Powersports dealers often face significant monthly expenses from flooring (floorplan financing) on major units like motorcycles, ATVs, UTVs/side-by-sides, and other inventory. These costs come from interest charges when units sit longer than free flooring periods allow. The good news? Smart strategies before, during, and after ordering can minimize or eliminate those expenses.Here’s a practical breakdown to help reduce your flooring costs on major units.
Before Ordering: Maximize Free Flooring and Negotiate Smartly
The ideal scenario is securing the maximum free flooring period allowed under your manufacturer’s program, which are likely tied to order volume or timing. For example, buying enough inventory to qualify for 3 months (or more) of free flooring means zero interest if you turn that stock within the window. While multi-month free periods are less common now, they’re still the goal for many programs.
- Order strategically: Align purchases with realistic sales timelines. Don’t overload on units just to hit a higher free-flooring tier if it extends your average days to sell beyond the free period. Calculate your historical turn rates first.
- Push for exceptions: If a program deadline approaches and there’s no strong incentive to order early, contact your district sales manager (DSM) or rep. Ask about extensions, additional free days, or custom accommodations. Many manufacturers have flexibility but won’t offer it unless you ask.
- Choose the right program/lender: Look for options with longer free terms, lower interest rates post-free period, or lower curtailments (mandatory principal paydowns). Specialty powersports floorplans often provide better terms than generic ones due to seasonal sales cycles.
This upfront planning sets you up for minimal or no flooring expense on new orders.
During the Flooring Period: Actively Manage and Mitigate Charges
Once units arrive and statements show interest accruing, don’t wait! Proactive steps can stop or offset the bleeding.
- Leverage add-on programs: Call your DSM immediately if interest appears. Ask about current promotions, like buying one needed unit to gain extra free flooring on others (e.g., “buy one, pick up free days on another”). Even if they say no initially, reps sometimes have wiggle room or unadvertised options.
- Pay off early when possible: If cash flow allows (from strong sales, parts/service revenue, or other sources), pay down high-interest units ASAP. Stopping interest accrual preserves margins.
- Trade or swap inventory: If a unit isn’t moving but another dealer in your region needs it, arrange a trade. This clears the floored unit quickly, often with mutual benefit, and avoids ongoing charges.
Regular inventory reviews and communication with your floorplan provider keep costs in check.
After the Sale or When Charges Pile Up: Clean Up and Prevent Recurrence
Post-sale or when aged inventory triggers extra fees, focus on recovery and long-term fixes.
- Accelerate payoffs on sold units: Pay floorplan lenders immediately upon sale to avoid penalties or audits. Timely payoffs maintain good relationships and can lead to better future terms.
- Address aged inventory aggressively: For units past free periods, use promotions, discounts, demo sales, or wholesale to move them fast. High turnover directly cuts interest exposure.
- Review and renegotiate overall: Analyze statements for patterns such as high curtailments, rate hikes, or excess fees? Shop alternative floor plan providers (some offer flat-fee or more flexible powersports-specific options) or renegotiate with your current one based on your payment history and turns. Strong performance may yield lower rates or extended free terms.
- Track KPIs closely: Monitor days’ supply, turnover ratio, and interest as a percentage of sales. Tools like DMS software with integrated floor plan tracking help spot issues early.
By treating flooring as an active expense and not a passive one, powersports dealers can slash monthly costs significantly. Many successful dealers turn what was once a major line item into a minimal or near-zero hit through disciplined ordering, quick action, and strong rep relationships. Start with your next order cycle: reach out to your DSM today and audit your current aged units. Small tweaks add up to big savings.
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