I’ve done a lot of searching in the forum on this, and I’d just like to confirm I understand how dealer floorplan works.
I’ve been trying to get 10% pre-incentive on a Wrangler 4xe and I started my search by focusing on cars that are on lots the longest with soft tops. I figure that most people aren’t buying soft tops in the Northeast in December.
When I see a car that’s been on the lot for 200+ days my understanding is that at some point (maybe after 30 days, maybe after 90 days, depends on their specific floorplan) they started paying a percentage of that car’s value in interest. To keep things simple, I’ll just say their finance rate with their captive or other financing company is 5% and it kicks in after 90 days. I’ll also saw the vehicle is 210 days old for simplicity.
210 - 90 = 120 days or ≈ 4 months. In this example, the dealer has been paying 5% of the MSRP every month for 4 months?
If that’s the case, a 60k Wrangler is costing them ≈$3,000/mo just to keep on their lot?
I have to imagine I have this wrong or the interest rates are way lower, because cars would be a cost not a profit very quickly.
I’m surprised it’s not lower as broadly speaking it’s collateralized by an asset that’s pretty easy to mark to market and a lot more liquid that something like a building.
Long story short here, a car needs to sit a loooooong time or be really expensive before it makes sense to sell me a car at a loss (behind holdback and invoice) to stop the bleeding if they’re not chasing a volume incentive.
For some dealers the motivation to keep wheels in motion is to not get reduced allocation counts for sitting on supply even when there isn’t volume bonuses.
You’re probably overthinking it. Just figure out the deal you want and reach out to multiple dealers and offer what you want. There is a dealer out there that will sell you a car still in transit at a lower price than a different dealer will give you for the same spec car that’s coming up on its first birthday. A dealer with a lot of aged units on the lot is just as likely to be an indication of a dealer who “knows what they’ve got” and tries to maximize profit on every unit than it is of a dealer who will be willing to make a deal.
No one in the dealer other than the owner really cares about the floor plan. It doesn’t give you any better leverage other than it being aged inventory.
@max_g there are many posts that mention floorplan as a reason as to why a dealer would care about aging inventory in general.
@wam22 my original post was mostly just my explanation for how I got to thinking about how floorplan works. It was a term I’d seen tossed around but wasn’t sure I entirely understood it. I didn’t mention it in any of my outreach
Floor plan pressures drive some of the best deals on LH - dealer has pressure to move a ‘22 in ‘24 - For example the idiots still sitting on new ‘22 SL
