Page 32 – NextGear Capital

Be Proactive in Retaining Your Customers

August 31, 2015July 8, 2021

Let’s be honest: the squeaky wheel gets the most oil. Dealers who are vocal and heavily involved with the auction staff tend to receive the most attention. Many times, these dealers are also the more prominent buyers and sellers, which means if they leave, your bottom line immediately notices the impact.

But what about the smaller dealers, the ones who aren’t the squeaky wheel and one day stop attending your auction? The reality is, these “little guys” make up the majority of customers in the lanes. While these dealers might not spend the big bucks individually, it’s important to proactively retain them because as a group, their numbers add up and can have a huge impact on your profit.

Here are some steps to ensure that you’re not only growing your dealer count with new business but retaining your current customer-base as well.

1) Ask for feedback and REALLY listen to your customers
From reconditioning and arbitration to customer service, it is important to know what your customers think of you. More importantly, allowing your customers to have a voice will help them feel valued and promote loyalty.

One way to accomplish this is through email surveys to dealers. There are a variety of options online to choose from to conduct your survey. While you might have to shell out a little money for this service, the return on investment is potential valuable customer insight into your business. With this knowledge, you will be well prepared to be responsive and make quick adjustments to resolve any unknown challenges, market changes or new competitive advantages.

2) Pull Monthly Lists
Did you know that you have some valuable data right there in your auction’s operating system? By looking at your sell lists each month, you can see who’s been 1) buying/selling cars or 2) absent. Volume variations and attendance reductions that aren’t deemed “seasonal” can be an early red flag into a bigger picture.

With this data, you have the ability to reach out to customers and gather additional information to resolve any issues before they mount. Assigning one person to this task each month for as little as one hour can be a game changer for your auction, as this personal touch can go a long way towards helping your customers feel important.

3) Promotions
I’ve spoken before on the benefits that promotions can have for auctions. In this case, I’m speaking about holding promotions specifically geared towards keeping the smaller dealers in the lanes. Identify what is important to the smaller dealer by asking for feedback and put an action plan in place to reward them throughout the year. This dealer segment has less working capital than the “large guys” and even small gestures can go a long way.

The reality is, three small dealers leaving your auction per month will not impact the numbers enough to be alarming. But if that rate continues throughout the year, your auction will find itself waving goodbye to almost 40 buyers/sellers. At five purchases per month, per dealer, this is a loss of approximately 2,400 sales per year! It is clear that these dealers can pack a punch on the bottom line. Staying proactive as opposed to reactive will not only help you retain your current customers but also create raving fans!

Top 5 Components of Customer Service

August 27, 2015July 8, 2021

Customer service plays an integral part in the success of any organization. According to a recent NewVoiceMedia Study, U.S. companies lose $41 billion a year due to poor customer service. At NextGear Capital, we understand the importance of and place a high value on providing customers with the best customer service.

Here are the top five components that make up great customer service.

1. Overall Customer Experience
Individuals have one main purpose for contacting a customer service center: to resolve an issue. No matter what that issue is – from making a payment to disputing a late fee – it’s imperative that the customer receives an experience that promotes trust and a feeling that the person on the other line truly cares about the issue at hand.

2. Top-tier knowledge
When a customer calls in to a customer service center, they want to speak to someone that is knowledgeable about their industry. What’s more, customers want someone that understands the actual needs of their specific business, as no two customers are the same. Two ways that NextGear Capital accomplishes this is through extensive training of our employees on the ins and outs of the industry. Additionally, our technology solutions allow our representatives to pull up information quickly so to speak accurately to the account.

3. Friendliness
Mother Teresa is quoted as saying “Kind words can be short and easy to speak, but their echoes are truly endless.” For customer service employees, it’s important to maintain a friendly and calm attitude, no matter the temperature of the customer. One way to accomplish this is through positive language. Phrases such as “Happy to help” or “Great question, let me find that out for you” promote a friendly, caring attitude, which can go a long way in creating real customer engagement.

4. Promptness
We live in a day and age where fast and speedy service are what separate the top companies from the rest. In the automotive remarketing industry, timely service is essential for dealers who are constantly moving inventory. To-date this year, 90 percent of NextGear Capital customers have had their calls answered in 30 seconds or less – a testament to our understanding of the need for prompt service.

