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When a dealer cannot quickly sell cars, they often face the need for swift cash injection—selling at a loss or via auction to cover debts. The insider emphasizes that even significant price cuts do not guarantee immediate sales due to consumer shopping behaviors, financing constraints, and market perceptions.
The Predatory Nature of Floor Plan Financing and Repossession Risks
Floor plan lenders play a dual role—while they finance dealer inventory, they also monitor the inventory closely. When a dealer can't meet payment obligations, lenders may repossess vehicles and sell them through auctions. This process, likened to repossession of consumer vehicles, underscores the financial fragility of many small dealers.