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What is Floor Planning?

By  Marilyn Courtney  ·  1 minute read

Dealerships are an essential component of the automotive industry, providing customers with a wide range of vehicles to choose from. One crucial aspect of running a successful dealership is managing inventory effectively, which is where floor planning comes into play.

Floor planning is a type of financing that enables dealerships to purchase vehicles from manufacturers and keep them on their lots until they are sold. This is where Floorplan Xpress comes into play.

The process begins with the dealership purchasing a certain number of vehicles from the manufacturer, which is then placed on the dealership's lot. Floorplan Xpress then provides the dealership with a loan to cover the cost of the vehicles, which is secured by the vehicles themselves. As the dealership sells the vehicles, the loan is repaid, and the dealership can then use the proceeds to purchase more vehicles.

One of the primary benefits of floor planning is that it allows dealerships to manage their inventory more effectively. By only paying for the vehicles as they are sold, dealerships can avoid tying up capital in inventory that may sit on their lots for an extended period.

Additionally, floor planning can help dealerships to respond quickly to changes in demand. If a particular model of the vehicle suddenly becomes popular, the dealership can use its existing floor plan to quickly purchase more of those vehicles and meet the demand.

Finally, floor planning can help dealerships to manage their cash flow more effectively. By only paying for the vehicles as they are sold, dealerships can avoid the need to make large upfront investments in inventory, which can be a significant drain on their finances.

In summary, floor planning is a critical aspect of managing inventory and financing for dealerships in the automotive industry. By providing dealerships with a flexible and cost-effective way to manage their inventory, floor planning can help to increase sales, improve cash flow, and ultimately, drive business success. How can Floorplan Xpress help you today?