5. First-call resolution
According to the SQM Group, a 1% improvement in first-call response equates to $276,000 in annual operational savings for the average call center. This shows that first-call resolution is critical for companies when it comes to retaining current customers. Beyond increased customer satisfaction, first call resolution also aids organization’s by reducing operating costs through decreasing the number of customers that need to call back.

Committed to Our Community – Worldwide

August 25, 2015July 8, 2021

There is no denying that volunteering provides a feeling of strengthening your community. Giving back is a core value here at NextGear Capital, not only at our corporate office but for our employees based around the country!

Some may think it could be a challenge for non-corporate employees to get involved and give back, as they aren’t surrounded by hundreds of co-workers. However, we are fortunate enough that our employees throughout the country hold this value in high esteem.

One example of this is our Midwest team. This group has led the way this year by participating in our two national campaigns to date – No Excuses, a month-long movement that encouraged employees to volunteer in their community, and Drive Away Hunger, a campaign that aids local food banks across the country.

As a group, the Midwest team logged over 50 hours of community service and donated $620 to their local food bank.

In addition to our Midwest group, the NextGear Capital Florida team recently took the initiative to organize a volunteer project during their two-day regional meeting.

Earlier this summer, the entire team spent a day at the Florida Future Farmers of America Leadership Training Center. They endured the heat, bugs and snakes as they dug, cut, sanded, tied, laughed, sweat, and in some cases, bled together as a team. The end result? A brand new Creation Station was built, which will be used for many years to come as an educational tool for team and leadership development. During their time there, the group was also able to mentor Frostproof FFA students on topics such as the environment and desire to be leaders amongst their peers.

“What an amazing two days of learning, sharing and giving back to our community, and we have NextGear Capital and Cox Automotive to thank for the outstanding opportunity.” – Stacy Fields, South Florida Regional Director

Not only is community involvement a value for our U.S.-based employees, but also for our employees worldwide! Both our Canada and United Kingdom offices participated in Drive Away Hunger and donated a combined total of 588 pounds to their local food banks! Our U.K. office even made their local newspaper because of this initiative!

These are just a few of the many examples of our employees giving back to their communities. Regardless of where we may live and work, as NextGear Capital employees, we all share the belief of being committed to our community.

Top 5 Floor Planning Mistakes by Dealers

August 19, 2015July 8, 2021

When it comes down to it, floor planning in its essence is a very basic process: you open a line of credit, purchase inventory with said credit, sell inventory and pay back the loan. Intertwined amongst the basics are a lot of moving parts that at times can cause complications. While there are many variables out of the dealer’s control, from the economy to auction prices, there are a few that are essential in driving success. Regarding tangibles that dealers can control around floor planning, it’s important to understand the most common mistakes made.

Here are the top five mistakes dealers make when it comes to floor planning.

1. Mismanaging cash flow
There’s an old saying that goes “cash is king.” That’s true whether you’re running a deli or buying and selling in the automotive industry. Cash flow is the number one key to a successful business. It can positively and negatively affect everything from advertising and staffing to acquiring business tools such as vAuto’s Auction Genius. And what’s more, it certainly can impact your relationship with creditors.

One of the benefits of floor planning is it frees up cash for other expenses and business investments. However, a common mistake is not taking into account that many of these bills mature at the same time. Improper cash management may cause dealers to get into a borrowing cycle that provides little wiggle room and thus creates a shell game of money cash from one debt to another constantly.

2. Over-extending
The automotive industry is full of companies that provide lines of credit for purchasing inventory; in fact, there are nearly 200 in the U.S. currently. It’s important to manage your line of credit so that you can grow your business responsibly. One scenario that happens far too often is dealers over-extending themselves when it comes to inventory. When you purchase more inventory than you can sell, you put yourself at risk if you can’t make the payments.

Moral of the story: Just because you are approved for a $250,000 line of credit doesn’t mean you have to go out and spend it all at the next auction. Buy in proportion to your sales figures.

3. Communicate Inadequately with Floor Plan Provider
No business likes surprises, especially finance companies. You should strive to keep your floor plan provider abreast of any changes, updates or issues regarding your business. Have a payment you won’t be able to make on time? If you have a payment that you know in advance you won’t be able to make, let them know as soon as possible. By being proactive and honest, you stand a better chance of your floor plan provider working with you to help resolve issues.

