A distinctive new stocking approach...
FCA regulation of consumer credit looks set to make any linkage between used car stocking and retail finance support an unsustainable option. In this event, specialist used stocking expert NextGear Capital expects more dealers to review their used vehicle stocking arrangements.
The good news for franchised dealers is that NextGear Capital will soon be launching a unique dedicated stocking option and tools for the franchised dealer market.
The FCA requirement to disclose the amount of any commission, fee or other remuneration payable to the dealer, if requested by the customer in advance of their agreement being signed is not new. However, the FCA’s increased rigour calls for dealers to act upon the spirit of regulation and increasing consumer awareness and will inevitably see commission disclosure becoming a more regular feature in dealer F & I management.
Any financial benefit to the dealer from a reciprocal stock funding/retail support programme would clearly be covered by the FCA requirements but could be hard to calculate. In light of this, it is expected that dealers could seek to remove links between stock funding and retail credit.
NextGear Capital. Inc, NextGear Capital UK’s parent and part of the US based Cox Automotive Group is well established in providing stock funding as a stand-alone product. The business handles the daily purchase of over 5,000 used vehicles through its dealer stocking plan for more than 17,000 dealers and 1,000 auction houses across North America and Canada.
Having entered the UK market in 2014, NextGear Capital UK, has grown rapidly as dealers have recognised the benefit of a dedicated stocking option that is not tied to retail credit, or other funding/banking options. The business has links with the majority of the UK’s auction centres, provides a fast, flexible means to add other sources of stock and integrates with major DMS systems. Dealers using NextGear Capital stock funding do not have to have a CCL in order to take advantage of the Stocking Plan.
David Mercer, Managing Director of NextGear Capital, notes; “The traditional F & I dealer model is undergoing a major change to create a more transparent and customer centric experience. In part this is driven by regulation but also through a more informed consumer, happy to take a forensic view of their finances.
“Stock funding and any reciprocal earning arrangements must be recognised by dealers as part of this new transparent era. At NextGear Capital, we are geared up to help. By providing a stand-alone stock funding option, dealers can ‘unbundle’ their retail finance arrangements and benefit from a new level of negotiation freedom, whilst embracing the spirit of FCA regulation.
“We are in dialogue with a broad spectrum of franchised dealers who are helping us to frame a dedicated franchised dealer support programme, which we expect to launch during Q1 this year. In then meantime, we welcome any dealer enquiries or feedback as we seek to develop the ideal franchised dealer used stocking funding plan.”