Quote:
Originally Posted by XDCX
Moshe,
Has Performance Brokerage Services ever had a transaction that involved the sale of a Used Car Dealership?
I know of some very successful used car operations and I was wondering if any of these dealers have ever enlisted your firm's services to sell their dealership?
Additionally, would having a successful Used Car Dealership make it easier for a rejected dealer to sell his/her real estate?
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During my 20 years career as a dealership broker I have been involved in only one transaction that was purely used car operation. As you can imagine, I have had dozens of inquiries, but I did not take them on as clients since our sole focus has been on new car dealerships.
From my observation over the years, when used car lots are sold, they aren’t able to bring any significant amount for the goodwill. Without a franchise and a territorial protection, theoretically, one can set an operation right next door.
The one lot that I sold was unique – it was located in an upscale neighborhood, in an excellent street corner and established itself for many years as one that specialized in quality hi-line vehicles. We felt that it had an intangible value in addition to the hard assets, and in fact, it sold for 2.0 times earnings plus the assets.
As for the second part of your question – if your facility is in a good location, and your used car operation is successful, your chances of selling the property will increase dramatically. But keep in mind, that the best that you can expect for the goodwill portion is probably less than one-time earnings. Mind you, we are selling new car dealerships for one-time earnings that sell 4, 5, 6 to 1 used vs. new. At least in those cases, the new franchise “legitimizes” the used car operation plus the service business of course.