4. Raise Red Flags
Most floor plan providers keep an eagle eye on all accounts in search of red flags that alert them to issues with dealers. There are three specific red flags that your floor plan company is watching for: NSF’s, Collateral Audits and Turn-times.

NSFs
Insufficient funds (or NSFs) are directly correlated to points #1 and #2 above. When you can’t make your payments on time, or your checks/ACH’s bounce, rest assured that your floor plan provider is now watching your account closely. This is one of the biggest indicators that there is an issue with how you’re managing your account and ultimately how the creditor views their chances of being repaid. This puts the floor plan provider at risk as they advanced funds on a certain piece of collateral.

Collateral Audits
Your floor plan company is a collateral-based lender. And that collateral is the physical inventory – not the title of the vehicle. As with any lender, it’s important that the collateral can be physically verified based on the agreed terms, usually monthly. When your floor plan provider can’t verify inventory, another flag is raised. If you need to move inventory to another location for a big tent sale or to an auction, let your floor plan provider know.

Turn Times
The NIADA and NADA have done extensive studies that show used vehicles should be turned every 45 days, as your ability to make money on aged inventory goes down over time. This may not fit all dealer’s business models; however, your floor plan company is going to get nervous if they see a vehicle on your lot for an extended period. Many times dealers hold inventory “looking for the right buyer” instead of cutting their loss and moving the unit at an auction. This allows them to acquire fresh inventory to market to customers.

5. Improperly Manage Account
When you open an account with a floor plan provider, it’s imperative that you understand the exact expectations the company will be holding you to. Find out when payments are due and what different tools are at your disposal. By taking advantage of these resources, such as valuation tools or payment schedules, you can make it easier on yourself when it comes to running your business.

Another great source is your floor plan or auction representative. These individuals meet regularly with other businesses and sister companies, so they are abreast on what’s happening in the industry and can provide some great insight.

NextGear Capital Expanding in Carmel

August 19, 2015July 8, 2021

CARMEL, Ind. (Aug. 19, 2015) – NextGear Capital, an automotive financial services provider for auto dealers, announced plans today to add up to 200 new jobs by 2018.

The company plans to make substantial investments exceeding $50.88 million to lease and renovate its corporate offices in Carmel to support its growing customer service and technology divisions. Additionally, NextGear Capital plans to upgrade its technology infrastructure and software to better serve its more than 20,000 customers.

“Indiana stands out as a regional leader for job growth, and companies like NextGear Capital repeatedly choose Indiana as a home for their expansions because of our pro-growth policies and low-regulation business environment,” said Governor Pence. “One of our greatest strengths is in our workforce, and after meeting with the hardworking Hoosiers who make NextGear Capital’s success possible back in March of 2013, I’m excited to announce today this additional expansion here in the Hoosier State.”

Today’s announcement marks the company’s second expansion in recent years. In 2013, Pence joined NextGear Capital to announce the company’s headquarters expansion in Carmel, creating up to 169 new Hoosier jobs. The company has since exceeded those plans, now employing more than 430 Indiana- based associates. NextGear Capital is currently hiring customer service and technology associates. Interested applicants may apply at http://jobs.manheim.com/careers/nextgear-capital-jobs.

“NextGear Capital’s success can be attributed to our talented workforce, both here and across the country, who work diligently every day to ensure our customers’ needs are met and embody the work ethic and family values that Indiana is known for,” said Brian Geitner, president of NextGear Capital.

NextGear Capital serves more than 20,000 automotive dealers with inventory financing services across the United States, Canada and the United Kingdom. The company is a part of Cox Automotive, which includes industry-leading brands Autotrader, Kelley Blue Book and Manheim. Originating more than $13 billion in dealer inventory financing last year, NextGear Capital has become the global leader in inventory finance for independent auto dealers. Recently, the company’s chief technology officer Bryan Everly was named CTO of the Year for Private Companies with over $100 Million Revenue by the Indianapolis Business Journal and TechPoint.

