Page 20 – NextGear Capital

How Independent Dealers Can Fight Shrinking Margins

August 9, 2018August 8, 2019

The rising costs of acquiring inventory mean compressed margins for dealers, and an increased focus on methods to improve profits. For independent dealers looking for a few operational actions they can take to help improve numbers, consider the following suggestions.

Source Smarter
It’s often easier for dealers to make their money at acquisition. Take note of the units that sell well and their typical margins. From there, determine an acceptable range that your dealership will stick to for acquiring similar units.

Beyond just researching inventory that sells well on your lot, consider the options available to source inventory. Physical auctions, digital auctions and a local dealer network are conventional inventory sources. Is there a particular channel where can you typically get the best deals to stock your dealership lot? Develop a dealership methodology to acquire units. For example, perhaps before going to a physical auction, check what’s available on OVE or Manheim Express.

Improve Speed to Market
Average dealers are typically able to get a vehicle front-line ready in seven to 10 days. Of course, there are a lot of factors at play that can add or decrease the time it takes to get a vehicle ready for customers. Transportation, reconditioning, and potential repairs are all common components that increase the overall time it takes to get a vehicle customer-ready.

Though these delays mean that units might not be on your lot right away, posting units on digital dealership platforms shortly after acquiring vehicles give potential customers a chance to digitally view inventory coming soon. The Cox Automotive 2018 buyer’s journey study found that a majority of car buyers that shopped online spent 60 percent of their time looking online for vehicles. It’s likely that by the time a customer wants to stop by to view a particular unit, it’s already front-line ready and available for a customer to test drive.

Have a Plan for Aged Units
Every vehicle at your dealership needs to have an exit strategy from the moment it reaches your lot. No dealer wants to take inventory back to auction or digitally wholesale it to another dealer. A defined strategy for aged inventory can ensure that units don’t fall through the cracks. For many dealers, there’s a tiered strategy with different courses of action at the 30, 45 and 60 day marks.

Operational changes don’t lead to results overnight. However, taking deliberate steps to improve overall operations will often help dealers realize additional profitability.

Cash vs. an Auto Floorplan

August 2, 2018July 20, 2021

dealer using the computer while on the phone

For dealers that purchase inventory with cash, dealership cash flow primarily hinges on a dealer’s ability to sell vehicles for more than the cost to acquire them. In theory, earning a profit and recouping costs should be a simple task. However, many cash-buying dealers eventually find that their dealership’s growth and ability to acquire inventory is often limited by their overall cash flow, which can be even further restricted by a slow season or issues making sales. Though it may often seem like purchasing inventory with cash is preferable to other options, the additional flexibility and cash flow afforded by an auto floorplan provider can assist in growing overall business operations.

Purchasing Inventory With Cash
A lot of dealers often prefer to use cash to buy vehicles. It allows them to own the vehicle in full, it doesn’t collect interest or fees, and when the car is sold all profits go to the dealership. However, dealers often don’t consider the full costs of using dealership savings.

Buying inventory with cash means that money will be tied up in the vehicle’s value. Those funds can’t be used for other opportunities that could potentially grow dealership operations. Like any business, there’s a set amount of cash set aside for a variety of expenses, like payroll, facilities and operational tools. If a dealer is using cash to pay for both inventory and regular operating expenses, how much is left over to really re-invest in the business?

Additionally, when a dealer purchases a car with cash, their cash depreciates along with the value of the vehicle. The longer a vehicle stays on a dealer’s lot, the more their initial investment will depreciate. By the time a dealer realizes that a vehicle has depreciated, it is often difficult to recoup costs due to overall holding costs.

Using An Auto Floorplan
With an auto floorplan provider, a dealer purchases a vehicle and has no personal investment in the vehicle until the first payment is due, which is typically only a small fraction of the original vehicle value. Depending on a dealer’s contracted terms, that could potentially be 30 days after acquiring the vehicle. For example, floor planning dealers aiming to turn inventory approximately every 60 days will have very little of their own cash tied up in a vehicle, especially if it sells within that time frame.

Even if a vehicle isn’t sold during a dealer’s preferred time-frame, dealers are able to use the extra funds that aren’t tied up in the vehicle to make payroll, pay the bills and keep the business up and running.

Improve your dealership’s purchasing power and cash flow flexibility with a floor plan finance solution. Connect with your local representative to learn more, or apply for credit.

