CNC MOTORS SCAM EXPLAINED (Why Dealers Do This Shady Money Trick)

[@chytaan]

That is not entirely true in terms of floor plan line of credit. I am an independent dealer and was offered by multiple floor plans up to 1 million in line of credit. Other dealers get even more. Some big dealers get 20 to 30 million dollars. Some of the big floor plan companies are AFC Nextgear and floor plan Express. Most dealers have access to those companies to get a line of credit. It is not 30 or 20% or even 15% rates. Most dealers with decent credit , their rate is about 2% over prime. The owner of CNC himself said in the interview that he went from 2 million to 20 to 30 million line of credit. He went and bought many cars. Spent many of the millions the line of credit provided him. Over leveraged himself. Very dangerous in the floor plan game. Exotic cars in general take a while to sell, some over a year. The floor plan is generally due after 90 days on a car loan. In CNC's case, what probably happened is that many of these cars didn't sell right away and he is left with millions due on the floor plan line of credit. So either the floor plan creditors come in and confiscate the cars on the line of credit and he loses millions. Or He uses the money from the consigned cars that have been sold and makes payments on his line of credit floor plan to buy himself time and not lose his entire business.

[@jaymorrison5895]

Thanks for the info. I’ve known owners of small used car lots and was aware they had some sort of credit line. Just wasn’t sure how it worked. Thought maybe the auctions provided the credit line. Thanks fir sharing

[@jimrobison114]

@@jaymorrison5895 Almost all dealers (new and used have flooring or can obtain flooring if they want it. I speak from 45 years of New, Used and Leasing Company experience. As a used car dealer I always had a flooring credit line. Some are handled through banks, auctions are a big source and many flooring companies set up with auctions to floor auction purchases. Another error in the video is that as mentioned above by allh1, this dealer did have flooring but may have mishandled it at some point and had it revoked which would put him a cash crunch. Flooring companies require immediate payoff when a car is sold. He got underwater and was robbing Peter to pay Paul which happens often but usually not in such big numbers.

[@johnshellenberg1383]

People that keep supporting CNC need to watch this really understand why this is 100% the fault of the dealership owner. Concise and well done explanation.

[@ethersecure2432]

You're really giving them more credit than you should. Clearly they just blew all their customers money on cocaine and prostitutes.

[@agent9184]

probably, they have terrible cash flow and long term planning skills 😂😂😂

[@HalfBreedMix]

@Ether Secure Skip the cocaine and spent the saved cash on better prostitutes,,,,,,,,,,, cleaner in both respects.

[@toddp.226]

It's called the FLOAT! I was in the car business for over 20 years, it is VERY common. Customers get late payments, etc on their credit reports. All it takes is one bad month for the house of cards to crumble.

[@JetFire9]

Yes, so many people think CNC is the first and only one to have the house of cards fall down. It happens all the time. It happened to a highline dealer near me, and I bought a car from them and had to pound them to get the title, but I got it. Only months later, the whole place cratered and people got hurt for sure. It's really not that rare.

[@travelingman8230]

Or 14 bad Covid months!!

[@jamesplotkin4674]

@@travelingman8230 CNC's been in trouble since 2018. Like a compulsive gambler... "just one more roll and I'll make my money back."

[@2011blueman]

@@travelingman8230 The car market was fantastic during 2020, CNC's issues likely had nothing to do with covid.

[@Truthcanbeconfusing]

It's called a scam, a ponzi scheme, new investor money to pay off old investors type thing.

[@simonbelmont1]

"And he would have gotten away with it, too, if it weren't for you meddling kids!"

[@themessenger5868]

HE HE HE HE HE HE...time for a scooby snack Scoob...

[@Pboy7272]

😂 You won the internet that day.

[@chijen2010]

Shaggy consigned the Mystery Machine van to CNC

[@davidbranch3104]

@@chijen2010 and never got his money back. Damn Shaggy..damn😂😂😂

[@duramax78]

Meddling kids.?

