The Dealer Risk Management Group
A Simpler Way of Doing Things
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In today’s competitive auto market, dealers face several challenges as they grow their business. One of the most critical aspects of a dealership’s success is how effective are their management of risks associated with their products and services.
Participation structures play a major role for dealers. Participation structures are arrangements that allow dealers to participate in the profits and losses from the products they sell.
Having a participation structure in place allows dealers to form their own insurance and warranty programs and share in the underwriting profits of their program, while also better managing their risks.
Benefits of a Participation Structure
Increased Profitability
Risk Management
Greater Control
Tax Benefits
Value Creation
Insurance tracking is no longer needed
Questions to ask yourself before choosing a Participation Structure
What is your Risk Appetite?
What are your Financial goals?
Are you content with the size of your dealership or would like to scale up?
Are you familiar with the regulatory and tax implications of each structure?
Do you have the in-house expertise and the sophisticated resources for management?
Participation Structures
Dealer Obligor
Controlled Foreign Corporation (CFC)
Non-Controlled Foreign Corporation (NCFC)
Dealer Owned Warranty Company (DOWC)
Retrospective Programs