The Indiana Economic Development Corporation offered NextGear Capital Inc. up to $1,600,000 in conditional tax credits and up to $85,000 in training grants based on the company’s job creation plans. These incentives are performance-based, meaning until Hoosiers are hired, the company is not eligible to claim incentives. The city of Carmel supports the project.

“We were thrilled last year when NextGear Capital moved into its new corporate headquarters in Carmel, which we took as a reflection of the strong high-tech business community we enjoy,” said Carmel Mayor Jim Brainard. “NextGear Capital has been one of Indiana’s true technology success stories and today’s news of another expansion in its workforce is great news for Carmel and all of central Indiana.”

Growing companies like NextGear Capital continue to select Hamilton County for their job creation plans. Earlier this summer, nonprofit computer coding school Eleven Fifty Academy and corporate coding firm Eleven Fifty Consulting announced plans to grow their operations, committing to create a combined 92 new jobs in the coming years.

Regulatory Issues Remain in the Spotlight

August 17, 2015July 8, 2021

stack of titles floorplan companies hold

The Consumer Financial Protection Bureau’s (CFPB) increased regulation of auto lenders remains a focal point of interest for dealers and lenders in 2015. As the agency continues to tighten its grip on the industry, we wanted to provide some highlights of the organization’s actions of late.

Extension of oversight to non-bank finance lenders
In June, the CFPB announced a new rule providing the agency with power to supervise larger non-bank auto finance companies. Any auto finance company that makes, acquires or refinances 10,000 or more loans/leases in a year is subject to this new ruling. According to CFPB Director Richard Condray, this rule “will help ensure that larger auto finance companies treat customers fairly.”

Here is what the CFPB will be evaluating:

Fair marketing and disclosure of auto financing terms
Accuracy of information sent to credit bureaus
Fair treatment of consumers when collecting debt
Nondiscriminatory lending practices

This new ruling correlates with a statement Cordray made during a field hearing in Indianapolis last year:

“It should not matter whether you get a loan or lease from a company that has a banking charter versus one that does not – every auto lender should be following the law and be subject to the same level of oversight.”

Questions raised over CFPB Actions
The National Automobile Dealers Association (NADA) recently filed a Freedom of Information Act request to make a CFPB inter-office memo public. According to the NADA, this memo shows that the agency is not following through on its claims that it is not targeting auto dealers through enforcement actions. This goes against the Dodd-Frank Wall Street Reform and Consumer Protection Act, which prohibits the bureau from regulating auto dealers.

However, the agency’s targeting of dealer markup – the practice of marking up interest rates on an installment sales contract as compensation for arranging financing – has been viewed by industry experts as an attempt to regulate dealers. In a press release from the organization, NADA President stated “Consumers benefit tremendously from dealer discounts, so they deserve to know if these discounts are in danger being unjustly and unfairly eliminated by overzealous Washington regulators.”

While it remains to be seen what the end result will be from these recent occurrences, it is clear that dealers and lenders need to have their ducks in a row to ensure that all consumers are being treated equally and fairly.

Floor Planning 101

August 11, 2015July 8, 2021

A dealer learning about auto dealer finance requirements

The automotive industry is very unique in that it is one of the few industries where commercial loans are abundant and relatively easy to qualify for. Whether you are just starting out or looking to grow your business, it is likely you will be able to find the capital needed to stock your dealership. Yet while there is a good chance you will be able to acquire a floor plan line of credit, the size of that line of credit will vary depending on your business needs and overall portfolio snapshot.

Floor Plan 101: The Basics
First and foremost, to qualify for a floor plan, you need to have credit. Specifically, you should have a history of utilizing and repaying debt. Bad credit and hiccups on credit history aren’t always deal-breakers, but they will likely reduce the amount for which you qualify. Additionally, there is a good chance that credit issues will have a negative impact on pricing structure. The good news is that over time, with good performance and the adherence to the terms and conditions, it is possible to eventually overcome these setbacks.

It is also important that you are not over-extended. If your credit cards are all maxed out, that is a potential red flag even if you have not paid late. Handling your available credit responsibly is essential, so be sure to maintain a substantial amount of available credit.

How to Use Your Floor Plan
It is relatively easy to use your floor plan line of credit. Not only do NAAA-affiliated auctions accept most floor plan companies, but the lender handles much of the back-door operations, leaving you to just worry about one thing: purchasing inventory.

