GE’s Lannon Addresses New Retail Program
The aggressive new finance program that GE Capital Commercial Distribution Finance has put together with Fleetwood RV Inc. is likely to cause quite a buzz as the industry turns toward the fall and RVIA’s 48th Annual National RV Trade Show, Nov. 30 to Dec. 2 in Louisville, Ky.
The new program, which involves all Fleetwood RV products invoiced on or after last Monday (Aug. 23), provides a competitive interest rate on financed inventory for 120 days and allows dealers to be reimbursed by Fleetwood for 100% of interest charges on new inventory financed through GE Capital and sold within 60 days. A second tier provides 50% interest reimbursement for inventory sold between 61 and 90 days.
Peter Lannon, managing director–RV, for GE Capital’s CDF Business, paused long enough earlier this week to answer a few questions about all of this during Fleetwood’s 2010 National Dealer Meeting in Fort Wayne, Ind.
RVBUSINESS.com: This is about as aggressive as it gets in the finance business these days, is it not?
It’s an innovative program. It’s aggressive, only because it combines two elements which have not been brought together before. There is the reduced interest rate for the first 120 days, which is kind of a standard offering. It’s been seen in the industry before.
But by combining it with the high-turnover option, which allows the dealers to recoup all of their interest expense if they sell through to retail in the first 60 days – or recoup 50% of it if they sell through in 90 days – that’s the unique feature, putting both of those together.
We’ve not done it before. It took somebody like Fleetwood to partner with us to see the value of it, and we’re very happy to innovate with Fleetwood to bring this to the market.
RVBUSINESS.com: It’s apparently based on the premise that fast turns benefit everyone, right?
It is. As we’ve said, we think one of the key lessons from the downturn is that there needs to be a renewed focus on turn at the dealer level – that the dealer has to get the product to the consumer and, frankly, hold margin for the dealers. It’s very important to keep fresh product at the floor, not to allow a lot of aged inventory to stack up, which then leads to discounting pressures.
So, with fast turn and rapid replenishment, which is probably a key thing that most manufacturers now are willing to talk about and encourage, that’s what makes it happen.
In the past, it was pretty much large orders at (the National RV Trade Show in Lousiville, Ky.), or maybe twice-a-year large orders were the norm because manufacturers wanted to level out their production. Now in the current environment, manufacturers see the value in taking more frequent orders, even though each order might be smaller, and responding with lean production.
Just like Fleetwood was talking about here at their dealer meeting, they can fill those orders much more quickly and be much more market-attuned and shorten down the inventory carry cycle for dealers, which is where dealers are probably at the most risk.
RVBUSINESS.com: The end result of all of this for GE is healthier clients, right?
Obviously, faster turn and the promotion of margin retention makes for healthier dealers, which reduces our risk and it also reduces risk for the manufacturers because they can develop stable, long-term dealer relationships without as much exposure to the market swings.
RVBUSINESS.com: Are you going to do this anywhere else? I mean, are we going to see any more aggressive programs out of GE?
At GE, what we are interested in seeing is improved turn overall from dealers, and we are open to working with other manufacturers that share that philosophy about promoting the turn from dealers to retail customers. So, yes, we are open to working with other manufacturers with programs that are designed to promote the turn.