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.”

Utilizing Cox Automotive Products to Get the Most Out of Floor Plans

When you have a floor plan with NextGear Capital, not only do you have access to additional funding, industry-leading tools and local expertise, but you’re also a part of the Cox Automotive network. Cox Automotive has more than 25 brands to choose from to integrate with your NextGear Capital floor plan. Here are just a few ways independent dealers are using Cox Automotive products to optimize their floor plans:

  • 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.
dealer using cox automotive products

As part of the Cox Automotive network, you’re getting more for your business with access to the products and tools you need to tackle any challenge and thrive in an ever-changing industry.    

NextGear Capital, Inc. Renews $1.1 Billion Financing Securitization, Closes $500M Bond Offering

Renewed credit facility and securitized term note reinforces NextGear Capital as a strong lending partner for independent dealers

NextGear Capital, a Cox Automotive brand, has completed the renewal of its $1.1B financing facility on August 31, 2021. In addition, the company recently closed its latest $500M bond offering in July. 

NextGear Capital’s renewed $1.1B line of credit with industry-leading banks provides a variable funding mechanism to support the seasonal and growth needs of its dealer clients. The bond offering is NextGear Capital’s 13th asset-backed security (ABS) issuance since its initial offering in 2014. Together, they make NextGear Capital one of the most stable financing sources in the marketplace for independent dealers.

“These recent transactions preserve our operating flexibility while allowing us to continue serving the floor plan financing needs of independent dealers,” said Dave Horan, chief financial officer at NextGear Capital. “Our 20,000-plus dealer clients can gain greater confidence that their lender is well established in the capital markets and has a reliable source of capital to fund their inventory needs today and in the future.” 

This $500M bond offering was the first for NextGear Capital since March 2020 and represents the first floor plan ABS transaction issued in 2021 YTD. MUFG Securities Americas Inc. served as administrative agent on the bank conduit facility, and RBC Capital Markets was the lead structuring agent and underwriter for the securitized term note offering.

Top 5 Ways to Optimize Title Management

As an independent dealer, managing your titles is yet another task when you already have your plate full of the day-to-day responsibilities that come with running your dealership. What you might not realize is that an effective title management system can help you oversee your inventory and streamline some of your procedures. Here are the top 5 ways you can utilize a title management process to the benefit of your dealership:

  • Keep Track of Inventory – When you use a title management system like NextGear Capital’s Account Portal, you’ll be able to quickly view the status of your titles. You can also see how much you have left on your floor plan so you can make informed decisions on future purchases.
  • Reduce Turn Times – When you visit the titles page on Account Portal, you’ll see a column with the number of days your vehicles have been on your floor plan, which allows you to easily identify the units that need to be moved. This information will help you avoid additional fees from inventory sitting on your lot for too long.
  • Get Paid Quickly – While floor plans are designed to keep more money in your pocket, there are ways to optimize them to access additional cash flow sooner. An industry first, NextGear Capital’s Title Release Program allows dealers to get access to titles prior to payoff, in order to complete the sale quickly. With the sale complete, you have the flexibility to get the vehicles you need.
  • Increase Efficiency – You don’t have to worry about wasting time trying to locate a title when you can simply use your title management system. Rather than spending hours on the phone trying to track down titles, investing in a good system that does the heavy lifting for you will save you valuable time.
  • Strategically Diversify Your Inventory – If you want to make changes to your inventory, checking your titles can help you figure out which units are staying on your floor plan the longest, so you can be more strategic with future purchases.

Processing titles can seem like busy work, but with some savvy know-how and the right title management system, you can utilize them to effectively manage and grow your business. By helping you keep track of your inventory so you can focus on closing sales, you’ll have more cash flow to improve your dealership.

Dealer Spotlight Tariq Dmanhouori: A Floor Plan With FLEX

Tariq Dmanhouori

Tariq Dmanhouori, owner of NY Auto Sales in Omaha, Nebraska, didn’t have a background in the automotive industry when he started selling vehicles on the side. So, he started watching videos and reading articles online about selling used cars to help expand his knowledge. It wasn’t long before he experienced a sudden increase in sales. “I had never worked at a car lot before, but I spent over a year educating myself and realized that owning my own dealership was the next step,” said Dmanhouori.

