Launch of NextGear Capital UK
The launch of NextGear Capital UK Ltd was announced today; a new vehicle stock funding program to support UK independent dealers in growing their business. Based in Chester and set to employ 42 people initially, NextGear Capital will grow to well over 100 people in a few years. NextGear Capital UK will operate as an independent organisation and is investing over £50 million to support independent dealers in the UK.
NextGear Capital’s stock funding program will allow dealers to source vehicles without paying for the vehicle out of pocket while enabling the dealer to offer the vehicle for sale on their lot for over 100 days. The dealer will still visit the auction to bid for and buy stock as they would normally, with NextGear Capital UK funding the vehicle purchase directly to the auction.
The fund, which is expected to grow to as much as £250 million within a few years, will be aimed at independent dealers that retail cars as their primary income source. NextGear Capital UK is set to become the UK’s largest stock funding provider to the automotive industry with initial funding estimated to be ten times more than any other comparable provider. In addition, unlike many other UK providers, it will cover 100% of the wholesale value of the vehicles, plus any auction buyer fees and transport costs.
NextGear Capital, Inc already operates in North America and was created through the merger of Manheim Automotive Financial Services, Inc. (MAFS) and Dealer Services Corporation (DSC). Currently NextGear Capital’s US customer base includes more than 17,000 dealers purchasing at over 1,000 auctions with $1.7 billion of outstanding floorplan receivables.
David Mercer, Managing Director of NextGear Capital commented. “Research undertaken by Manheim suggests that accessing finance is one of the top concerns for nearly 4,000 independent dealers across the UK. Our significant investment in the UK used car market will help ambitious used car dealers looking to expand their business but who may be lack current access to traditional funding methods.”
Mercer continued, “We recognise that a funding service of this nature is not only good for buyers but it will benefit the entire industry. Market conditions are currently very buoyant and we are likely to see an increase of supply returning to the wholesale market over the next 18 months. Therefore to be able to offer a regular injection of liquidity in to the market, NextGear Capital stock funding program will enable buyers to absorb more of this supply from vendors.”
Talking about the new Chester location for NextGear Capital David Mercer said. “Chester is one of the key financial business areas in the UK outside of London. Many leading financial service companies have operations based in the city so it will aid us in our recruitment of high calibre people to support the launch of this new business venture.”
Martin McFarland, Executive Vice President of NextGear Capital in the U.S. said. “This is an exciting opportunity for Manheim and NextGear Capital. We are delighted to be expanding to the UK, creating new jobs and supporting our customers with their own business growth plans, just as we already do very successfully in North America.”
NextGear Capital UK Ltd will officially launch in Q2 2014 but interested dealers and auction houses are encouraged to get in touch from February 2014.