to make the floor plan work for them. “My advice to any dealer signing up for a floor plan today is not to max out your plan right away,” he said. “Just ease into where you feel comfortable because a lot of the negativity surrounding floor plans comes from people who don’t know how to manage them. And don’t buy crazy stuff, just buy what your customers want so you can move your inventory quickly.”