On auction day, after checking in at the auction, you will want to go to the appropriate department at the auction to check your credit availability with your floor plan lender(s). Once you are done bidding for the day, take your blocked tickets to the auction check-out, where you will notify the auction which purchased units you wish to floor plan. From there, your floor plan company will take care of the rest.

Growing Your Business
If you are looking to grow your business through the addition of a floor plan line of credit, there are several other items that will play into the lending decision above and beyond your personal credit history. Trade references, business credit, equity, cash and the overall health of your business all come into the picture and become increasingly more important in your effort to acquire more floor planning dollars.

The same principals apply if you are looking to increase your existing floor plan credit limit. However, there is another component that could either be in your favor or held against you: performance. You can rest assured that commercial lenders have learned a lot about managing and mitigating risk, especially over the last several years. It is crucial that you closely adhere to your lender’s terms and conditions. NSF’s, late curtailments, slow payoffs and bad audits will inevitably prevent you from gaining the additional buying power you need to grow your business. Stay on top of managing your accounts and you will improve your chances of increasing credit limits.

“Trade references, business credit, equity, cash and the overall health of your business all come into the picture and become increasingly more important in your effort to acquire more floor planning dollars.”

Pitfalls to Avoid
Floor plan companies are discretionary lenders, and it should be understood that your account is constantly being underwritten. Changes in your performance or credit profile will not go unnoticed. Commercial lenders have learned a lot about managing and mitigating risk, especially over the course of the last five years. It is crucial that you closely adhere to your lender’s terms and conditions. NSF’s, late curtailments, slow payoffs, and bad audits will inevitably prevent you from gaining the additional buying power you need to grow your business. Stay on top of managing your account, be honest and communicative, and you shouldn’t have any problems.

In Conclusion
All of this ties into the overall viability of your operation. A thriving business should be building equity while reducing debt. As a thriving dealer principal you should be building net worth, not acquiring debt to keep your business above water. If your business isn’t building and growing, then you probably shouldn’t be seeking more floor plan dollars. More flooring won’t turn around a failing business model. You would just be adding more fuel to the fire. Instead, focus on perfecting your operation. However, if your business is building equity and turning a profit, having some additional buying power can surely help you shift into the next gear

Top 5 Reasons to Work for NextGear Capital

August 6, 2015July 8, 2021

It’s not just dealers who rave about NextGear Capital. Our employees love working here as well! Below are the top five reasons NextGear Capital continually draws the top talent in the industry!

1. Work Hard Play Hard Atmosphere

Our employees put in the sweat to help our dealers be successful. But that doesn’t mean it’s all work and no play. We want our employees to look forward to coming to work every day, which is why we hold different events and contests. From our annual Mini 500 each May to costume contests at Halloween to our Christmas luncheon, our employees experience the benefits of a fun work atmosphere.

2. Community Involvement

At NextGear Capital, we believe it’s our corporate responsibility to give back to the places where we live, work and play. As a result, we encourage our employees to volunteer as much as they can! Our employees embrace this philosophy wholeheartedly by volunteering with multiple organizations, including Special Olympics, Ronald McDonald House and many more! To date, we’ve supported 43 organizations in 2015.

Additionally, we partner with our fellow Cox Automotive companies to participate in three nationwide community relations initiatives throughout the year: No Excuses (March), St. Jude Walk and Movember!

3. Promote from Within – Across All Cox Automotive

Many companies claim they like to promote from within. At NextGear Capital, that phrase has a whole other meaning to it. As a part of Cox Automotive, you have unlimited potential to grow your career at any of the 20+ brands that make up this amazing group. From Autotrader to Kelley Blue Book to Manheim, NextGear Capital employees are already viewed as internal candidates, giving them an edge over the competition to help advance their careers.

4. Brand new facility

In 2014, we moved into a newly renovated corporate headquarters in Carmel, Ind. Our facility was designed to promote an inviting, collaborative environment, from our working spaces to the multiple meeting rooms throughout. Additionally, our corporate office includes some perks for our employees, including a basketball court, fitness center with locker rooms and employee café. We’re like the smaller version of Google (without the slide).

