Dealers knew low interest rates wouldn't last forever — and the day of reckoning has arrived.
Even with automaker subsidies, dealership floorplan expenses this year flipped to a cost vs. a revenue item for the first time in nine years as interest rates rose, according to the National Automobile Dealers Association. The swing has dealerships small and large, public and private, exploring ways to mitigate the cost.
"The industry for both the manufacturer and the retailer has had a nirvana period where the cost of capital and the cost of inventory has basically been free. But those days are over. Rates have already risen," AutoNation CEO Mike Jackson told Automotive News. "So now each retailer has to look at their inventories and say, 'Wow, does it make sense to carry this much inventory?' "