[@JulianGonzalez1974]

I sold cars at West Covina Plymouth-Chrysler-Jeep. Back in the early 2000's they were doing what CNC is accused of doing. We didnt know until my co workers mom traded in her car for a new Chrysler....but a few weeks later the bank called his mom and told her she missed a payment. After some back and forth between the dealer and my co workers mom it came to light that the scheme was happening. Another instance was a guy came into the dealer so pissed off that he walked into the finance directors office and punched the dude in the face! They were SHADY!!! A coworker and I went to the bank on payday to cash our check and the teller told us that couldn't cash the check because the dealers account was overdrawn! I told the teller she needs to cash our check right now...she did but told us to warn everyone else that they basically have a worthless piece of paper until the dealer reconciles the account. After that I was out of there!

[@jimrobison114]

In my 45 years of auto dealer experience the more experienced crooks saved the payment books from the person trading in the car and made the monthly payments until they got enough heat that they had to pay the loan off.

[@UNLOCKsilo]

You don't need to be a franchise dealer to have a floorplan.

[@ExoticCarHacks]

Yes, but while almost all franchise dealers have floorplans, most boutique exotic dealers do not -- or if they do it is too small so they seek other funding as well.

[@shawnl3151]

That’s true floor plans usually are short term for high turnover dealerships. Most cars have to be paid off between 90-180 days that’s why dealers are motivated to sell when a cars been on the lot 90 days

[@semajd5995]

What are you guys talking about? Tons of mom and pop dealerships have floorplans...

[@UNLOCKsilo]

@@semajd5995 that's what I'm saying

[@kevinw627]

This is a fact . LARGE numbers .....depending on how long you have been in business credit worthiness etc.

[@skylerssupercarlife348]

This style of video you're starting to do is actually really good and engaging. Fyi.

[@19993gt]

Hm illl be the judge of that. And I hope I agree. Thank you for this disposition

[@chenglo8999]

Love the straight up no bs method man

[@levrige]

The key here is that all of these are FAR beyond 90 days. How do I know? I am out $500k as of today. Also, you failed to mention the kicker: all of these deals are like mine - they are CONSIGNMENTS. CNC has not floated a dime.

[@michaelgiandonato3313]

You do not have to be a franchise dealer to get a floor plan. Next gear capital is a floor plan company that will extend lines of credit to independent dealers. Those credits are called floor plans. God bless nice video

[@ScrubRadius]

Exactly. Over 20 years ago when I was a used car dealer I had floorplan money. Clay at CNC said just the other night that he was making interest payments on 30 million in floorplan. I suspect the floorplan bank may very well have all the titles (this is pretty common on floorplans)...and CNC isn’t paying THEM.

[@650turbo]

Disagree. Next gear is shit for Floorplans. Complete joke. Good Floorplans aren't I boutique dealers by real banks

[@chadwick-ma]

@@650turbo Next Gear is super expensive to use.

[@eddiejoseph9062]

A dealership can’t floorplan autos it does not own-i.e., consignment vehicles.

[@iambriguy]

@@ScrubRadius He’s more than likely out of trust with all his floor plan lines. Over leveraged. Plus he’s out of trust with consignment customers cars. Rumor on the street is he’s out of trust by around $40,000,000. 40 Million

[@DioguardiAS]

OK, independent dealers absolutely have floor plans. That's 1000% incorrect, you don't need to be a franchise dealer to have a floor plan.

[@georgecifuentes3244]

I agree with you

[@ask4george1]

OK I got it, well you explained it 100% I was watching Dan's channel Normal Guy Supercar and he's still figuring out how they could of done this to so many people.

[@Kevins93cobra]

Direct and to the point from someone who knows (indirectly) what happened.... excellent video, thanks!

[@czwhat328]

Best analysis of the CNC situation out on internet!

[@MattTradesLife]

Don’t own an exotic yet. But, this video will be rewatched in the future!

[@EmmanuelDeligeorges]

U dont need to worry if u r buying, only if u hand over a car u own for consignment

[@restomodmustangs]

@@EmmanuelDeligeorges wrong. if the dealer didn't pay off the note on the car (if previous owner had financing balance). there would be no title released for you to register the vehicle and the old owners bank would still be the lien holder. in that situation both consigner and buyer get screwed with the dealer mismanaging funds.

