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The financial characteristics of the car dealership are attractive:
".... A moderate growth and risk and high returns. Franchised new car dealer revenues have grown at an annual rate of 7.2% compared to 1992, about two times faster than GDP. Moreover, this growth arrived with only a slight risk losing the dealer body is not the money (based on pre-tax) for one year in the last twenty - even during the industry cycle for 1989-1991. Finally, despite major changes in automotivestructure, dealer returns have remained high, with pretax ROE averaging 26.1% over the last twenty years". [MerrillLynch, April 19th, 2004 Report on "Automobile Dealers".]
Athletes from almost every major sport have invested in new car dealerships: Rick Hendrick, Roger Penske, John Elway, Troy Aikman, Evander Holyfield, Arnold Palmer, Michael Jordan, Scottie Pippen and Alex Rodriguez to name a few.
The idea isn't new. Johnny Lujack, 1947 Heisman Trophy winner and Chicago Bear Pro-Bower, started in 1954, a company that then to 16 franchises, spread over 40 acres to expand with sales of over 10,000 vehicles and 150 million dollars a year would be. Lujack retired from the auto business after almost 50 years as a successful broker.
What is the right time?
"It is time to wait," reports Greg Gilmore in June 2005 Dealer Magazine.
Dealers have reported that the Executive classified last year (2004) as the fourth new unitThe sale of the franchised new car dealers. Dealer dollars in total over 714 billion dollars, more than 2% over 2003.
The fact is that when the time is ripe. In 1991, the depths of depression car, John Elway asked me, before signing the contract, if "this" (1991) was the right time to buy. I told him to buy the way, as you and sell, the count is. This year has an investment of $ 20,000,000. When he was a single Mazda store on ArapahoeRoad, in Englewood. I sold the Mazda franchise for him and Nissan gave him its franchise to put in the old Mazda building. Shortly thereafter, I put together another transaction that had John buy the Mazda store on 104th Avenue, in Thornton. John then terminated Suzuki and put the Mazda store with his Oldsmobile and Hyundai franchises. After that he bought one more dealership (a Ford franchise) and then, in 1995, sold the entire package to Republic Industries for $86 million.
A lot of People who buy fear, a franchise in 1991 and thought that John was a big bet. But he did not play. "He structured his purchases and sales correctly, and then turned on his investment.
For example, although GM and Ford lost money (as in 1991), individual dealers made millions, according to NADA (National Automobile Dealers Association) and Automotive News statistics, the dealer margin before taxes average between one and two percent theirThe total sales. Why? The dealers capture a broader base than the manufacturer's business. While the manufacturer makes money by selling new cars, dealers pay the additional services shares, service organizations, used car departments, ministries of finance, insurance services and in some cases, the body shops. So while the manufacturer is on the sales of each year, new car, a successful trader is higher than the total number of vehicles, based inoperation.
DOES THE DEALERSHIP'S HISTORY MATTER?
A little, but don't be intimidated by it. After Jimmy Vasser won the CART racing championship for Target, I put together a transaction for Jimmy to buy a dueled Chevrolet-Toyota franchise, in Napa, that lost money for the previous 10 consecutive years. I put Jimmy together with a dealership manager and Jimmy's dad, who had some previous used car experience, signed-on as used car manager.
Subsequently, after going to dealer school and passing through the chairs, Jimmy's dad took over as General Manager; the store thrived; and Jimmy not only bought the dealership land and facility, but bought the Ford store in the next town, and is currently building a new Toyota store so that his Chevrolet and Toyota franchises can have separate facilities.
WHAT DOES IT TAKE TO BE SUCCESSFUL?
Good advice. Good advice is both important and hard to find. In the words of Trace Armstrong, past president of Just be aware that the bad NFL Players Association: "It 's out there to pay these guys. It' s really a sort of fear." [Reported by Eric Fisher, March 27, 2000.]
As for the entertainment industry and sports, there is so much money in the automotive sector, everyone wants a piece of it. So everyone thinks or she is an expert in analyzing and structuring transactions, while in reality they only want to receive a broker a commission from the transaction.
Sidebar: NewAutohaus sales reached nearly one billion U.S. dollars in 2004. The retailers and related industries account for 15% of gross national product of the United States.
How to create a successful team?
An investor needs a team. In general, the same team, completed by an expert in the automotive sector. Not in a false sense of security that loyalty is tantamount to be put down with the "factory" or "banker".
For example, Ford is one ofits black dealers (a superstar athlete) the point man, meeting with senior agency and act as intermediaries between the company and Jesse Jackson. He has mediated disputes between Ford and its dealers, and encouraged the company public appearances. He also had a close relationship with some Ford family members.
"He was friends in high places," said John Clissold, a former executive at Ford Credit. "[The head of Ford Credit] was a strong supporter." But if problemscame, it made no difference. The work was carried out. "... A manager familiar with the situation summed up the prevailing mood in the company's headquarters:" [t] Superstar directed toward a precipice, and we were not with him. History [by Bill Vlasic and Mark Truby / The Detroit News Sunday, May 26, 2002.]
The fact is that the factory and bank employees to do a duty, which is better for the factory or bank, and not what is best for your customers. It's the law. Youlegal obligation to their shareholders - no matter how Nice or your client to connect to them.
The financial statements and the accountant is not enough. Your client needs a member of your team who is a student of the industry. A statement from statements cars are certified and comply with all applicable accounting standards, but always a false impression of success. There are many nuisances in defining and structuring automotive transactions, that the needs of customersin the field of automobile industry may take an expert to determine both what is best for the athlete and what is the best way to get it.
So while the team of accountants are lawyers, agents and managers, which are exceptional in their work, unless a student of the industry (one that does not buy structural and sold every day), a key factor for success not is available.
Think of any sport or activity. If a person wants to create aTeam Championship in a particular sport, is created by people who play the game 50% of the time, 75% of the time, or someone who plays every day?
Remember: The most beautiful thing he had ever heard of Richard Nixon, said: "It looks like a car salesman."