Originally, he wasn’t interested in getting a floor plan. He had heard about them from other dealers but thought it was easier to just use the cash he had on hand. That changed when he was hit with several unexpected costs that caused a setback to his business just a few months after opening his dealership. When a friend mentioned NextGear Capital he once again did his research and decided it was time to sign up.

He wasn’t sure about using a floor plan because he had heard some negative things from other dealers, but he now realizes that’s because they didn’t know how to manage their floor plan. He said he’s never had an issue since day one and is glad he listened to his friend. He likes the additional cash flow and flexibility it provides and its helped him “take his dealership to the next level.”

Dmanhouori said getting started with NextGear Capital was a quick and easy process and exceeded his expectations. “Some floor plan companies will require you to be in business for several years before approving you for a floor plan, but I didn’t have that issue with NextGear Capital,” he said. “When I told my wife that the dealership had been approved for a $50,000 line of credit, she was really happy because she knew we could do a lot with the additional cash.”

Before signing up with NextGear Capital, Dmanhouori had around 20 vehicles in inventory and has doubled that number since getting his floor plan. He said keeping more vehicles on the lot attracts more buyers, which improves his turn times and frees up more cash so he can buy more inventory and find better deals. He said his floor plan makes it easier to get the vehicles he needs so he’s able to source better quality vehicles and turn his inventory quicker.

Dmanhouori also loves Account Portal and uses it to check, track and release his titles and also to view his inventory. He said it’s easy to use and keeps him updated in real-time on the status of his vehicles and available credit. “You can view all your inventory in one spot, you can view all of your titles in one spot, it’s just a very easy platform to work with,” he said.

Like other dealers, COVID took a toll on his business. He was forced to reduce his workforce and inventory at the beginning of the pandemic but he’s grateful that NextGear Capital deferred his curtailments and some fees in the beginning. In October 2020 business picked back up and sales were strong to carry him through the remainder of the year. He prefers to go to the physical auctions like Manheim in person and is also glad he’s able to do that again. Despite all the changes and challenges over the past year, he’s proud to say his business has done well.

One of the things he’s learned from the pandemic is how to handle uncertainty. He says that one of NextGear Capital’s newest pricing programs, Flex Pricing, has helped him to feel more comfortable purchasing inventory in a volatile market. “Flex Pricing provides me the additional cash flow I need to purchase inventory when I need it,” he said. “The smaller payments give me some breathing room so I can be more agile with my inventory instead of having to worry about making large payments until I sell a vehicle. It removes so much pressure and I give it five stars.”

Using the cash his floor plan frees up, his future plans include adding a service department so NY Auto Sales can be a one-stop shop for his customers. He is also considering opening a second location. He has a big vision for his business including adding variety to his inventory so his customers have more options while also improving the customer experience by creating a low-pressure sales environment.

Dmanhouori said his advice to new dealers is simply to get a floor plan and ignore the misinformation regarding fees that might keep a new dealer from getting one. However, he encourages dealers to ensure the fees are reasonable and easy to understand. “If you need help getting on your feet or want the ability to grow your business, then you have to sign up with NextGear Capital,” he said. “My floor plan has become part of my day-to-day business strategy and has helped my dealership thrive.”

The Keys to a No Fuss Title Management Process

When sourcing inventory, you need to focus on getting the best price possible and securing the vehicles your customers are looking for. While a necessary component, acquiring the titles to accompany them is often an afterthought. Title management can be a time-consuming and frustrating process for dealers, but it can be streamlined and stress free with a NextGear Capital floor plan. Here some ways your floor plan can improve your title management process:

