Page 3 - MIADA-Q4-2021

NextGear Capital Shares Advice for

Independent Dealers in 2022

NextGear President Scott Maybee outlines three key

areas for future opportunities and growth.

By ADT Staff
Despite predictions by industry experts expects the industry will continue to thrive 3. Finding the right funding balance
that independent auto dealers would not all the way through 2023. – Whether it’s operational working
fare well during the pandemic, they have cash or floor plan financing, having
largely survived and, in some cases, even “Despite macroeconomic factors that are cash on hand allows dealers to act
thrived. And, while there will be room for beyond anyone’s control, independents can quickly when they find the right
more growth in the year ahead, they must still take command over how they navigate inventory or opportunity to enhance
continue to evolve to take advantage. the road ahead,” Maybee explained. Here their dealerships. Successful dealers
are a few areas where independent dealers minimize operational risks by
“I’ve been in the automotive industry for have opportunities: balancing cash and credit to maintain
more than 15 years and, hands down, this is and grow their businesses. An inventory
one of the most unusual markets I have ever 1. Relentless sourcing – New car strategy based solely on available cash
seen,” remarked Scott Maybee, president of production is low, there are fewer lease will both limit purchasing power and
NextGear Capital. He sees some distinct returns making it into the wholesale the ability to make needed business
challenges for independent dealers in 2022, market, and fleets are competing for moves, especially in an unpredictable
but also some unique opportunities. used car supply instead of adding to it; environment with higher prices.
all contributing to an inventory deficit With the right floor plan, dealers can
Studies by Cox Automotive reveal that in the used car sector. As a result, used use the extra cash flow to improve
dealer sentiment remains optimistic. The car dealers will want to have a firm infrastructure, hire a needed employee,
market outlook index was down slightly grasp on what their customers are invest in technology or otherwise put
from Q2 to Q3, but still high and, more looking for and be relentless about it to work to ensure they’re running
importantly, above levels recorded in Q3 of finding it. That means expanding their efficient and profitable businesses.
2020 and 2019. The profits index also saw a sourcing horizons, whether it’s live or
slight improvement compared to the prior online auctions, other digital sources, “Our data projects retail volume for
quarter, although independent dealer profit the general public, other dealers, or independent dealers will grow in the
reporting was flat from Q2 to Q3; likely due any other source. coming year, and dealers will need to be
to increased expenses versus Q2. 2. Take advantage of technology ready to adapt in order to capitalize on this
options – Dealers will want to growth. Taking advantage of every source
Key drivers for anticipated growth in the embrace technology to tap into the of available inventory, digital channels and
used car sector are fewer peer-to-peer rich data that’s available to guide their ensuring they have the capital needed to do
transactions, resulting in greater volume decision making. By using platforms to it all will be key,” said Maybee. “As today’s
for dealers, and a growing supply of used determine the right inventory, where consumers look for more value-conscious
inventory in the 5-12 year-old range, which to find it, how much to pay for it, and buys, the independent dealer stands to
has aged out of a lot of franchise models how to price it, it will lead to smart gain.” n
but still has plenty of service life left. For acquisition strategies and pricing
these reasons and more, NextGear Capital decisions.

MIADA MISSISSIPPI DEALER Q4 2021 | 3