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GE Capital sees year-over-year volume increase in first half

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Dave McMahon, Senior Editor
August 6, 2012
Filed under Features, Top Stories

Dealer inventory turns ‘in excess of three per year’

The dealer body in the U.S. is becoming healthier thanks to inventory turns that are reaching numbers that “we haven’t seen in a long time,” according to Sam Yourd, vice president of marketing at GE Capital, Commercial Distribution Finance.

“Q2 was very similar to what we saw in the first half,” Yourd added. “We’ve had volume increases year-over-year, and we seem to be running well ahead compared to last year. What’s really nice to see for dealers is that inventory turns are running well ahead of the prior year. What we’re seeing is over three turns per year on inventory.”

Yourd also reports that delinquencies and past dues are down year over year, a direct result of the increased turns.

“And because the turns are so good, aging is down. There’s a lot of focus on getting that aging out of the pipeline,” Yourd said.

GE Capital saw a first-half year-over-year increase in its dealer financing business.

“We think healthy is about 2.5 turns, and when the dealers are over three turns, it speaks to a couple of things,” Yourd said. “Dealers have real good, lean inventory levels. And it speaks to dealers adjusting to the new reality and getting better at selling products and working with their lenders on the retail side.”

Pre-owned dealer financing continues to gain strength at GE Capital as well, Yourd said.

“It’s still continuing to grow with us,” Yourd said. “We’re proactive about going out talking to our customers about pre-owned financing. We do financing on trade-ins. For used products that they acquire right there off the street, we finance those as well. We also have auction finance programs where GE finances the purchase at 100 percent and pays the auctioneer directly so there is no out-of-pocket expense for the dealer. It helps with cash flow and to fill product gaps on their floor. Where an OEM may be short on product, or whether they sold through on quota of product, they can go out and get used products and put them on the floor with the confidence that GE can help them in the finance side.”

Receivables are up double digits year-over-year through June at GE Capital.

Sam Yourd

“We’re out there contacting dealers, seeing what dealers need,” Yourd said. “We’re hearing about positive margins, a positive business climate. Dealers are willing to stock a little more, turns are better, and we’re not encountering some of those dour moods that we saw a couple of years ago. We never backed off in our support of dealers or OEMs in those down times, and now that things are improving slightly, dealers seem more positive at the various shows and dealer meetings we attend.”

GE Capital’s ability to respond to dealer needs helps dealers satisfy their financing needs, and a recent addition to its Customer Online Management System has enhanced the relationship even more.

“It’s another business intelligence tool for our OEM partners and dealers to help them do a better job at managing their inventories,” Yourd said.

COMS assists dealers via analytics, searches, sorts, inventory downloads, trend charts and more.

“COMS 2.0 has an improved look and feel. The enhancements allow dealers to self-administer their accounts. They can look at mix, turn, and get better performance metrics on their portfolio. It’s a beefed-up, much improved system that we’re proud to provide to our customers.”

Dealers, for instance, can take a 12-month rolling view at their inventory to see mix, turn and trends, and react accordingly to provide an optimal inventory level.

“It allows dealers to make sure they’re optimizing the mix and the level of inventory they have,” Yourd said. “That’s a win-win for everybody.”

GE Capital’s Franchise-to-Franchise locator system produced 36,000 powersports vehicle tranfers among the company’s dealerships in 2011.

“It’s proven to be a great assistance to dealers,” Yourd said. “If there is a customer in your store looking for a specific model that the dealer does not have in stock, it allows the dealer to search for the model and arrange for a transfer from another GE dealer to fill the customer’s needs today and not three or six weeks from now.”

With electric vehicles making their way into the powersports industry, GE Capital figures powersports EVs, including motorcycles, scooters, UTVs and golf cars are prime growth areas and is supporting that segment as well.

“We’re bullish on the future,” Yourd concluded.

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