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The road ahead for car dealership business finance

The road ahead for car dealerships

Unlocking opportunities for the car dealerships in 2023

Right now, there are seismic challenges and changes happening inside SA’s car dealerships.  South Africa’s automotive and transport sectors are the primary engine behind human mobility in SA.  It’s an enabling sector, driving employment and keeping South Africans moving, however, they are quite literally taking all the bumps in the road, head-on right now. 

In a market anticipated to shift in favour of buyers, dealerships offering more affordable brands and models will likely capture the bulk of sales in 2023. Amidst the threat of global recession, and rising fuel, transport, and living costs, individuals and families are looking to downgrade to smaller, more fuel-efficient vehicles, and with escalating public transport costs, we may see a spate of first-time buyers entering the vehicle market. Though sales of electric vehicles (EVs) will continue to rise in SA, hybrid vehicles are predicted to account for the lion’s share of sales in the first half of the decade, with full EVs expected to follow suit towards 2030, especially if our current power woes are successfully addressed, but the big pressure lives in floor planning and the financing of stock. 

There is however light ahead. S A’s car manufacturers stand to grow their business streams in 2023 by tapping into emergent shifts and trends in commercial, industrial, and technological spheres and acting at the right time. And…car dealerships can strive to retain high-quality service commitments, consumer value, and choice.

Opportunities not to miss out on:

  1. Vehicles are so expensive!  Stocking up and cleaning stock costs a lot! Take advance of financing for your dealership to ensure your cash is in constant flow when you need to order.
  2.  Invest in EVs. If you are not already there, it’s time to consider this move. More and more consumers are looking to save on fuel costs and support our changing environment.  Support your customer’s needs and invest in hybrid or EV stock options they will need now and in the future.
  3. Manage your floor plan inventory, equipment, diagnostic tools, and dealer management systems with ease and flexibility.  Without capital to support your needs, this will feel impossible, so it may serve you and your business to engage with a revolving capital facility to support your needs.
  4. Create offers your market can’t refuse.  In times of need, consumers will be looking for a solution. A reliable line of business capital will help you manage unexpected costs and let you stay a step ahead of shifting consumer trends.
  5. Get organised with Subscription-based offerings, or MaaS will be a growing trend. If consumer affordability can be mitigated, more cars will be sold. 2023 could be the year this becomes a reality for car dealerships.
  6. Upgrade your dealership system to work for you! Tech is pricey, but time is money.  Having a credit facility you can tap into when you need it can help you navigate the expense and inject your business in positive ways.

Despite a myriad of opportunities, the automotive industry will nevertheless face considerable hurdles in 2023 – the ongoing energy crisis, supply chain disruptions, and less money in people’s pockets – to name but a few. To successfully navigate these obstacles, and ensure growth and success in 2023, car dealerships will need business capital. 

Floor plan financing

Floor plan financing is one of the most important focal areas for car dealerships right now. This is a lending option that allows car dealers to borrow money against the value of their car inventory. This type of financing enables dealers to keep a wide range of cars on their floors, providing their customers with a greater selection.

Floor plan financing offers several benefits for used car dealers. For instance, it can help to increase cash flow by financing your inventory through a lender, such as Lulalend. This frees up cash flow that can be used for other business purposes. In addition, financing can provide the liquidity needed to expand inventory and grow the business.

Another advantage of floor plan financing is that it can help improve the credit rating of a car dealer. By providing the necessary financing, a lender can assist in building a better credit score. This can be beneficial for obtaining other types of financing in the future, such as when the dealer needs to invest in larger premises to accommodate business growth.

With quick convenient fully online paperless applications for up to R5M of working capital, Lulalend’s business capital solutions for car dealerships require no collateral and offer flexible repayment terms, and full transparency, with no hidden fees.

With a vision to assist SA’s entrepreneurs in growing our economy and providing jobs for our people, Lulalend is a trusted business credit partner, supporting car dealerships with the flexible cash injections they need to innovate and take advantage of opportunities. Find out more here. 



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