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Floorplanning remains a hot-button issue

Duncan Aldred, vice president of global Buick-GMC, told Automotive News in April that GMC plans to limit, and in many cases eliminate, dealerships’ floorplan costs for the 2022 Hummer pickup and 2024 Hummer SUV long term to help protect retailers’ profits and simplify the sales process. The brand is requiring dealers who want to sell and service Hummers to invest about $200,000 on chargers and other upgrades.

Even though Hummers will arrive pre-sold, dealers will need some time to prepare them for delivery and finalize everything with the buyer. GMC will cover the floorplan cost until the vehicle leaves dealers’ lots, for a maximum of 30 days, Aldred said.

“The dealer will be whole,” he said in April. “It’s more precise than now where basically we give dealers a lump sum, and if it’s not enough, that’s unlucky, and if it’s too much, it’s lucky.”

Once Hummer dealers deliver the reserved vehicles and regular production ramps up, GMC will implement a more traditional vehicle distribution process, and the floorplan coverage periods will vary, Aldred said.

Today’s floorplan credit and inventory management standards industrywide can be “a bit clumsy,” he added.

“Sometimes a dealer may get more than they need, sometimes they may get way less than they need.”

Jorge Gutierrez, corporate strategist at Bert Ogden Auto Group in Texas, expects the Hummer to sell quickly. Floorplanning credits have generated significant gains across his stores’ usual lineup. “We move the inventory really fast and we get the credit. [The credits] not only offset the floorplan expense, they exceed it,” he said.

Eliminating those credits would hurt the bottom line, but the extent of the fallout has yet to be seen.

“As far as how many and how much, that’s where it becomes a question,” Gutierrez said. “Are we talking about five Hummers a month? That probably wouldn’t be a big deal. If we’re talking about 50 Hummers a month, like we used to sell back in the day, we’re definitely going to hurt.”

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