  • Reduced Headaches – Tracking down titles after an auction sale can be a hassle, especially when you’ve purchased multiple vehicles on the same day. Fortunately, with a NextGear Capital floor plan the heavy lifting can be done for you by keeping tabs on the status and location of your titles, so you can focus on getting your inventory ready to sell.
  • Increased Security – When titles are being handled by multiple people, they can get misplaced or even end up in the wrong hands. When you have a NextGear Capital floor plan, your titles are kept securely in our title vault until they’re ready to go to their new owner so you don’t have to worry about them getting lost or mishandled.
  • Streamlined Process for Non-Auction Vehicles – In the past, it was not uncommon for dealers to have to wait days before their titles were processed and the received funding for their non-auction inventory. NextGear Capital has expedited this process by providing dealers with a prepaid FedEx Waybill inside of Account Portal so they can ship them overnight and have their funding request approved by the next day.
  • Detailed Title Information – Tracking the status of a title is one of the most time-consuming aspects of purchasing a vehicle. The newly enhanced Title page inside of Account Portal gives dealers greater visibility into the status of a title including its due date, the number of titles eligible for release, tracking information and title location so they’re always in sync with their titles.
  • Less Overhead – If you carry a large amount of inventory on your lot, you know that tracking down titles can be a full-time job and require additional staff to help oversee the process. If you have a floor plan that offers title management, you can quickly access information about your titles and release them when you’ve completed a sale from your mobile device or desktop. This saves you the expense that goes along with hiring a title clerk.

A vehicle can’t be sold without a title, so finding the right system to keep your titles organized is crucial. Fortunately, when you select a floor plan provider like NextGear Capital you have the resources available to help you manage your titles so you can focus on moving more metal.

Finding The Way Forward in July

Relationships Matter

Independent dealer Edwin Smith opened Blue Sky Auto in 2014 and has been a NextGear Capital client since 2015. He started out with a modest line of credit of $25,000 and has steadily grown to $350,000.

While he says his business model hasn’t changed much over the years, his relationship with NextGear Capital and his business partner has helped him remain successful no matter what has come his way. “I had previously worked with a different floor plan company but as soon as the rep from NextGear Capital walked into my door, I immediately liked him and decided to switch to NextGear,” Smith said. “I really think that my relationships with NextGear Capital and my business partner, along with the support of my staff, have been the key to my dealership’s success over the years.”

These relationships have been especially important for Smith in 2021. Despite the economic factors all dealers have faced, as well as a personal health challenge he has had to overcome, he has leaned on both NextGear Capital and his business partner to remain successful. Whether it’s finding ways to keep from overpaying due to high inventory prices, making sure the units on his lot are the right mix for his client base or just talking through the big decisions, it all adds up to a steadily profitable and successful track record.

Stronger Together

After spending 30 years in the automotive industry, Mark Weida, owner of Street Smart Auto Brokers in Colorado Springs, Colorado, said the pandemic was unlike anything he’d ever seen. “Since we weren’t considered an essential business, we were shut down for two months which was really difficult,” he said. “When we were finally allowed to reopen, I went to great lengths to make sure my customers and staff were safe by increasing our sanitization protocols.”

Weida says that he also decided it was time to make other adjustments to his dealership. “I made some changes to my staff and hired a new service and general manager who were willing to adapt to our changing business model,” he said. “I’ve also hired more mechanics so I can get the vehicles ready to sell as quickly as possible. My goal is to have each vehicle sold within 45 days of purchase and if they don’t sell by the 60-day mark, I turn around and sell them to another dealer.”

The biggest change Weida says he’s made is to his buying strategy. His dealership specializes in mid-sized used vehicles between 2 and 10 years old. While he uses some online buying platforms, for the most part he prefers to buy his inventory in person even though it takes more effort. He takes a team of buyers out so they can work multiple auctions over a few days. Recently, he had four buyers spread out at eight auctions over three days and purchased 38 vehicles. In comparison, he used to be able to buy the same number of vehicles in one day after only attending two auctions by himself.  “I’ve never seen a market this volatile,” he said. “First, inventory prices started to creep up, then the semiconductor chip shortage happened. Suddenly we were competing with new car dealerships because they didn’t want empty lots, so they started purchasing used vehicles which further added to our inventory challenges. I’ve talked to other dealers around the country who’re paying the same price for 2016 model vehicles that they were paying for 2018 model vehicles just a year ago.”

