Quote:
Originally Posted by XDCX
I'll send and email to Moshe to make sure he's aware of your question.
My guess is Moshe will be less concerned about volume and more concerned about net profit. He commented that the threshold seems to be about $200K/year on the pro-forma. With a small overhead a rural dealer could probably hit $200K/year on a light mix of new and used cars.
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The problem is that "small overhead" hardly exists anymore. Smaller dealers pay a disproportionate percentage of sales for all the fixed expenses compared to a larger volume store. All the insurance coverages base off a minimum charge that's the same regardless of total coverage, so the small dealer pays the same base charge as a metro store, then it's just a matter of how high a limit they carry...once you get past the first million, each added step goes down in cost per million. Health insurance is a HUGE cost to everyone, but the small dealer is again at a big disadvantage because "small group plans" ( less than 50 employees) are rated on an individual group basis and can be hit with a much higher premium if several employees have risk factors (heart condition/ back problem) whereas a large group can't be rated up...all employees pay same rate regardless of health history. The factory requires the small dealer to purchase the exact same special tools as the large store...he has to spread it out over 200 sales versus the metro store amortizing it over 1000 units...it's costing the little guy 5 times as much on a per unit sold basis. Small dealer pays the same for "unlimited long distance" as the big store. Expensive facility requirements, increasingly specific training requirements for service techs in order to apply for different warranty labor ops, two-tier pricing, factory stair-step dealer cash and other incentive programs are set up to favor the metro stores and are making it more and more difficult for the small town dealer to sell the same volume now that he was 10 years ago. Not saying it can't be done, but there are a lot of hoops to jump through that make it much harder than it was 20 years ago!
