The marine industry’s behemoth floorplan lender increased several credit lines in the last year or two as boat sales continue their steady, albeit slow ascent and confidence rises among consumers and dealers.
“I would say virtually every one of our largest customers has come back to us for credit increases over the last year or two years,” GE Capital Commercial Distribution Finance marine group president Bruce Van Wagoner told Trade Only Today.
Van Wagoner said the dealer requests for increases have been “in response to the marketplace and opportunities in front of them.”
Those opportunities include dealers taking on another segment of the market, requiring a bigger line to handle unit sale increases, those seeing the dollar value of units is increasing, or simply a rise in confidence, Van Wagoner said.
“We’ve had the vast majority come back and request increases and I feel good about our ability to accommodate them,” provided they’re properly capitalized, he said, adding that the credit lines vary from $50,000 to $250 million.
“It’s our view that credit’s widely available on boats on the wholesale and retail side. The dealers that need financing generally are able to get it,” Van Wagoner said. “Every dealer’s different. We try to find financing solutions that are reasonable.”
GE Capital’s survey of marine industry manufacturers, dealers and suppliers, conducted at the Miami International Boat Show, showed that 80 percent of participants expect sales to increase 5 to 10 percent in 2015, up from 54 percent in 2014.
“Two years ago, that number was only 43 percent,” Van Wagoner said, adding to keep in mind that the majority of respondents are Florida dealers in a robust market.
And although the industry is still about half the size in units that it was prior to the recession, “frankly, it’s the healthiest it’s been in years,” Van Wagoner said.
There is more of a commitment from manufacturers to dealers, and vice versa, he said. The level of customer service from both dealers and manufacturers has improved, and manufacturers are making better products.
“The industry reflects well out in the marketplace,” he said. “From the financial statements we see every day, the industry is absolutely healthier. The dealers are focused on the bottom line and are taking care of customers more than ever before. In the old days, they were more aggressive and said, ‘Hey, I’ll make money tomorrow.’ Now they rely more on metrics like inventory aging and turning, and manufacturing partners care about their distribution network more than ever before. We feel it as a lender. I think they recognized that they’re dependent on each other, and both need to be successful … to be able to work.”
Asked whether GE has a sense of whether dealers are seeking alternative or additional financing sources, as became more common post-recession when several lenders pulled out of wholesale financing, Van Wagoner said: “I think as a business they have to make a decision about whether they need another lender or not. There are some alternatives. We’re challenged every day to support customers. I’m less concerned about competition — unless I’m losing business, and I’ll react to that.”
Inventory levels, another critical part of the business that GE has a unique perspective on as the industry’s largest floor planner nationwide, continue to be at historical lows.
“Without a doubt, inventory management is one of the most critical aspects of running a dealership,” Van Wagoner said. “We look at inventory management to be the trademark of an exceptional dealer. After the recession, dealers have been pretty smart about optimizing the amount of inventory they’ve been carrying.”
The company projects that the general industry will grow between 4 and 5 percent in units and between 8 and 9 percent in dollars for 2015, Van Wagoner said.
“Barring any major economic event, they should remain at these healthy levels for the next couple of years,” Van Wagoner said. “We’ve seen some good consistency.”
“We didn’t forecast for individual segments,” Van Wagoner added. “Am I comfortable with every segment? Largely, yes.”