The automotive financing market is a large, fast growing, and fragmented market. It was valued at 213 billion USD to in 2020 and is expected to reach 300 billion USD by 2026. Traditional banks, captives and financing companies compete to get a share of this profitable market.

Before any such financing, dealers require to get a financing of all stock available for demo or new for delivery.

Thrown into this cutting-throat competition, banks propose to finance the stock of car dealers in exchange for retail credit and leasing. This practice, known as either wholesale or floorplan, carries many advantages for all stakeholders:

• Dealers no longer have to finance their stock.
• Banks find new outlets for automotive lending and leasing and increase market share.
• This service is a perfect way for financing banks or industrial captives to get a good hint about the volume sold by each dealer and his financial status.
• Manufacturers can push dealer to get new models for demo, or to increase sales on some specific models if yearly targets are not met.

For those reasons, wholesale is both a strategic tool and a powerful differentiator for any automotive brand or bank to increase market shares. But on its own, this activity is not very profitable.

Wholesale is a market of high volume and low margins

So what does it take to successfully differentiate thanks to the floorplan ?

• Act fast: you should be able to add a new manufacturer or car dealer within hours.
• Be attentive to user experience: be sure to offer the possible, seamless user experience, on any device, to manufacturers, car dealers, and end customers.
• Think real-time : ensure that financial reconciliation is done in real-time, in order to free the credit-lines as fast as possible
• Go beyond stock financing, go to dealer financing. For example, you may consider advances on commission, financing the cashflow or investment projects.
• Be prepared for anything: make sure you have the agility to innovate by bringing new services to car dealers and manufacturers, proposing innovative and real-time incentives, providing more insights and self-care capacities to end customers...

Wholesale is no different from other businesses. There will always be room for those who can bring the right innovations with a stellar level of service at the right price.

1. LE BLOG DE DIRECT ASSURANCE, 28/09/2020

2. U.S. car financing and leasing - statistics & facts – Statistica.com - Sep 2, 2021

3. AUTOMOTIVE FINANCING MARKET - GROWTH, TRENDS, COVID-19 IMPACT, AND FORECAST (2021 - 2026), Mordor Intelligence, 2021