5. Benefits

At NextGear Capital, we view our coworkers as family. And just like any family, we want to ensure that we have the best resources available when it comes to their health and future. All full-time NextGear Capital employees are entitled to our amazing benefits package, which includes health, dental, vision and a 401k. However, what sets us apart is our pension program, available to employees after their first five years of service!

NextGear Capital is a continually growing company and we have many job opportunities available! Check them out on our Careers page!

NextGear Capital Closes $433 Million Securitization

August 3, 2015July 8, 2021

CARMEL, Ind. – NextGear Capital, the leading provider of inventory finance solutions in North America, recently completed the sale of $433 million privately placed notes. This securitization provides NextGear Capital, a Cox Automotive company, with additional capital and operating flexibility to support the rapid growth of its dealer finance business.

“NextGear Capital is extremely pleased at the bond market’s receptivity to our second transaction, following our inaugural issue last November,” said David Horan, chief financial officer of NextGear Capital. “This securitization supports our company’s rapid growth as we continue to position both ourselves and Cox Automotive as the industry leader when it comes to how the world buys, sells and owns cars. As NextGear Capital rises to meet market demand, we will look to the bond markets for capital to complement the funding from our strong bank group.”

This securitization comes less than a year after the company’s inaugural bond issue, in November 2014, when the company secured a $433 million bond securitization.

Floor Planning Critical to Auto Industry

July 30, 2015July 8, 2021

Inventory financing (or “floor planning”) continues to be a viable source for dealers to floor their units. Not only does a floor plan allow dealers to expand their new and used offerings, but it frees up capital for other uses and lets dealers focus on what they do best: sell cars. What’s more, advances in technology have made it easier than ever for dealers and auctions to conduct business.

Full spectrum of dealers empowered
A flexible floor plan allows dealers of any size to finance used and new vehicles from multiple buying channels, including auction purchases, trade-ins, wholesale units, dealer-owned inventory and even private owner purchases. From a franchise owner with multiple lots to a small mom-and-pop operation, floor planning is an efficient and simple way dealers can balance credit and working capital to maximize their cash flow, which is the lifeblood of a dealer’s business and the fuel for growth.

An added benefit floor planning provides is the ability to leverage additional tools to assist with cash flow. Having financing options not only allows dealers to increase cash flow while waiting on units to sell, but the relationship between commercial (floor plan) and retail (consumer) lenders can greatly assist dealers by getting profits quicker and satisfying debt sooner, which allows dealers to buy and sell more cars.

A line of credit can sometimes be a one size fits all, but many dealers have different needs, from wholesale to retail, high line to economy. With the flexibility of a floor plan, dealers can accommodate their needs and demands by choosing terms/programs that are right for them.

Floor plan companies can also play a role in helping dealers expand their business. If a dealer wants expand his/her operations or add a second location, they’re going to need units to sell on that new lot. By working with a willing and focused floor plan company, a dealer can simplify the process of securing new capital to help stock their new lot or expand an existing location.

Technology = game changer
Recent advances in technology – such as the use of mobile devices – have made floor planning a powerful tool for dealers, saving time and simplifying the process of buying and selling inventory. Mobile technology allows dealers to conduct business anywhere and at any time, making floor planning easy and efficient.

The swift changes in the technology landscape have benefited the wholesale auction industry as well. Technological advancements continue to improve bringing buyers and sellers closer from all over the country and the world. This increase in technology solutions for auctions has fueled the success of many internet-based auction offerings. These sales channels have grown by leaps and bounds and are living proof that online continues to show promise for the wholesale industry. The retail side of the business is also recognizing growth online, with multiple success stories from AutoTrader.com and Cars.com to smaller channels across the landscape.

Helping create a more robust industry
Inventory financing continues to play a role in the recovery from the financial crisis of 2008. As the economy improves, dealers are stepping up with more confidence. Because dealers have financing options to choose from, they have the ability to stock their lots with more units. Whether it’s a specific make or trim level, floor planning allows dealers to meet the demand of their customer base. This has a positive correlation on auctions, as they need to floor more cars in the lanes to meet demand.

Looking to the near future, off-lease inventory will start coming out over the next year or two as well. That flood on the market is going to create more supply, resulting in lower prices and more demand for financing options.