Floor planning and dealership inventory is not a new topic; but it’s gotten a lot more interesting lately. As Auto News reported in a recent article, floorplan swung from a $96-per-vehicle-expense on average in 2019 to a $140-per-vehicle gain last year. The gains are attributed to slim vehicle inventories, low interest rates, and credits from OEMs.

Unfortunately, this is probably a one-time thing. OEM subsidies have died down, and gains made from new vehicle floorplans are going to be offset by high used vehicle floorplans.

We’re also likely looking at a permanent change in our industry when it comes to dealership inventory. Many experts predict we’ll never go back to high, high levels of inventory and slower turn. I believe this is a good development for our industry. Excess inventory is a waste and accrues unnecessary interest expense.

With so many factors in flux, a hard look at your floor planning is in order. Get started with these proactive tips:

Our industry will always rely on floor plan lending to keep new and used cars on the ground. The uncertainties of today’s market present opportunities to manage and retool your floorplan and dealership inventory to keep expense down and minimize risk as our industry changes.