Car dealerships - any good as a business?
Discussion
OK chaps a semi-serious question for you here, arew car dealerships any good as a business? I knew a guy who bought a run-down family dealership and built it up to become one of the leading Skoda dealers in teh south, he sold up and retired with a fortune. Likewise I have heard horror stories. So with a mid-life crisis looming and some cash to invest what do you reckon? Comments/ideas? Rich...
Like any business they only make cash if they are run well.
Car dealerships are more prone to economic factors than, say, supermarkets but a well run dealership can be a gold mine.
Alternatively "invest" the cash in a Tuscan S (and one for me as my investment advice fee)
>> Edited by plipton on Wednesday 12th February 14:15
Car dealerships are more prone to economic factors than, say, supermarkets but a well run dealership can be a gold mine.
Alternatively "invest" the cash in a Tuscan S (and one for me as my investment advice fee)
>> Edited by plipton on Wednesday 12th February 14:15
He was probably lucky to pick a rising star of a brand in skoda. The one question is are you decended from generations of horse thieves ???? Every Dealer Principle I've met started life doing the Frank Butcher in a Porta cabin it's just in their blood, there are good and bad dealers out there but in my experience it just depends on how good they make you feel after shagging you. The question shouldn't be "is it a good business" but "will I be good at that business" ?
Well that's almost certainly true, however there may be other opportunities lurking?
mel said: He was probably lucky to pick a rising star of a brand in skoda.
Not exactly but selling is in my blood, well I've been a salesman for 25 years and not been given my marching orders too often (well only once actually - and we won't go into that
The one question is are you decended from generations of horse thieves?
) Also my son-in law is an accountant and his dad is in "the trade" so there are a few contacts. I just can't imagine flogging software for another 10 years and fance something totally different. Rich...
right, get my strategy head on here....
what are the fundamentals of that kind of business, and how are they changing? what does this mean for you?
IIRC...
Margins on new cars are not massive.
Servicing is where the profit is. Bloc exemption is ending, at least on servicing (sooner or later) and this will tend to erode this revenue stream.
The trade seems to be dominated by big dealer groups, selling more cars and therefore getting better terms from the OEM than a small player.
So on the basis of 2 minutes of not very informed strategising, I'd say don't do it.
On the other hand, if you were to spend a large chunk of time researching this, you might come up with a different answer.
hope this helped a bit
N
what are the fundamentals of that kind of business, and how are they changing? what does this mean for you?
IIRC...
Margins on new cars are not massive.
Servicing is where the profit is. Bloc exemption is ending, at least on servicing (sooner or later) and this will tend to erode this revenue stream.
The trade seems to be dominated by big dealer groups, selling more cars and therefore getting better terms from the OEM than a small player.
So on the basis of 2 minutes of not very informed strategising, I'd say don't do it.
On the other hand, if you were to spend a large chunk of time researching this, you might come up with a different answer.
hope this helped a bit
N
Rich - I'd agree with the last post - the car job is completely shagged.
You've got some cash & time on your hands? Not tied down? No overheads to worry about?
Get in that gorgeous Griff and head orf to Europe for a month; head straight to Milano and chill.
If you feel the slightest urge to return, just consider the surroundings of that place versus the catastrophe that is currently Bliar's Blighty.
A career in high quality Italian porn {management, of course} might just be the way forward.
Ciao.
You've got some cash & time on your hands? Not tied down? No overheads to worry about?
Get in that gorgeous Griff and head orf to Europe for a month; head straight to Milano and chill. If you feel the slightest urge to return, just consider the surroundings of that place versus the catastrophe that is currently Bliar's Blighty.
A career in high quality Italian porn {management, of course} might just be the way forward.
Ciao.
For my sins I spent 7 years in "the trade" (left 4 years ago)selling for a large chain, it was bloody hard work even then with margins down to 5-10%, the money spinners were the servicing and parts. I still keep in touch with my contacts and not one of them is on course for early retirement! Most of them are more on course for an early grave!!! The only people I know still turning a few quid are the long established prestige guys selling 2nd Hand with anything upto 5k profit on each vehicle, even so they are known to go the odd month without a sale!! There must be easier ways of earning!!
Ps if you find one let us know!
Ps if you find one let us know!
My neighbour made his pile by being one of the first (if not the first) to import Skoda. He had his dealerships in the Bucks area (Madge Motors I think it was called). He sold out to VW. I think he's got his cash in ship & boat yards on the South Coast, and he's always struck me as a very shrewd operator.
Net, think it is a huge gamble if you go into an area you don't have much background in. But good luck whatever you decide.
Net, think it is a huge gamble if you go into an area you don't have much background in. But good luck whatever you decide.
Yes I thought about that and came to the conclusion that I must know more about cars than I do software and I've managed to flog that for 20-25 years now ok, and... computers bore me ridgid, whereas cars are a passion. There's got to be a way
AndrewD said:think it is a huge gamble if you go into an area you don't have much background in. But good luck whatever you decide.
Rich...
NDT said: IIRC...
Margins on new cars are not massive.
Servicing is where the profit is.
Yes. I used to have a head office job in one of the larger uk motor groups (4th largest at the time, 900m turnover). New car profit per unit is 200-300ish. Can be lower, depends on franchise etc. Used cars are normally £1000 average ppu.
Most places work on "service absorbtion" ie all the profit generated by your service dept and parts department needs to cover all the dealership overheads. THat way, even if you don't sell any cars (the most vairable element of the business) you won't go bust.
Whoever said 3% return was actually being a little optimistic. Generally returns are 1 or 2% in this industry, and thats' for people who know what they're doing
Best solution IMO is to work at what give you the most dosh to spend on your toys, rather than make the cars themselves your work.
just my 02p
AndrewD said:He had his dealerships in the Bucks area (Madge Motors I think it was called). He sold out to VW. I think he's got his cash in ship & boat yards on the South Coast.
Nothing to do with Madge Marine in Port Solent Marina by any chance ? I has some work done on my boat by them last winter. Small world...
derestrictor said: Jesus - 1 - 2% margin? That's like the bloody FMCG supermarket grub - shocking stuff.
So much for rip off Britain.
Not that I'm advocating the ridiculously high car prices some manufacturers charge but this system of comparing the price to other European countries is a bit simplistic. For example apparently in the Netherlands there’s about a 50% luxury tax on new cars on top of VAT
. So the car manufacturers have to slash their net list price in order to get any kind of reasonable gross price to the consumer. Of course the tax is not payable on export sales, so us Brits go over there, see the knock down prices and then start jumping up and down about how the British consumer is being shafted by the motor industry. On the other hand you could argue that if the manufacturers are able to slash their net list price by that much in one country then why don't they do it in other countries. Damn... looks like I've just unravelled my own argument... again
.
t1grm said:
Of course the tax is not payable on export sales, so us Brits go over there, see the knock down prices and then start jumping up and down about how the British consumer is being shafted by the motor industry.
On the other hand you could argue that if the manufacturers are able to slash their net list price by that much in one country then why don't they do it in other countries. Damn... looks like I've just unravelled my own argument... again
Market share. That's as important to manufacturers as profit, even more so sometimes. If one manufacturer cuts his price in a given area, even if he loses money as a result, the others will follow suit because they don't want to lose market share. Hence the anomaly pricing referred to above
John
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