Despite all the challenges, Weida says that things are starting to look up. His dealership recently had the best week in terms of vehicles we sold since COVID. While he used to average between 80 to 100 vehicles on his lot, he now averages about 120 so he’s still been able to increase his inventory during this time. He is also currently the President of the Colorado Independent Automobile Dealers Association (CIADA) and a member of a NIADA board and committee. “It’s nice because I get to talk to other dealers, share ideas and help each other figure out solutions to problems,” he said. “I don’t remember a time in the industry it’s been this precarious, but I think dealers who’ve been able to adapt have been able to be successful. We don’t know what tomorrow’s going to bring but we know we’re stronger together.”

NextGear Capital Team Members Embrace Inclusion Virtually

Employees finding the way forward in July

Even though most NextGear Capital team members continue to work from home, they were recently able to participate in virtual events to celebrate PRIDE and Juneteenth. The PRIDE Employee Resource Group (ERG) board members recently distributed items to members’ homes. “Knowing that PRIDE would be a virtual experience this year, we wanted to ensure that we kept the energy, excitement and inclusiveness that comes with PRIDE month,” said PRIDE co-chair Erin Kahre. “This allowed us to get creative and we decided that we would assemble and deliver PRIDE-themed swag bags for our team members at home to enjoy! We had about 120 team members sign up to receive the bags.”

After distributing the items, the ERG held a selfie contest for team members to post pictures in their PRIDE shirt. The ERG plans to be back to the Indianapolis PRIDE parade in 2022, but was so pleased that they were able to do something to show LGBTQIA+ team members that they’re important and supported.

NextGear Capital team members also celebrated Juneteenth by participating in a virtual Cox Automotive discussion, “Why Investing in Diversity & Inclusion Pays Off” with Cox Automotive’s Inventory Solutions President, Grace Huang, and Mercedes Benz USA’s Chief HR Officer, Lars Minns. They shared their experiences and the benefits they’ve seen when automotive organizations focus on being more diverse and inclusive.

5 Things You Didn’t Know About Floor Plan Lending

While many dealers have heard about floor plans, they might think that they operate in a similar style to a local lender or a traditional financial institution by simply offering lines of credit. However, floor plan lenders know that independent dealers have unique needs and have designed their floor plans with that in mind by providing additional tools and services to help support their whole business. Here are 5 things you may not know about floor plan lending:

  1. Increased Flexibility – With additional cash flow, you have the flexibility to be agile. Do you need to quickly meet the demand of your customers, or do you want to try stocking your car lot with different types of vehicles? Working with a floor plan lender provides you with collateral and market insights so you can make quick changes when needed.
  2. Financing Designed for Dealers – Traditional loans are typically structured with rigid terms and don’t take into the consideration the needs of a specific business. Floor plan lenders like NextGear Capital have created different types of term plans. Whether you’re new to the independent dealer space, specialize in carrying lower priced inventory or are looking for lower principal reduction payments, you’ll be able to select the plan that best fits your needs.
  3. Account Management – Do you get tired of spending hours tracking down your titles after an auction sale? When you choose a floor plan lender that offers products like NextGear Capital’s Account Portal, you’ll have access to tools that can help you manage different aspects of your dealership like audits and title management, saving you time so you can focus on selling more vehicles.
  4. Additional Support – Whether it’s answering questions about your account or helping you figure out the best inventory to carry to reach your target customers, floor plan lenders provide you with the additional support you need to help your dealership reach its full potential.
  5. Transparent Financing – It can be difficult at times to know what you’re being charged for when your traditional lender has hidden fees buried in complicated loan terms. Floor plan lenders like NextGear Capital know how frustrating this is and make sure fees are upfront and easy to understand, so you don’t get hit with any surprises.

