The car selling adventures of Yankee

BigOrangeMojo

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LOL! I aint no rocket surgeon.
All kidding aside. My grandfather had a dealership, wife has done business incentive work for a few, and we have a friend that owns a couple. It's not easy work for sure and you can be heavily impacted by macro factors for sure...

Not sure how your business was impacted but may want to look at Employee Retention Credit
 
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txbo

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I wonder how difficult it is to get your own dealership? YankeeVol may be on the way to owning one.
It takes capital and experience. How much of each depends on the brand, size and location of the dealership.

Car dealerships can have really good cash flow but they operate on a slim profit margin. The typical dealership averages a 3% net profit to sales margin. There is little room for error and manufacturers hate when a dealership has financial woes. It's bad for their brand image. Because of that, they won't aprove your franchise application if you can't show the ability/experience to operate the store.
 
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txbo

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All kidding aside. My grandfather had a dealership, wife has done business incentive work for a few, and we have a friend that owns a couple. It's not easy work for sure and you can be heavily impacted by macro factors for sure...

Not sure how your business was impacted but may want to look at Employee Retention Credit
It's certainly more complicated than most realize.... it's also heavily regulated.
 

Go aeiou

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All kidding aside. My grandfather had a dealership, wife has done business incentive work for a few, and we have a friend that owns a couple. It's not easy work for sure and you can be heavily impacted by macro factors for sure...

Not sure how your business was impacted but may want to look at Employee Retention Credit
It takes capital and experience. How much of each depends on the brand, size and location of the dealership.

Car dealerships can have really good cash flow but they operate on a slim profit margin. The typical dealership averages a 3% net profit to sales margin. There is little room for error and manufacturers hate when a dealership has financial woes. It's bad for their brand image. Because of that, they won't aprove your franchise application if you can't show the ability/experience to operate the store.
Our firm had new car dealership clients in the early 80s when the floor plan Interest rate went to 20+%. A couple went out of business. That's the way they had functioned for years. Cars on a lot went from 50+ to one of each model.
 

txbo

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Our firm had new car dealership clients in the early 80s when the floor plan Interest rate went to 20+%. A couple went out of business. That's the way they had functioned for years. Cars on a lot went from 50+ to one of each model.
The 2010 financial crisis wiped out a bunch of dealers. Several floor plan lenders pulled their line.
 

hog88

Your ray of sunshine
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My BIL has been approached about opening his own dealership, or buying one out. He's the GM of a pretty big store now so IMO it would be one hell of a gamble with everything going on.
 
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Go aeiou

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My BIL has been approached about opening his own dealership, or buying one out. He's the GM of a pretty big store now so IMO it would be one hell of a gamble with everything going on.
It's always a gamble. Things are always going on. Being is business is tough. Being undercapitalized might be a real problem if we get significant inflation. It looks like we already have it to me.
Last I heard Beaman Toyota in Nashville is for sale. He might have changed his mind since the population seems to double every month these days.
 
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txbo

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It's always a gamble. Things are always going on. Being is business is tough. Being undercapitalized might be a real problem if we get significant inflation. It looks like we already have it to me.
Last I heard Beaman Toyota in Nashville is for sale. He might have changed his mind since the population seems to double every month these days.
If it's for sale, I'd be a player. Love to have contact info.
 

hog88

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It's always a gamble. Things are always going on. Being is business is tough. Being undercapitalized might be a real problem if we get significant inflation. It looks like we already have it to me.
Last I heard Beaman Toyota in Nashville is for sale. He might have changed his mind since the population seems to double every month these days.
I understand the gamble of starting/buying a business. I do believe we are recognizing inflation right now, between wages and materials I think it will only get worse. Then if the fed increases interest rates a couple points to slow inflation I think the car business will take a major hit.
 
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txbo

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I understand the gamble of starting/buying a business. I do believe we are recognizing inflation right now, between wages and materials I think it will only get worse. Then if the fed increases interest rates a couple points to slow inflation I think the car business will take a major hit.
A rate increase usually does slow the business but business is so good right now it won't be a tragedy if it slows a bit.

The biggest issue is probably income. GMs of large stores normally make really good money. It would take buying a decent size store to replace the income and those take a lot of money to buy.
 

hog88

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A rate increase usually does slow the business but business is so good right now it won't be a tragedy if it slows a bit.

The biggest issue is probably income. GMs of large stores normally make really good money. It would take buying a decent size store to replace the income and those take a lot of money to buy.
He does make a sizable income now as a GM, at least he lives like he's making money hand over fist.
 
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K-town Vol Fan

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I recently purchased a truck from a large dealership in town. Only paid 10k 05 1 owner Tacoma im going to use it mainly for utility purposes and drive it to work a couple times a week. I assumed they were going to mail me my tags but they didn't, I had to go pick them up. They told me they don't mail tags to people who live within the county. It kind of pissed me off because I paid a $600 processing fee and they can't be bothered to spend a few bucks to mail me my tags. It wasn't a huge inconvenience but it was nonetheless and its just the principle I guess but it is this standard practice or does this particular dealership just suck?
 

walkenvol

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A rate increase usually does slow the business but business is so good right now it won't be a tragedy if it slows a bit.

The biggest issue is probably income. GMs of large stores normally make really good money. It would take buying a decent size store to replace the income and those take a lot of money to buy.
Looking at things from a macro level, the fed can’t ever raise interest rates very much due to the massive existing and growing federal debt. 10 year T bills are under 1% which is crazy low yet that very low rate of interest is currently consuming close to 8% of the federal budget. Not hard to imagine servicing the debt being 30% of the entire budget if rates we’re just to rise up to 4% which is still quite low historically speaking.
 
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volsknx

The only people who dislike winners are losers!
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I recently purchased a full sized diesel 4X4 truck. I have read a lot lately how those vehicles are in such a large demand that dealers are calling customers up asking to purchase the trucks back at almost costs. Now, it could be that people are not actually being truthful but one guy stated he had a 2019 Ram Cummins with 30K on the clock and the dealer offered $5K less than what he bought it for!
 

volsknx

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I remember a non Ford dealer back in the early 2000's that kited his floor plan checks each month. Ford Credit got a check a day early and cashed it and thus it bounced. His entire inventory was financed through them. They came in, hung around for a month and then forced him into bankruptcy.
 

hog88

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I recently purchased a full sized diesel 4X4 truck. I have read a lot lately how those vehicles are in such a large demand that dealers are calling customers up asking to purchase the trucks back at almost costs. Now, it could be that people are not actually being truthful but one guy stated he had a 2019 Ram Cummins with 30K on the clock and the dealer offered $5K less than what he bought it for!
They're going for a premium right now. I've got a 2015 GMC 3500 Denali diesel with 30k on it, I bet I could upper $40s for it.
 

Go aeiou

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I understand the gamble of starting/buying a business. I do believe we are recognizing inflation right now, between wages and materials I think it will only get worse. Then if the fed increases interest rates a couple points to slow inflation I think the car business will take a major hit.
It's not a short term business venture. That's why you want to be as well capitalized as possible. Pay down debt, and get prepared for the inevitable hard times.
 

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