Dealer Insights – May/June 2011 - Dealer Digest

May 31, 2011

What’s your spread between new and used cars? 

The prices and availability of used cars will help drive up sales of new cars this year, according to NADA’s chief economist. Paul Taylor told visitors at NADA’s annual convention that, as the demand for used cars has gone up during the recent downturn, the supply has gone down — thus hiking the prices of pre-owned cars and trucks.

Potential used car buyers — particularly those looking for late-model, low-mileage vehicles — will see a shrinking gap between the cost of pre-owned vehicles and new ones. This will tilt many potential used car buyers toward new-car inventories, Taylor said.

SBA offers new loan program 

A Small Business Administration (SBA) dealer floor plan pilot program, which provides guaranteed loans from $500,000 to $5 million, is available to qualified dealers until October 2013. A dealer can apply if it has fewer than 200 employees or a net worth of less than $15 million and an average net income less than $5 million for the last two years.

The SBA will guarantee 75% on floor plan lines of credit when the lender advances no more than 100% of the cost invoiced for new inventory, and 100% of the cost or industry-based wholesale book value, whichever is less, for used inventory. The loans may be used to buy titleable inventory for retail sales and to refinance existing floor plan lines of credit with the participating lenders. Proceeds also may be used to pay the SBA guaranty fee.

Fast service, furious growth 

No matter your manufacturer affiliation, if your dealership has a service operation you should read between the lines of Ford Motor Co.’s expansion of its Quick Lane® brand of service shops.

In February, the automaker encouraged more of its dealers to sign up for the fast-growth initiative, and opened its 600th Quick Lane® Tire & Auto Center. The line of shops, which don’t require appointments and provide quick service while you wait, posted record sales of more than $570 million last year.

All this success in less than a full-speed-ahead economy should pose some questions: Does your operation offer no-appointment service? What’s your average turnaround time for a job? Make sure the answers contain some good news, and get that news out.


Dealer Insights – May/June 2011


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