Floorplan loans are top concern at dealer conference

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ORLANDO, Fla. – The education portion of the Marine Dealer Conference & Expo concluded Wednesday with three panel discussions on a wide range of the most pressing issues facing the industry.

“The State of the Lending Industry,” panel featuring those involved in commercial and retail financing, was moderated by Bill Thompson of Cardinal Points Network and featured Bruce Van Wagoner, from GE Capital Solutions; Ralph Ross from the Small Business Administration; Jim Coburn, from the National Marine Bankers Association; and Scott Anderson, from Merrick Bank

“We have a major, major commitment to this industry,” Van Wagoner told the audience. GE holds an estimated 80 percent of the floorplan loans in the marine industry, as other key lenders have exited the market in the last few years.

Van Wagoner said he understands dealers’ concerns about rising interest rates and other hikes to their floorplan loans, but GE is facing its own losses and it had to raise rates to ensure the company could stay in marine lending.

His advice to dealers was to communicate and work closely with their lenders to make sure everyone is “on the same page.” Also, he said, be prepared with a detailed business plan.

The SBA’s Ross acknowledged it has been difficult, if not impossible, for most dealers to get loans through the SBA’s new dealer floorplan program.

“This is brand-new for us. This has been a tough sell,” he said. “It may be that the banks just do not like your industry. It seems almost irrational.”

Dealers, he said, need to take the lead on getting more banks involved.

“You have to teach them about your industry,” Ross said.

Coburn predicted lenders would start looking more favorably at the marine industry in the next 12 to 24 months.

“We’re slowly recovering,” he added, noting that consumer confidence, employment and light vehicle sales need to all improve for the marine industry to follow.

He advised dealers that the NMBA has on its Web site information dealers can use when talking to their local banks or credit unions about setting up floorplans.

The final panels of the conference were a mix of retailers and manufacturers talking about a wide range of issues, including inventory management, building better relationships between the two parties, product changes, consumer demographics, use of technology in the boating business and the used boat market.

The first panel featured Jerry Brouwer from Action Water Sports; Randy Kelly from Kelly’s Port; Bill McGill from MarineMax; Bill Yeargin from Correct Craft; and Bob Apple from Volvo Penta.

The second panel included Rod Malone from Sail & Ski Centers; Alan Bohling from Seattle Boat Co.; Dusty McCoy, from Brunswick Corp.; Duane Kuck from Regal Marine; and Phil Smoker, from Smoker Craft.

Through more than two hours of discussion, all of those involved talked about the need for better communications and relationships among dealers and manufacturers if the marine industry is to successfully come through this downturn.

“We need to help each other to get through the years ahead of us,” McGill said.

“The only time you win is when everyone wins around you,” Brouwer added. “When we all win, we’re going to have a bright future.”

Most predicted a flat year for 2010, or possibly a slight uptick.

“OK is the new great,” Kelly said, to laughs from the audience. “I see it as being a littler bit of an increase.”

“[2010] is not going to be a bang-up year,” McCoy said, adding it may be down a bit, but if he’s wrong that would be a “high-class problem” to have.

Look for excerpts from the panel discussions and complete coverage of the 2009 Marine Dealer Conference & Expo in the January issue of Soundings Trade Only.

— Beth Rosenberg

b.rosenberg@tradeonlytoday.com

Comments

3 comments on “Floorplan loans are top concern at dealer conference

  1. Jack Pillsbury

    I am glad that GE is staying in and maintaining floor plan accounts for a lot of us dealers.  I, for one, would be out of business if they did not.  However I am saddened by the fact that once again  the dealers who did nothing wrong and are paying their bills have to pay extra to GE to make up for the losses incured by the mistakes and bad business practices of those who did not. 
    As far as new floor plan sources go we have to look to the manufacturers for a national program as after the last couple of years many of us do not have strong enough financial statements to go to a bank on our own. 
    As far as next year goes, I have spent the last couple of years shedding overhead and old inventory, so even a minute increase in sales will be a major blessing to my business. 
    I hope that the manufacturers contine along this theme that we must all work together.  Maybe once again this marine business can be fun.  Thanks

  2. Jon K.

    After using one floor plan company for 18 years, always paying the required interest on time as well as paying off sold units immediately we have been given notice of cancellation. We have been told to present additional collateral other than the boats being floorplanned. This sends me a message that our industry products, specifically boats are not worth the value the manufacturer places upon them!  This in itself sends a strong message that our industry produces products that are overpriced.

  3. DAVID GRAYSHOCK

    Floor plan, floor plan, floor plan. I heard it a lot in lots of circles in and out of meetings there at M.D.C. and we are just a small mom and pop dealership and have the same issues as some of the best dealers in the country. Now. Here is what We are doing about it. This has been done before but not at this level. We will be accepting sponsership to do a nationwide webinar with other parties involved.
    I and others are going to build a single template of documentation in similation to Bill Thompson’s “White Paper” (with Bill’s help) that will be used to bridge without fear a less labor inducive but more accurate way to successfully supply an inventory relationship with any lending institution. Banks, floor co.’s, finance co.’s, manufacturers, etc.,etc,.
    This universal template for inventory planning will consist of advantages of financing, the securities involved, a formulation of techniques to reduce flooring labor, a reform of how the floorchecking process is done in the future.
    This will improve local banking relationships nationwide and boost our local economies in many cases.
    Sincerely,
    http://www.gotchaboat.com  ;

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