You’re a dealer without an heir apparent. You’re ready to enjoy the fruits of your labors. You keep hearing about a new kind of shopper in the dealership buy sell marketplace. You’re interested in selling to one of these shoppers, be they private equity or a family fund.
Take a deep breath. Successfully completing a sale to one of these new investors requires new knowledge and a different approach. In this issue, Tim York of DHG Dealerships discusses some of the differences, such as potential monthly cash distributions, and the importance of having a plan. That doesn’t just go for dealers. York says he has encountered private equity investors who rush in without a plan. That can hurt the chance the deal will win manufacturer approval.
Image programs are the bane of many dealers and a bump in the road in many a buy sell negotiation. Lengthy renovations are especially troublesome when determining value. Dealers aren’t just letting manufacturers steamroll them into upgrades, however. In this issue, Ira Silver of MBAF discusses how dealers in Connecticut are pushing for an eight-year moratorium on upgrades to prevent erosion of dealership values.
I am sitting in Shanghai, China as I write this. I visited Auto China, the country’s largest auto show, on Monday and Tuesday. It is vast and a bit overwhelming. What I can tell you is that connected or smart cars are the latest trend here, as in the U.S. Also that Chinese automakers are producing much higher quality vehicles now, with much nicer styling. The interiors could still use a bit of work on some models, however.
I’m often asked when Chinese vehicles will be sold in the U.S. For more than a decade, I’ve been saying not for at least five years. I am officially revising that to at least two more years. Volume sales will take much longer. One Chinese automaker, Guangzhou Auto, says it seeks a U.S. distribution partner. The first Chinese car to be sold in the U.S., however, will almost certainly be a Volvo produced in China. Volvo’s parent company is Chinese privately-owned automaker Geely. This will be interesting.
Meanwhile, check out some news that is happening now at our popular Transaction News section.
Enjoy!
Alysha Webb, Editor and Publisher
