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Furthermore, dealerships relying heavily on floor plan financing—credit lines they use to purchase inventory—are feeling the pinch. Many have resorted to double-counting collateral, which increases risk and could lead to more bankruptcies if the credit environment worsens.
Impact on Dealers and Used-Car Market
The repercussions are felt heavily by smaller, used-car dealers. As top-tier vehicles lose value and demand shifts to more affordable models, traditional dealers specializing in lower-cost vehicles face a squeeze. The trend toward more distressed inventory forces prices downward, creating a volatile environment.