Source Smart, Buy Local with Manheim Express

July 25, 2018July 20, 2021

Managing your NextGear Capital floor plan financing account

Experienced dealers accept that in order to keep business going, they need a stable stream of inventory to keep their lots stocked. Dealers looking to acquire vehicles have a number of options available to purchase a variety of inventory for their lots. However, it isn’t always possible for dealers to take advantage of traditional options like visiting a physical auction, or buying inventory online from a few states away. Dealers need flexible methods to purchase local inventory.

Launching in July, Manheim Express will give dealers unrivaled access to fresh local inventory and trades. Compared to traditional inventory buying channels, Manheim Express offers a few key benefits.

Buy Local Inventory First
When searching for inventory, it’s often much easier to look for local buys and trades first. Unfortunately, purchasing inventory from other dealers in the local area isn’t necessarily the simplest process. However, dealers that take advantage of Manheim Express have the unique ability to search first for local inventory. Beyond just saving on transportation costs, dealers that source locally have more opportunities to build a bigger network.

See Exactly What You’re Going to Get
A few pictures don’t always give dealers a full view of a vehicle they’re acquiring via digital channels. With Manheim Express, 360 degree imaging ensures dealers have a full view of the vehicle before making a purchase.

Enhanced Seller Disclosures Available
Condition reports provide third-party verification of the current condition of the vehicle. When a vehicle comes with a condition report, dealers can be assured of the quality of the unit they’re interested in purchasing. Enhanced seller disclosures on units purchased via Manheim Express can further instill purchasing confidence.

Take advantage of the flexibility Manheim Express provides to purchase local inventory and stock dealership lots. Dealers interested in buying on Manheim Express can learn more by visiting mymanheim.com/express/ or search for inventory by clicking here.

Evaluating Dealership Floor Plan Options

July 19, 2018July 20, 2021

Dealers looking for additional capital have a number of options to consider, and many floor plan providers offer funding services. However, dealers should consider a number of important factors before making a selection between their potential floor plan options.

Accessible Account Management
Dealers use a variety of platforms to maintain daily operations. When looking at floor plan options, consider what kind of account management capabilities are offered. Can you see your account status at a glance? Can you view important reports about inventory types, outstanding balances and inventory turn time? Easy access to a comprehensive account management platform is essential to manage daily floor planning activities so dealers can quickly get back to business.

Dealers who select NextGear Capital have 24/7 access to Account Portal. Account Portal is the NextGear Capital account management platform that gives dealers the tools they need to manage their dealership floor planning information. Comprehensive dashboards give dealers a high-level overview of important dealership metrics. Additionally, dealers can view inventory, pending transactions, titles, submit new vehicles for financing, make and schedule payments and also view account analytics.

Responsive Customer Service
Dealers require business partners that understand their unique business needs. Can you easily contact your floor plan provider to resolve issues? Is there a representative in the area that can visit your dealership?

NextGear Capital dealers have access to a business partner that is committed to service. Every dealer is supported with a local, dedicated representative, and has additional options for online and over the phone assistance, giving your dealership the help you need, when you need it.

Efficient Solutions
Dealers evaluating their floor plan options should consider any additional solutions and services provided with their floor plan. Some dealers may prefer to use a number of independent vendors, it can be convenient to select a floor plan lender that easily combines with other services.

Dealers that pick NextGear Capital have unique access to solutions that can reduce administrative efforts. For example, through a partnership with Ready Logistics, NextGear Capital dealers can floor plan their transportation costs. Additionally, solutions like Rapid Pay allow dealers to put non-auction purchases and overnight titles with a complementary FedEx waybill.

How would NextGear Capital fit into your dealership operations?
NextGear Capital offers dealers the buying power and solutions needed to transform dealership operations. Want to learn more about how NextGear Capital can benefit your dealership? Let us know!

Avoid Late Fees When You Enroll in AutoPay

July 12, 2018July 20, 2021

Managing the daily operations of a dealership can be hectic! Dealers see their time as more valuable than ever, and hate the inconvenience of constantly keeping notes on which bills need to be paid when. However, NextGear Capital dealers enrolled in AutoPay are no longer worrying about missing payments! AutoPay can mean peace of mind for busy dealers who simply don’t have time to manually schedule and oversee payments on their auto floorplan.

The best way to stay ahead of late fees.
Available via Account Portal, AutoPay allows dealers to focus on daily operations without the worries of a potential missed payment.

