The industry is filled with trepidation over the impact the threatened 25 percent tariffs on imported autos could have, and the negative impact the already-imposed tariffs on steel and aluminum imports are having. The pain will certainly trickle down to the dealership level in the form of higher prices, which will be passed on to the consumers. NADA explored the impact of the tariffs in a posting on its site recently.
Another disruption on the dealership force is the entry of Amazon into the fixed ops area, something I am just learning about. Given the growing importance of fixed ops to a dealership’s bottom line, this could be serious. But there are ways dealerships can compete, such as offering mobile repair services themselves. I don’t know about you, but I would prefer a mechanic from a dealership over one from Amazon.
How these disruptions will impact dealership valuation is unknown. The key, it seems, will be to determine how a dealership’s future cash flow may be impacted. Buyers are willing to pay for future cash flow if shown how it can grow, says Mark Johnson, a buy sell professional and the owner of this website. Read more about how MD Johnson Inc., his financial advisory firm, operates in this issue.
Also, this week I profile Mark Ward, a dealer from the Midwest that I met at the Automotive News Marketing 360 event last month. Ward was going to throw in the towel on the dealership business until successors appeared on the scene. Now he’s looking to grow. Learn more in his profile.
And of course we have Transaction News.