Wells Fargo Commercial Distribution Finance seeks to educate dealers on the benefits of valuing and accepting trade-ins, Head of Motorsports Jeremy Jansen told Powersports Finance.
“Pre-owned is a very large piece of our business, but I know that we are only scratching the surface, both in capability and the amount of volume that we do in pre-owned,” Jansen said. “In my opinion, there is still too much trade-in business that happens with cash. There are other compelling financing options for dealers that free up their cash for other uses.”
The used market has grown in the “high single digits,” and is “definitely growing faster than the market overall,” Jansen added.
Part of the education for dealers relates to taking more trade-ins at the store and ensuring dealers have ample credit lines and valuation tools to make sensible trades.
“A major dealer challenge today is nearly two-thirds of all the pre-owned units are [sold] consumer-to-consumer,” Jansen said. “Obviously, the more insight we can provide our dealers on how the pre-owned market works and the more financial solutions we can provide to a dealer for pre-owned, the more comfortable they’re going to be taking trade-ins, which will ultimately help them drive new sales and better margins, too.”
Educating its dealer base on certain market data is another initiative for the floorplan lender. The company is working with the IT department at parent company Wells Fargo & Co. and third-party vendors to decide how best to leverage its data and analytics to benefit dealers.
“There’s so much information and the industry as a whole has got to do a better job of putting information at our dealers’ fingertips and then showing them how to use it,” he said. “What makes and models are selling in your area? How much inventory do you have compared to peers, both nationally and in your geography? What are the buying habits and buying patterns of consumers in your area? That data is all out there. We just have to do a better job of revisiting some of our reports and reeducating our dealers on the data available.”
Chicago-based Wells Fargo CDF works with more than 5,000 dealerships through its partnerships with OEMs such as Polaris, Suzuki, and Textron.