[@tdee17]

Ya, got caught in floating title scam. Dealer resold the vehicle without paying off note. Had to repo the vehicle from poor bastard on the other end. The GM of the dealership was versed in this game originated from CA. Great vid!

[@haulistic7569]

So what I'm gathering is that they couldn't manage risk properly. But bought a 16mil dollar complex 🤦🏽‍♂️

[@rongosciniak264]

All affected customers need to file a lien against CNC before he files bankruptcy.

[@gustavo-gs6jy]

ASAP. Once cnc files a BK, that's it.

[@cucamongaduke3600]

I’ve driven past their Upland dealership a thousand times. I lurk on their website inventory page frequently just to see what’s new and what it’s going for. I had no clue how they were acquiring their stock, let alone, who are the people actually buying these cars. What a great video. What a crazy scam.

[@EmmanuelDeligeorges]

This is an excellent explanation. This happened to a dealership in my city... im surprised the guy in charge didnt get hunted down by the rich people who got burnt.

[@imapisces5156]

What's happening to CNC makes perfect sense once you have heard the back story. Thanks for your great job of presenting it.

[@TheLambo123254]

thanks for this video - helped me understand the situation!

[@bigmotor3845]

Ooooooh! I bet those guys over at CNC might not like to see this Vid!

[@ExoticCarHacks]

They might not like to see the inside of a prison cell, either lol

[@fstmr2trd]

@@ExoticCarHacks LOL yup. one way trip he made himself to the Pen.

[@bigd9848]

They will be in jail soon

[@morfeophantasm7435]

@@ExoticCarHacks excellent articulate explanation of how the house of cards falls . Thank you for making this video. Nice watch too ; ) we are hoping the best outcome for all the people who's cars and money are in this state of limbo .

[@todtalk3912]

Ur the man, that was the best real explanation I've heard. Everyone else wants to pretend it isnt over for them, it def is. They scaled to high without enough people on the financial side to know what they were doing n they got swamped.

[@machetekid07]

I don’t even recall the last timr I watched your videos and I randomly remembered your channel yesterday and now I came across this by chance so glad i watched and glad to be a viewer again. Very informative

[@Pigpen76]

i drove by there two weeks ago and noticed there were no vehicles parked around the building outside like there usually is. i thought it was really odd. now i know why.

[@vladimirtalijan]

The problem with this is, if CNC goes bankrupt, nobody gets their money.

[@1570CHRIS]

They need to be shut down and unfortunately people are going to lose money. As long as they stay in business more people are and will be scammed! They will not be able to legitimately make up the deficit in their current situation.

[@The_Drive_Inside]

Damn. Straight to the point and full of a shit ton of good info!!! 🤙🏻

[@mohamedelyaouti2051]

This guy is an absolute fraud. Can't get more clearer than that man.

[@brettsmith1367]

Excellent explanation on the House of Cards of how CNC and other dealerships were running their business. Thank you for this

[@LordLoMR2]

This sounds a lot like the performance shops I used to order parts from. I’d pay upfront for the part and they’d lie to me about how there are shipping delays, back orders, etc, wouldn’t let me cancel my order. 3 months later the part shows up. Lol.

[@22Epic]

That's unfortunately how most businesses work. Everything is fine as long as the number of transaction stays the same, but if for some reason you get less transactions then it's the start of a domino effect.

[@davidhasselhoff619]

You can get a Floorplan as an independent non-franchised dealer. There are many to choose from. Even Mannheim offers them.

[@erikjohansen1873]

That's not the business model CNC Motors used. He sold the consign vehicles and pocketed the money .

[@chadwick-ma]

as a safe tips when you buy the car from independent dealer. i only pay dealer if they can show me title or copy of title. if they floor plan it. It can be pulled from bank. without it do not pay for the car.

[@BamaE92]

Very, very well explained! Even if one chooses the higher road and doesn’t float & leverage consignor cash....the huge daily cash swings of an exotic car dealer are hard to manage and can get out of control very quickly. Unfortunately many dealerships see spending money/time on financial back office as a waste because they aren’t “revenue-generating”, and always choose to spend their overhead on more sales guys and marketing spend. Then they spend consignor money on accident and dig themselves in a hole. Not having a solid back office that can keep up is like building a mansion on sand. It’ll collapse eventually.

