At this year’s NIADA Convention and Expo – held June 24 – 27 in Las Vegas – NextGear Capital Vice President of Operations Alan Lang participated in a panel forum entitled, “New Avenues in Dealer Capital,” and fielded questions on trends in the industry.
The following is an excerpt of questions and answers that were fielded from that forum.
How do you evaluate the financial marketplace today and how do you see it changing in the next five-years?
The marketplace is aggressive and very much in favor of both the dealer and the end consumer. Market corrections will likely begin in 2014 and continue into 2015, with lease vehicle inventory entering the market and placing a downward pressure on vehicle values. As in all cycles, when this begins and is coupled with very competitive lending and an abundance of inventory, dealers find themselves in a unique position. Consumers also have more selection, which is a positive factor that encourages more buying. Compounding the buying and lending cycle, dealers take less profit while lenders buy deeper. As we have seen before, lenders begin to pull back while the inventory remains high and pricing is driven down further. While it may be tempting to invest in speculative inventory, the long-term success will be a result of staying disciplined in spite of a “turn and earn” mindset.
We must also factor in several macro and micro-level automotive industry key indexes that impact overall dealer count growth. These include the impact of new car sales, lease returns, and even used vehicle historical trends from previous years. Use of this data allows us to evaluate the financial marketplace in terms of the impact on floor plan volume and dealer count projections.
How important is the dealer relationship to your company?
Our relationship with dealers is the very backbone of NextGear Capital. Our continual focus is building stronger relationships with our partners, which are our customers. Through this partnership, we assist them with the growth and operation of their business. Through our “Dealer Direct” business model, we spend time on-site at their dealership to ensure we are providing the products and services that complement their business for months and years to come.
What criteria are you looking for in a dealer?
NextGear Capital is a “relationship buyer” in every sense of the expression. As with all lenders, we look at traditional factors such as years in business and past credit performance. However, as a commercial lender, we assign a personal underwriter to each relationship, looking for every way possible to engage each dealer’s business model. One fact that makes this approach so unique is that we typically conduct business with 9 out of 10 dealers who want to work with us. This involves a tailored solution for each one of them.
As well, we consider our responsibility to the industry as a serious consideration for NextGear Capital. We see a duty to the industry to do all we can to lend to every dealer possible. This keeps the industry moving forward, even when there are anticipated downward trends.
In your opinion, what do dealers find most frustrating in their dealings with financing and the financing process and how we ease these frustrations through venues like this?
Dealers wish to stay ahead of the ever-changing trends in the industry. They are looking for a consistent partner to meet their financing needs. We invest a great deal of time in our initial set-up process with a new customer to thoroughly address what they can expect from NextGear Capital. We want them to know the diverse services available to them, and how we tailor our relationship with them based on what their needs are, and what is vitally important to them as customer.
Alan Lang, Vice President of Operations and Business Development for NextGear Capital can be reached at 888–969-3721