Get Started with AutoPay
Enrolling in AutoPay is easy and free! Follow these four steps to sign up.

1. Log in to Account Portal

2. Click “My Account” on the top navigation bar.

3. Select “Account Management”

4. Find the box labeled “AutoPay” and move the “Enrolled” toggle to say “Yes.”

AutoPay gives dealers the chance to manage their auto floorplan with limited payment interruptions. Enroll today!

Get MORE Control Over Your Auto Floorplan
AutoPay combined with other NextGear Capital offerings like Transportation Financing, Rapid Pay and Audit Improvements mean dealers are empowered to customize and streamline their operations. Learn more about incorporating these tools into your operations by contacting us today!

Key Independent Auto Dealer Floor Plan Metrics

June 28, 2018July 20, 2021

Many auto dealers have procedures in place to track dealership efficiency and profitability. For example, most dealers keep a careful eye on their monthly sales and overall revenue. However, those looking to further optimize business operations in conjunction with their independent auto dealer floor plan should consider monitoring a few other key metrics.

Aging Inventory
Vehicles depreciate the longer they’re around. Holding onto inventory for too long can tie up dealership cash flow. In addition, if a dealer paid cash for that vehicle, their initial cash investment decreases with the car’s depreciation. Take a look at your lot. How many vehicles have been there for three months or longer? Consider developing an aged inventory exit strategy for those vehicles to stave off further depreciation.

Turn Time
A dealer’s turn time is the average time a car stays on the dealership lot, and how many times a year a dealer can sell their entire lot. For example, if vehicles on a dealer’s lot stay for an average of 40 days, a solid estimate would be that dealer turns their lot 9 times a year. Tracking turn time can help dealers monitor the overall health of their dealership.

Dealership Holding Cost Per Day
Keeping a dealership running comes at a price, and every car on a dealer’s lot incurs costs, despite whether a vehicle sells or not. To truly get an idea of how much it costs for your dealership to keep a vehicle per day, you’ll need a solid idea of your monthly expenses. An estimate of your dealership’s holding cost per day can help guide operational decisions. For example, how long to hold on to inventory before taking it to wholesale at auction.

Keeping tabs on these measurements can help dealers effectively understand how they currently manage inventory and cash flow, and how they can potentially use the additional cash flow flexibility from an independent auto dealer floor plan to further optimize business operations.

Don’t know how to calculate your turn time or holding cost per day? Walk through three floor plan financing formulas every dealer should know to see where your dealership currently stands. If you have more questions about how to use this information to benefit your dealership, click here, and we’ll connect you with your local representative!

NextGear Capital Announces New Auditing Tool

June 19, 2018July 20, 2021

To make a challenging audit process easier, NextGear Capital will be introducing a self-reconciliation tool that saves dealers time and provides them with greater control over their vehicle audits. Combined with other recent audit process improvements, dealers will be able to experience up to 80% fewer audit-related interruptions and have the ability to reconcile units seamlessly from their devices.

With a mobile-first solution for reconciliation, dealers are empowered to take charge of their audits through a simple three-step process via NextGear Capital’s Account Portal. After logging in, dealers select a vehicle, take four photos, then submit them to clear outstanding audits in real-time. Overall, this significantly reduces the amount of time it takes to resolve audits and allows dealers to avoid floor planning delays.

“After hearing dealer opinions on the audit process from our annual client survey, we were determined to make streamlining the entire auditing experience one of our top priorities,” said Randy Dohse, NextGear Capital senior vice president of operations. “We wanted to build more trust with dealers through increased transparency and simplify the overall experience to return time back to them so that they can focus on their business. Improving customer experience and addressing customer feedback with effective solutions are critical components for any business.”

Dealer feedback was crucial in determining where improvements to the auditing process could be made. After conducting a comprehensive survey to gauge dealer feedback, results showed that the audit process was one of the more time-consuming tasks of daily floor plan management. These results inspired NextGear Capital to further improve the auditing experience for dealers everywhere.

“None of us love the audit process. So I was very straightforward with our account rep and actually they had one of the regional guys fly in to talk to us about what we were feeling and what we were experiencing, and why that was such an issue for us,” said Heather Moreno, owner of Lightning Motorsports in Grand Prairie, Texas. “They listened, they made changes, they’ve streamlined the audit process, they’ve worked with the auditors and I have found NextGear Capital to be incredibly responsive.”

