George Triplett, sales manager of Rosenberg Tractor, Rosenberg, Texas, gave a thoughtful reply to the question about OEM sponsorships. He suggests that those same dollars could be used to improve struggling cash flows for everyone's benefit.
“I am not the architect of these deals, but have observed the risk that paid off huge in the past from those that took on the risk,” he says. “Competitive finance can differentiate a business over competitors who may not be able to offer similar rates.”
First, he advises those dollars be put into a “warehouse model” for financing and use it to get everybody financed for the product. “Parking $1 million in a warehouse model” means allocating a significant amount of funds into a business or investment model that acts as a financial reserve or buffer, he says.
“Use the racecar sponsorship to subsidize the interest rate buy-downs on Tier 2 and Tier 3 clients,” he says. “There is never a plain old 0% interest rate; it is always bought down from some source of funds.”
Terex Finance tried this years ago, he says, in what he called a “heck of a business plan” to get everyone financed. “Terex’s concept was to use the pool of funds to buy down the riskier Tier 2 & Tier 3 clients that would normally be above 0% or require a down payment,” he says.
“Great Plains Manufacturing mastered this way back when in sending all of its and Land Pride’s advertising budget to Kubota to subsidize 0% so their Land Pride implements could sell with Kubota products.” Not only was this a successful plan, says Triplett, but it also led to Kubota’s acquisition of the large shortline OEM in 2016.
Triplett asked for a homeowner “consumer” lease for zero turns and compact tractors but to no avail.
Noting that now is not the time for “bragging rights” on sponsorships, he adds there’s a lot of conversation for using all funds wisely during lean years. “But there are too many perks for a NASCAR sponsorship to give that money up – not so much as brand awareness but more of a gratitude tool to win big buyers.”
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