After acquiring a vehicle at auction, there are quite a few steps a dealer must take before that vehicle gets to their lot. After purchasing, transporting, reconditioning, and posting vehicle details online, it’s easy to see how it could take a while to get a vehicle back to the lot. Unfortunately, taking too long to put inventory on the lot and post it online can hurt a business. Luckily, there are ways to improve turn times using a car floor plan. Taking advantage of a floor plan gives dealers the additional capital and hours needed to refine processes that improve turn times.
Know your holding costs
Before a dealer can begin the process of improving turn times, it’s important to understand holding costs. The average dealer takes around seven to 10 days to make a car customer-ready. That being said, the top dealers are able to get cars ready in less than four days.
As every dealer should know, it costs money to keep a car on a dealership lot, even if it is just sitting in a parking space. Figuring out the dealership holding cost per unit per day is a beneficial metric that can help dealers keep their inventory balanced. Dealers that are interested can use these three floor plan finance formulas to figure out what individual unit holding costs per day are.
Purchase Inventory With a Car Floor Plan
Using a car floor plan means that dealers don’t have to use their dealership savings to purchase inventory. The up-front cos
t to put a floor planned vehicle on a dealer’s lot is incredibly minimal, which is good for dealers looking to improve margins. 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 used 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 car 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 dealership turn times.
When a dealer decides to floor plan, it saves time at auction and reduces administrative tasks. For example, cash-buying dealers often must take additional steps and keep track of more paperwork at auction to ensure their new inventory is properly purchased. With a floor plan, dealers simply bid and put the unit on their line of credit.
Car floor plan companies can also assist with titles. Because of the constant buying and selling of cars, dealers have the ongoing responsibility to manage titles for a variety of different vehicles. Though dealers need to have a process in place to handle titles, dealers that floor plan vehicles are often able to offset a wide variety of title management tasks. Additional title work from select states can also often be requested, leaving dealers free from an afternoon at the DMV.
Post Vehicles Online
One of the most realistic ways for a dealer to turn vehicles quickly is to list inventory online as soon as possible, 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 customers can see available dealership inventory, which can then help improve dealer turn times. Dealers should aim to have every vehicle online within 24 hours of arriving at the dealership.
Transportation
Another way to improve turn times 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.
Ready to improve turn times with a floor plan? Get started here.