[@michaelwalker1145]

The Big problems start when the person that bought the car starts claiming for faults. Especially is you don't have a warranty from a third party company.

[@toddp.226]

You can sell yourself out of business as a car dealer. Especially if you get a lot of trade-ins that zap your cash flow with payoffs.

[@davidhasselhoff619]

@Herbert Harris lies

[@davidhasselhoff619]

@Linda Owen forex hustlers are liars

[@davidhasselhoff619]

@Macus Wilson liar

[@davidhasselhoff619]

@Herbert Harris Forex hustlers have been around a long time. Poor suckers think they are going to make money.

[@davidhasselhoff619]

@Linda Owen sorry for your loss.

[@cartergarnon6299]

Best video on this BY FAR!

[@vm6093]

Great video and so true I saw it all the time then they start messing with employees pay stats off with little things.

[@bootscootinhd]

Insightful and informative for anyone interested in purchasing an exotic car from an independent dealership. Hopefully this information will save an honest and unsuspecting consignment prospect thousands of dollars as well as a tremendous amount of stress, grief and regret!

[@markmcintosh7095]

You did a great job explaining how some of the dealers work. Thanks

[@garyconway6769]

So CNC doesn't really own any of the cars they have on the web site? So no one that is owed money is going to get paid because the cash flow cycle is falling to far behind? So the bank will soon pull the plug and everyone is going to loose! I hope everyone who has a car on the lot runs down there to get it back real soon! The WEB site is full of beautiful cars still today!

[@michaeljkasnter]

How this guy isn’t behind bars is absolutely unbelievable!!!!

[@LosAngelesPrivateInvestigator]

Thank you for the insight! I have a case right now that someone has borrowed millions against twenty cars. (He claims to be a broker/whole saller w/ out a license) The deal went through and now the borrower is demanding 10+ titles to be released. So naturally we went out to check the inventory and we can only find two cars (and one of them is showing it's been sold!) So what does the lender do? The money is gone, the cars are not found AND NOW the borrower wants the titles!!! (talk about doubling down!)

[@mikelliteras397]

So when your dealer gives you your 3rd paper tag, it might be time to ask some questions.

[@dakotaautosales9673]

Lol absolutely

[@user-bc9tp6tu4b]

You are on another level now with your content a real pleasure to watch now family friendly too your great at explaining complicated things to dummies like me thank you

[@kerryeff407]

Spot on Mate! That was my impression after viewing the 1st video regarding Shane's situation. It appeared to have the Ponzi Scheme vibe.

[@zache3818]

99% of this is spot on and he’s accurate. Only correction is you can be an independent dealer with a floor plan and sizable ones. I know independents that have floor plans as small as $50k up to $30 million. A dealer doesn’t need to be associated with a franchise like Porsche or Audi etc to get a floor plan. Without floor plans I’m guessing about 80% of dealers wouldn’t exist

[@tulzentulz5989]

It’s very reassuring when this type of information comes from a regular car buying guy, also keep it up, love your videos man🤝

[@mikehurracan691]

Thank you for not using any profanities. Good Job.

[@thefceUSMC]

The word "bullshit" at 9:33 isn't a profanity? LOL

[@jessemartinez9279]

Thank you for enlightening explanation. I knew Clay was likely doing this from the first time I heard how long he was stringing some of his clientele. He was trying to buy more time before settling all accounts but the “cash”was just sitting there.

[@DustinChase]

I’m sure he was also trading consignment titles for cash at a super high interest rate. Here’s how it works you take your 150k car in leave the title. CNC takes title either puts it on the “floor plan” and the floor plan pays out 150k on that car. He uses the 150k to cover some holes until he gets a check on another group of cars that just sold.

[@chrismartin4654]

There are floorplans for dealers like CHC. Adesa is a floorplan for used car dealers among others. CHC surely used a floorplan. CHC was using a combination of consignment and floorplan. They were comingling fund from consignment with floorplan funds and vice versa.

