Time to review the options for used-car inventory funding, says NextGear Capital

Time 5:00 am, June 9, 2015

next gear capitalAs the UK economy continues to improve, so does access to funding. Almost eight years on from the day when the term ‘credit crunch’ was first used, heralding a dramatic slowdown in the capacity for dealers to access the level of stock funding options they had previously enjoyed, stock funding experts NextGear Capital are encouraging dealers to review the facilities they have in place today.

NextGear Capital finance director Michael Kelleher said: ‘There is scope for many dealers to get better value from their used inventory stocking.

‘We are encouraging dealers to take the time to assess their options and to explore ways to reduce costs and mitigate any potential FCA compliance risks. With some fresh thinking, many franchised dealers could benefit.’

While dealers know inventory funding is a significant operational cost, research by ASE suggests attempts to reduce stocking days have largely seen limited improvement. In spite of this, NextGear Capital believes adopting a wider holistic view to stock funding could see improvements.

Kelleher adds: ‘A wider Just In Time (JIT) approach to purchasing stock is now very feasible. Moving 10 to 15 per cent of stock to JIT by buying digitally has the potential to make real in-roads into stocking days. This is one of the real driving force behind our new StockMaster platform and the partnerships we have in place with the majority of NAMA members right across the UK and with a host of other remarketing organisations.’

The call for dealers to review their stock funding options is not just limited to reducing stocking days. The availability of funding monies has improved, providing a new level of choice that dealers should consider, says NetGear Capital.

Perhaps more importantly, regulation of consumer credit has the potential to impact any reciprocal retail finance to wholesale finance arrangements that may be in place.

Kelleher says: ‘We believe franchised and independent dealers should assess the opportunities to improve their used inventory funding approaches. Compliance, technology and consumer buying habits are all driving changes in the showroom; used stock funding needs to be assessed to see how it could benefit from positive change as well.’

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Colin Channon's avatar

Colin is a former editor of Car Dealer. He left the magazine in August 2015.

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