Floorplan financing data shows aged product on the decline

GE Capital CDF reports ‘healthier’ inventory mix

As Sameer Gaur accurately portrayed the 2013 dealership floorplan financing landscape, August was a much better time to be discussing inventory lending than earlier in the spring.

Gaur, president of the Motorsports Group at GE Capital Commercial Distribution Finance, has liked what he has seen from the industry in recent months.

“It feels a lot better than it felt last year at this time,” he said. “There’s quite a bit of positive momentum from a model introduction standpoint; we’ve all seen it. That’s certainly helping a lot in terms of positive sentiment. All of the OEMs that have released product so far have strong portfolios of product, so that’s helping.”

Gaur noted that liquidations have “accelerated nicely” in the last few months.

“It was an interesting first half of the year,” he said. “The snow season had a bit of an extension because the winter lasted a little bit longer. That helped the snowmobile dealers, but it put a slow start to the spring and therefore the motorcycle, ATV and side-by-side selling season.

“So the start was soft, but it’s stepped up the last few months. The acceleration is there, and the sales have gotten stronger.”

Gaur, sharing data exclusively with Powersports Business readers, noted that GE Capital CDF statistics show that product two years and older on showroom floors “is tight, in the 5-7 percent range. It was at the higher end of that range last year, and it’s at the lower end of that range now. That’s an important indicator that it’s somewhat healthier, better product.”

Inventory turns have slowed somewhat. “They were at the top of 2.5-3 times a year last year, and are in the middle of that range now,” Gaur said. “Anything above 2.5 is good. I think it’s more a reflection of the lack of product last year, which made the liquidations spin faster. Now you have a healthy mix of product, so naturally turns will slow a little bit.”

Product mix — both new and pre-owned — will give well-inventoried dealers an edge.

“It’s a passion-driven industry, so you want to have that right mix where you can make the sale when somebody wants the product, as opposed to an order basis,” he said.

Pre-owned floorplanning has taken a particularly sharp rise among GE Capital dealer partners in 2013.

“In the pre-owned space, our activity is between 1.5 and 2 times what was last year,” Gaur said. “With respect to listening to the dealers, we’ve made improvements on our offerings from a systems standpoint. About 95 percent of our advances are completed online, which makes it so much simpler for a dealer to submit. Based on feedback from dealers, we made the investment to facilitate that process.

“Selling pre-owned creates more traffic, and if we are behind the scenes helping them finance the trade-in and therefore create a new sale, and keep that somewhat seamless, that facilitates the new product coming to the table. It allows the dealers to say ‘I can take your trade-in.’”

GE Capital CDF continues to work with OEMs to help create floorplanning programs for their dealers.

“We’ve seen positive momentum building, and it’s great to see all the new product coming in,” Gaur said. “There’s a lot of running hard behind the scenes that we’re doing with our OEM partners. We feel, and our dealers feel, really, really strong when you see new product coming in. We’re gung-ho about making sure we keep that system fluid.”