[@freddaniali]

Dan with Normal Guy Supercar interviewed the owner. Check out his videos.

[@linoleumshake]

The owner didn’t even answer the question. I didn’t know a man can spew BS for so long. No explanation about the funds/titles/location of cars. Just boo hoo I’m broke, I’m renting, I’m not getting away with this and if you all keep pointing fingers at me then that somehow prevents checks from being paid. I’m glad Dan followed up with a video basically stated the owner is a pos and don’t do business with them.

[@georgesuzuki7040]

Get the violin out when watching Dan’s interview with Clay.

[@Abeylius]

This was the best overview description so far 👍🏽 Amazing breakdown.

[@PatrickMichael2002]

I went there a few times. Never liked the people or the vibe. So, they were basically kiting?

[@toddp.226]

Not kiting, but very similar.

[@Xplicitlyricky]

I’m an independent dealer and I have a floor plan. So yes, they do have them. In an interview with CNC’s owner he said he had a 30 million dollar floor plan.

[@christschool]

I saw that as well. He said early he had a $30MM line and then later in the video $20MM. As a banker to car dealerships throughout the US, I call bullshit on both those numbers. There would have to be some heavy collateral behind those floorplans and CNC just doesn't have it.

[@Xplicitlyricky]

@@christschool the collateral is the cars

[@panchosspeedshop8576]

CNC was a franchise dealer, they were Lotus of Upland.

[@MakeMoneyTrucking]

thanks for explaining this makes sense now 👍 borrowed into a hole they couldn't dig themselves out of

[@smiconsulting8434]

I had a floor plan as an independent dealer. MAFS allows independent dealers to obtain floor plans with good credit.

[@paulnowlin2901]

This is spot on!! I am glad you explained this so well!!!

[@MitchPatriot-ve6zg]

That's BS. There should be new laws to prevent this in the future for these kind of car dealers. You sell a car for someone, you give the money to the seller right away! Period, No using their money to finance your business! That's BS. Thanks for clarifying for me. I live in Upland and am horrified at this CNC dealer!

[@503garage2]

CNC did have a floor plan through Next Gear Capital

[@turbokid99]

Great video and info. You nailed this on the head.

[@TheEriksniper]

I do not understand why anyone would hand over the car before getting payed!!?

[@linoleumshake]

7:30 for anyone who wants to learn why GAAP is a thing

[@Brendon184]

Thanks for the video. I think the issue is the guy had 20 days to pay and never asked those sellers if he could use their float. He just used it and lost it and then lied time and time again. He also sold cars without titles, anyway you look at it it’s fraud and if other dealer are doing it too then they need swift legal action.

[@CAMG-hg1cf]

I always wonder how dealership have a ton of exotic cars on the lot, especially when it’s a private dealership and they have a ton of hyper cars. Good info

[@maynardholmes8870]

Sir you are the professor thank you for breaking it down in simple terms I’m not even a high price car guy but I’m subscribing I drive by this place all the time and from the outside looking in everything looked perfect at this dealership WOW I should just quit profiling and judging at 55 years old I’ve been wrong more than right as it relates to wealthy upper crust people places and things. I guess it’s true all that glitters is not gold

[@davidfulginiti5985]

thanks, it's an old game!

[@sunroameroverland]

Yes sir your example at 7:51 is exactly how we ran a book business on our inventory supply, we were in the 100 top sellers in US for dollar per square foot sales.

[@bobfitzjohn]

Great video. Very clear and concise explanation of what dealers are doing. Keep them coming. (small point. Check your spelling on the pop ups EXIOTIC and follwers)

[@stephenedelman9167]

What are the CA laws or regulations regarding how the money must be held after payment to the dealer? Aren't there regulations that it can't be commingled and must be put in a trust account until distributed? I thought they have to also pay off the loan before the sale.

[@sanfordlavine1760]

Excellent video. Your explanation was clear and concise.

[@vitoaugello1677]

Moral of the story. Save your money for total cost and go to Mecum or Barrett Jackson and buy the damn thing outright. If more people did that these scammers would go back in their hole and go away.

[@michaelwarner2434]

The problem with that is if you get caught up in certain situations you can pay way more than you should at an auction.