Efforts to streamline the auditing process have changed the way dealers interact with NextGear Capital. Beyond the transparency and flexibility that the Account Portal’s self-reconciliation tool provides, dealers now get twice as much time to fully clear an audit, streamlined notifications and the ability to advise on scheduled vacation and auction days, all of which can be easily done from a smart phone or tablet, making the NextGear Capital auditing process one of the most flexible in the market.

“When we revised our audit reconciliation process, we knew that we were tackling a major pain point for dealers,” said Lucas Hancock, NextGear Capital senior director of risk. “Empowering dealers to self-reconcile units combined with the most flexible auditing process in the market will positively transform how we communicate with and conduct business with dealers for the foreseeable future.”

For dealers that are constantly on the go, NextGear Capital’s self-reconciliation tool and audit improvements offer the benefit of a flexible and efficient process, with fewer interruptions and more time to get everything done. Dealers will also receive improved visibility through the “My Audits” tab in their Account Portal dashboard, which will show units that need to be verified, audit due dates and potential financial impact if no action is taken. My Audits is set to launch this summer, with additional self-reconciliation features to follow.

Access to an industry-best combination of improved flexibility, functionality and convenience on audit processing means dealers have more time to concentrate on dealership sales and operations.

For more information about NextGear Capital’s self-reconciliation tool launching later this year or the audit process, visit ngc.dev3.rt.gw or contact a local NextGear Capital representative.

Move and Purchase Inventory with Manheim Express

June 14, 2018July 20, 2021

A prevailing truth for many dealers is that what sells well on one dealer’s lot might not sell on another dealership lot. Discerning automotive dealers understand that continual cycle of fresh inventory is needed, and when a dealer notices some of their vehicles aren’t selling, or that they need to acquire more inventory, flexible solutions to buy and sell inventory are vital.

Of course, every independent dealer has options when it comes to buying and selling inventory. Dealers can go to auction, use digital platforms, or even trade with the dealership down the street. However, independent dealers are often pressed for time, and may not always have the luxury of buying and selling vehicles through those avenues.

Launching later this year, Manheim Express will allow vehicle buyers and sellers access to a fast, easy, self-service method to purchase and offload inventory.

Dealers wanting to sell units will have an unmatched volume of buyers across the entire Manheim Marketplace, which is comprised of Manheim.com, OVE, ManheimExpress.com in addition to OEM-specific marketplaces. Additionally, sellers will be equipped with the information they need to evaluate their selling options after completing a few basic steps on the Manheim Express mobile app.

Scanning a vehicle’s VIN will present sellers with the unit’s estimated value based on the Manheim Market Report (MMR), vehicle history, and manufacturer information, if available.

From there, a dealer will be able to gauge how they want to retail their inventory; either by getting a Guaranteed First Bid™ (GFB), posting the vehicle in the Manheim Marketplace, ordering an inspection or consigning the unit to the closest Manheim auction location.

Selecting the option to get a GFB ensures that if a vehicle doesn’t sell for a minimum set price after being listed for two business days, Manheim will purchase the unit at the GFB price. For dealers who want to sell inventory quickly, the GFB offers dealers the opportunity to have a check in hand in two business days.

For dealers who don’t want to list across the Manheim Marketplace, there’s also the option to send inventory to the Manheim location of their choice.

Each listing gets shared across the entire Manheim Marketplace, and simplifies the process to create inventory listings. 360-degree imaging lets sellers create tagged images that show extra vehicle details. Additionally, dealers also have the opportunity to order a condition report from an independent inspector. When ordered from the Manheim Express App, an inspector will come to a dealership lot within 72 hours, making inspections easy and convenient.

Combined, the 360-degree images and inspection report give buyers a comprehensive look at vehicles available for purchase, and help to reassure buyers of a unit’s condition when buying before seeing it in-person.

Manheim Express buyers have unrivaled access to fresh inventory and local trades. To search inventory available, visit mymanheim.com/express/.

For dealers interested in selling across the Manheim Express platform, download the app from the App Store. Visit mymanheim.com/express/ for more details.

The old inventory of one dealer can be brand new inventory to another dealer. Take advantage of the simple flexibility Manheim Express presents for both buyers and sellers to list inventory right from their lots to the world’s largest wholesale marketplace.

