CASE STUDY: Floor Plan Financing for a Sydney Car Dealership

A growing car dealership in Sydney specialised in late-model and imported vehicles. Customer demand was strong, but capital was tied up in vehicles awaiting arrival and sale.

To support growth without tying up additional owner funds, the dealership explored floor plan financing, a specialist facility designed to fund motor vehicle inventory.

FLOOR PLAN FINANCING

The Business Challenge

Each vehicle had to be paid for upfront, often weeks before it arrived in Australia. This tied up working capital, limiting the ability to increase stock levels, respond to market demand, or cover operational costs like staff wages, rent, and marketing.

While a standard business line of credit was considered, it did not align with the dealership’s inventory flow and would require ongoing repayments regardless of whether vehicles had sold.

The Funding Solution

The dealership explored a floor plan financing facility, which funds vehicles individually and is secured against the vehicle itself. Repayment is generally required only when a vehicle is sold, freeing up capital to fund additional stock.

Typical facility terms for an established dealership can include:

• Facility limits up to $10 million, depending on lender criteria

• Interest-only payments while vehicles remain in inventory

• Revolving structure: as vehicles are sold and repaid, the facility limit is replenished

• Compliance with inventory reporting, stock ageing, and periodic audits

This structure aligns borrowing with vehicle turnover, rather than requiring repayments on a general unsecured credit line.

Potential Benefits of Floor Plan Financing

Floor plan financing allows dealerships to:

• Increase inventory without tying up owner capital

• Fund high-value vehicles or imported stock efficiently

• Maintain cash flow for operational needs while vehicles are in transit or on display

• Scale the business sustainably, as facility limits revolve automatically when stock is sold

Unlike a standard line of credit, floor plan finance is asset-specific, self-liquidating, and directly tied to inventory turnover, providing transparency and reduced risk for both the dealership and the lender.

Floor Plan Financing for a Sydney Car Dealership

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DISCLAIMER:  This case study is illustrative only and may be hypothetical or partially fictitious. Details may be modified to preserve confidentiality and should not be relied upon as a representation of any actual client outcome. Finance options are subject to individual lender credit criteria, approval, and applicable terms and conditions. This content is general information only and does not constitute financial, legal, tax, or accounting advice. Our firm provides business consulting and finance broking services only and recommends that readers seek independent professional advice tailored to their specific circumstances.