[@CarlsGarage1]

I know people are running credit fraud at some point of their dealership management, for example my friend used to forge bank statement to get customer approved. Most of their cars are not paid off, the dealership will pay 10% and have the car parked at their lot, once customer pays them they then pay off the commercial loan and make their profits. Cash flow is everything, I have no issue holding customer's cash for as long as I can.

[@JR0Rider]

PJ’s knowledge of the car business is incredible! Thanks for breaking this down step by step for us!

[@pk8186]

PJ, actually independent dealers can acquire flooring line of credit as well.

[@rolexer]

I hate your youtube ads but this was very well done.

[@DavidDavid-jb1cy]

thank you for a great video with no gimmicks, dumb intro etc. Well done!

[@Flammable281]

Moral of the story let the buyer beware.

[@weets69]

Explain so very well. Didn’t know about flooring until this vid. Ponzi true and true.

[@michaelpuderramirez2331]

Excellent video. Extremely well explained. Thanks for sharing, sir.

[@3plus6equals25]

😆🤣😂 CNC is in Upland, California. that's funny I live by them..they drive Lamborghini and other fancy cars around the neighborhood speeding down the 210 fwy to mountain and back to campus super fast...

[@billypayne6197]

Great job ! Because of your presentation on this video - I subscribed , good luck !!!

[@shawnshavali9291]

Very educational PJ!!

[@ousi00]

I have been waiting for you to talk about this!

[@Charlies1970TA]

Audited many New and Used Vehicle Dealers whom floored (financed) all or part of their inventory which required detailed inventory audits to ensure the dealer complied with the terns of their credit account. Some did not. Note, Individulals whom consign their vehicle are seriously at risk given the dealer can sell their car and not pay as required and it's Very Important to understand that Innocent Buyers in most cases are entitled to keep the vehicles they purchased! Trust, but Verify!

[@erikjohansen1873]

In theory that's how it should be done. Exception being CandC Motors. They were consignment store and the money for the vehicles was pocketed by the owner of now defunct store.

[@rugger104]

Good video. How can you tell which dealers are shady or legit?

[@toddp.226]

If in doubt, go to a franchise dealership. Their is no way to tell if an independent dealer is legit or not. It's a VERY shady business. VERY SHADY.

[@paulpan2553]

Just the video needed. Subscribed immediately 👏🏼👏🏼👏🏼

[@gpzjeffrey7974]

I don't understand why owners would agree to consign their car with ANY dealer, regardless of their reputation.

[@bmwaddict]

I was a very small independent dealer, and I had a floor plan. Maybe things have changed in the past three years. Crazy story tho.

[@toddp.226]

Same here, but I think he means the big floor plans where they don't do floor plan checks for 90 days or more, giving the dealer time to play the float game.

[@bmwaddict]

@@toddp.226 Ah got it

[@semajd5995]

Nothing has changed... and independent dealers can get floor plans

[@chuckschillingvideos]

This is easily resolved by not being an idiot. Don't allow a dealer to take your car on consignment and this can never happen to you.

[@SwissMarksman]

Yeah I was suprised that those individuals did that. Especially the expensive one, because those people shouldn't be that naive, right.. right??

[@CitySlicker360]

Wow very informative

[@gglen2141]

Also, you're not fat, love the Gucci yoga ball(?) and that was really well explained.

[@zonkers_garage]

Isn't CNC Motors a franchised Lotus Dealer?

[@roscoejones4515]

It was, Lotus pulled their inventory awhile ago.

[@zonkers_garage]

@@roscoejones4515 Pity the guy who bought their car there, expecting a service dept. and customer service representative of a $100k plus car.

[@suzyjohnson4667]

I studied the earlier Clay Thom video(s). Same personality as a serial killer! Let this be a lesson to us all!

[@bluestang7571]

Clayton Thom the owner of CNC motors deserve to be behind bars now !

[@Gedalneil]

Asset allocation, cost of money, cash flow management. That’s all it is, and will ever be. My question is, if an independent dealer does it RIGHT (legit, strong Cutomer service, etc), is it worth the effort to be in this business?