I just read that investment bank CLSA downgraded Tesla’s stock two notches to Underperform. That slap wasn’t based on its dealership model, however. Rather, it was based on a belief that the next Tesla model, the Model X SUV, would have low margins.
I also just read a column in Time magazine putting forth some ideas regarding why Silicon Valley is so interested in cars now. The writer suggested Tesla’s integration of high tech into its cars, and its financial success, could be one reason.
Will the downgrade make the automotive business seem less sexy to Silicon Valley? Doubtful. The Valley is irreversibly embedded in autos and that process will only grow. As the dealership sales people who have to explain all the new technology in a car to a new buyer are well aware, cars are increasingly complex machines. Dealerships have to evolve with them.
Does this mean moving towards a Tesla-like factory-owned model? Not necessarily. But pretending times aren’t changing is foolish.
The dealership world may be changing, but business still needs to get done as those changes occur. We here at Automotive Buy Sell Report aim to help dealers and professionals in the buy sell area get their business done more smoothly.
This week, Paul McGovern of Downey & Company provides advice that can smooth a buy sell agreement if there is an under-funded pension plan involved. This advice could prevent a deal from being stopped in its tracks.
Based on all the headlines about the hot buy sell market, you would think there are tons of dealers eager to jump at a lucrative offer for a store. That isn’t always true, Paul McGovern of Downey & Company, tells you in this issue.
He sees many small deals that in the end fail because the seller decides keeping his dealership is the right thing, regardless of a potentially high price. McGovern goes through some of those scenarios and suggests what characteristics you should seek in a seller for the best chance of success.
We also have our Transaction News, natch.
Enjoy!