Just like shopping for the right vehicle, you want to feel confident you’re selecting the right financing for your dealership. If you’re looking to add inventory to your lot or want to make upgrades to your dealership, choosing a floor plan lender versus a traditional bank provides you with the cash to do so. You’ll also have access to additional resources to help support your day-to-day needs and run your business more efficiently. With the right floor plan, you’ll have both the financial means and expert industry support to navigate through challenging times and adapt as needed. Start floor plan lending today!

Dealer Spotlight Bobby VanSickle: Embracing Floor Plans

Bobby VanSickle wasn’t initially interested in getting a floor plan when he decided to start his own independent dealership. “I worked for a franchise dealership for 21 years but I wanted more work-life balance. So, about seven years ago, I decided to take everything I had learned and apply it to operating my own dealership and that’s how AFS Ohio got its start. I had heard about floor plans when I was on the franchise side but I didn’t know how they worked for independent dealers. I really didn’t need the additional cash flow at the time and I thought that’s all they provided but it turned out I was wrong.”

VanSickle said that he was approached by somone from NextGear Capital and that’s when he started to rethink his decision about getting a floor plan. “I had worked with MAFS during my time on the franchise side and NextGear Capital had been recommended by the Ohio Auto Dealer Association (OADA) but if it hadn’t been for my Portfolio Manager, I still don’t think I would’ve signed up for one. He really showed me how much of an asset having a NextGear Capital floor plan is and how it could help me to further develop my business.”

Bobby VanSickle Dealership AFS Ohio

It didn’t take long before Bobby VanSickle realized how much more his floor plan had to offer. “It’s nice to have the additional cash flow but what I really like is the convenience and the resources available to help manage my dealership. I’ve looked into other floor plan lenders but I think that NextGear Capital has better tools, a better audit process and I prefer their term plan structure. Before I had a floor plan, I used cash to purchase all of my inventory. I kept about 20 cars on the lot and sold around 15 each month. Now that I have a floor plan, I keep around 150 on the lot and sell 50 vehicles each month.”

While being able to grow his inventory has been great, he says the biggest selling point for him is Account Portal. “I love using the Account Portal! The dashboard gives me a quick overview to see what payments I have coming up and I’m a huge fan of Self Reconciliation because it helps me keep track of the inventory I have between my two locations and I can quickly and easily clear my audits. I also love the titles page and I’m on it everyday. The main reason I floor the vehicles I purchase from auctions is because I don’t have to worry about following up to chase down my titles. I can quickly check their status in Account Portal, it’s such a timesaver and I consider it a huge asset to my business.”

When it comes to COVID-19, Bobby VanSickle says he didn’t have to change his sales model at all. “I was already purchasing about 90% of my inventory online before the pandemic started so the only major change I had to make was making sure the dealership was sanitized more frequently to ensure that our staff and customers were safe. We’ve been really fortunate because AFS has done great despite the pandemic. In fact, we were able to set some new sales records this past year.”

Despite this, VanSickle says that just like other dealerships have experienced, sourcing inventory has been challenging. “Finding inventory can be difficult and when I do find it, it’s often overpriced. I look for the most competively priced inventory whether I source it from traditonal auctions like Manheim, or from wholesalers. I’ve started using tools like vAuto’s Stockwave to help me make more informed decisions when I’m looking to purchase inventory. I’m also fortunate to have my own truck hauling company so I can transport units easier. I’ve noticed that there are less transport options out there because I think so many more dealers are having to go further away to source their inventory.”

In June, VanSickle says he’s moving into a new two million dollar location he recently purchased. “I’m excited about being able to finally own instead of renting my dealership space. I love that it’s closer to home and is going to allow me to save money and also carry more inventory. It’s also going to have a full body shop so we’ll be able to offer different service options to our customers.”

Bobby VanSickle jokes that the advice he would give to a new dealer is to get out, but then says, “Don’t jump in too quick and overextend yourself. I think it’s a good idea that new dealers have a floor plan but every dealer should use it differently depending on their cash flow and business needs. In my case, I wasn’t really looking for the additional cash flow but for the convenience and flexibility that my NextGear Capital floor plan provides. It’s crucial to figure out what your needs are and choose the best floor plan that’s going to help you meet them and succeed.”