Stocking plans – How they have ‘come of age’
Despite being a proven and reliable route for financing vehicles, stocking plans have attracted some degree of scepticism. Our latest blog examines the facts about them.
There was a time when stocking plans were viewed with the type of caution, reserved for the sub-prime loan market. However, in recent years this type of wholesale funding has risen, emerging to take its rightful place among the mainstem funding options available for dealers.
It could be said that 2018 was the year that stocking plans came of age. Towards the end of last year, half of the dealers in our monthly dealer sentiment survey said they used a wholesale finance package or stocking plan, compared to 38% opting to use their own funds.
These results suggest an increasing rejection of the one-size-fits-all approach to funding, with cash no longer the first port of call, as dealers look to diversify their options in order to meet their business requirements.
So, if stocking plans have come of age, what is it about them that’s led to their increased appeal across the motor trade?
One of the key attractions of a bespoke stocking plan is that the dealer receives 100% funding regardless of the source.
A NextGear Capital Stocking Plan directly integrates with over 60 sources of stock where the funds are paid directly to the source. In addition to this, 100% of the hammer price, plus delivery and buyers’ fees, are also covered.
Similarly, if buying from an alternative source such as the trade or taking in a part-exchange, 100% of CAP clean or invoice price (lower of the two) is also funded.
Dealers have also come to realise there’s no hidden agenda with this type of funding. It may be structured in a different way to other forms of wholesale finance, but dealers now get why that’s the case.
Dealers appreciate that a stocking plan provides them with the flexibility they need to run and grow their business. There are no reciprocal lock-ins tying them into promoting the lender’s consumer finance product, as is the case with some providers and there are no fixed payment terms and limitations on where they can source vehicles.
The confidence dealers now have in bespoke stocking plans is shown in the £2bn of vehicles funded since NextGear Capital began as a business five years ago. With over 1,600 dealers already on board, it shows how this type of wholesale finance is now considered as a fit for purpose, reliable and trustworthy means of funding.
As its popularity among dealers continues, then 2019 could very much end up being the year of the stocking plan.