Comparing Floor Plan Lenders

May 31, 2018July 20, 2021

Dealer considering the difference between a floor plan and auto bank floor plan

Floor planning partners are often an integral part of dealership operations. Comparing various floor plan lenders and choosing a floor plan partner can be an involved decision for a dealer. Certainly there are a number of options available for dealers to get financing. However, selecting a lender as a dealership partner involves more than just the ability for a dealer to access capital. Partnering with a lender that can not only give a dealer the required funds to purchase inventory, but can also help save dealers time and preserve cash flow should be considered in a search for floor plan lenders.

Technical Capabilities
Independent dealers are incredibly busy. At a moment’s notice, dealers should be able to check on the current status of any vehicle on their floor plan, from any device. Additionally, dealers need the capability to get a holistic view of their entire account. The ability to quickly view reports about outstanding balances, inventory types and vehicle turn times mean that dealers don’t have to be concerned about building time-consuming reports and can swiftly get back to business.

NextGear Capital dealers have 24/7 secure access to their account via Account Portal. Dashboards give dealers a high-level view of important metrics and account details. Additionally, dealers have the ability to securely look at inventory currently on their floor plan, schedule payments, view vehicle titles, account analytics and submit new inventory for financing.

Customer Service
Providing superb customer service is often a cornerstone at any dealership, and dealers often expect that same level of customer service from their floor plan lenders. Do you have a local representative in your area? Is it easy to resolve any floor planning obstacles? If your business grows significantly, will your floor plan provider be able to keep up? It is important to ensure your floor plan provider has the ability to take care of your dealership’s individual business needs in an the fast-paced dealership environment.

Dealers that choose NextGear Capital have access to a dealership partner that is dedicated to service and customer-centric solutions. Every dealer has a devoted account manager to assist with any floor planning needs. Additionally, the average time to connect to a NextGear Capital team member on the phone is 10 seconds.

Integrated Solutions
Dealers need business partners that help provide seamless solutions that can ultimately save dealers time, and preserve overall cash flow. Some dealers may prefer to use independent business partners for various tasks, but dealers should consider the integrated solutions that their floor plan lender offers.

Solutions such as Rapid Pay give dealers the ability to floor plan non-auction purchases and overnight titles with a complementary FedEx waybill. Additionally, NextGear Capital dealers have the unique ability to floor plan their inventory transportation costs thanks to a partnership with Ready Logistics.

Though selecting a floor plan provider isn’t a simple decision, having standard criteria to compare floor plan lenders should aid dealers in making a final decision.

Common Independent Dealer Floor Plan Mistakes

May 24, 2018July 20, 2021

Dealer using the self reconciliation functionality on Account Portal

Independent dealers are in control of how they use their floor plans. Compared to using cash, floor plans have the ability to help free up time and dealership resources. However, properly managing an independent dealer floor plan comes with its own set of management responsibilities. Keeping a few key components in mind can help dealers find success, and avoid the following mistakes.

Dealers Forget Floor Planning Is a Cash Flow Tool
Floor plans are meant to help dealers alleviate their cash flow needs. When inventory is purchased with cash, dealers tie up the use of their dealership savings. Without a floor plan, dealers can’t use their cash on hand for other expenses. What could those funds be doing if they weren’t tied up in vehicle inventory? Dealerships could hire more people, improve service operations, or put more cash towards dealership expansion.

Dealers Floor Plan Carelessly
Though a dealer might have access to a $300,000 line of credit, that doesn’t mean they should immediately purchase $300,000 of inventory. If a dealer purchases more inventory than what they can reasonably sell in a month, they’ve put themselves in a situation where they might not realistically be able to pay back the initial loan amount in a timely manner.

Dealers Don’t Actively Manage Their Floor Plan
Independent dealer floor plan providers monitor certain cues that may reveal that a dealer might be dealing with some issues. Those main cues are turn times and insufficient funds (NSFs).

Turn times will often signal dealership health. The faster a dealer can sell a car, the faster a floor plan loan gets repaid. Though a vehicle might just be sitting on a dealership lot, that car is still depreciating and consuming dealership funds and resources. The longer the vehicle sits, the more it will depreciate, and the more it will cause concern for a floor plan lender.

Insufficient funds, or NSFs, are a critical indicator for floor plan lenders that a dealer isn’t actively involved in managing their floor plan. It’s often a sign that there are underlying issues within a dealer’s account.

A floor plan is meant to be a tool to help dealers succeed. By actively managing a floor plan, dealers can potentially avoid these mistakes and build a thriving and profitable dealership. Have questions about floor plan management? Let us know!