Used Cars Troy Mo, Investing in Car Dealerships – How to Do it Right

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Used Cars Troy Mo – The financial characteristics of attractive car dealers:

“…. moderate growth and high risk and returns. Income from new car dealer franchises has grown at an annual rate of 7.2% since 1992, about double the GDP level. In addition, this growth has only a moderate risk, because body dealers not losing money (pre-tax based) for one year in the last twenty – even during the industrial cycle from 1989 to 1991.

Finally, despite major changes in the structure of the car industry, dealer returns remained high, with ROE pretax averaging 26.1% for the past twenty years “. [MerrillLynch, April 19, 2004 Report on “Car Dealers”.] Athletes from almost every major sport have invested in new car dealers: Rick Hendrick, Roger Penske, John Elway, Troy Aikman, Evander Holyfield, Arnold Palmer, Michael Jordan, Scottie Pippen and Alex Rodriguez.

Used Cars Troy Mo

The idea is not new. Johnny Lujack, winner of the Heisman Trophy 1947 and Chicago Bear Pro-Bower, started business in 1954 which will eventually develop into 16 franchises; spread over 40 hectares, with sales of more than 10,000 vehicles and $ 150 million, per year. Lujack retired from the car business after nearly 50 years being a successful dealer.


“This is the time you’ve been waiting for,” reports Greg Gilmore in the June 2005 Dealer Magazine.

Dealer Executives report that last year (2004) ranked 4th best for the sale of new units by new vehicle dealers. The dealer total dollar exceeded $ 714 billion, up more than 2% from 2003.

The fact is that anytime is the right time. In 1991, in the depths of the automotive depression, John Elway asked me, before signing a purchase contract, whether “this” (1991) was the right time to buy. I told him that that was how you bought it and how you sold it. That year he invested $ 20 million. At that time he owned a Mazda shop on Arapahoe Road, in Englewood. I sold the Mazda franchise for him and Nissan gave him a franchise to put in the old Mazda building. Shortly thereafter, I collected another transaction that asked John to buy a Mazda shop on 104th Avenue, at Thornton. John then stopped Suzuki and placed Mazda stores with Oldsmobile and Hyundai franchises. After that he bought another dealer (Ford franchise) and then, in 1995, sold the entire package to Republic Industries for $ 86 million.

Many people are afraid to buy dealers in 1991 and think that John took a big risk. But, he doesn’t “bet”. He compiled his purchases and sales correctly, and then made use of his investment.

For example, even though GM and Ford lost money (as they did in 1991), individual dealers made millions, according to the NADA (National Automobile Dealers Association) and Automotive News statistics, the dealers’ average pre-tax margins varied between one and two percent of total sales. Why? Dealers capture a broader business base than manufacturers. While manufacturers make money from selling new cars, dealers have additional balances from parts departments, service departments, used car departments, finance departments, insurance departments and, in some cases, workshops. As a result, while manufacturers rely on selling new cars every year, dealer success is based more on the total number of vehicles operating.


A little, but don’t be intimidated by it. After Jimmy Vasser won the CART racing championship for Target, I made a transaction for Jimmy to buy a Chevrolet-Toyota franchise that was dueling, in Napa, which had lost money for the previous 10 years. I put Jimmy together with the dealer manager and Jimmy’s father, who had a used car experience before, entered as a used car manager.

Furthermore, after going to the dealer school and passing the chair, Jimmy’s father took over as General Manager; developing shop; and Jimmy not only bought land and dealer facilities, but bought a Ford shop in the next city, and is currently building a new Toyota store so that the Chevrolet and Toyota franchises can have separate facilities.


Good advice. Good advice is important and difficult to find. In the words of Trace Armstrong, former president of the NFL Players Association: “There is so much bad advice out there given to these people. It’s really scary.” [Reported by Eric Fisher, March 27, 2000.]

Like the Entertainment and Sports Industry, there is so much money in the car business that everyone wants to get it. As a result, everyone thinks he is an expert in analyzing and compiling agreements, when in fact they only want to become brokers who get commissions from the agreement.
Sidebar: New car dealership revenues reached nearly one trillion dollars in 2004. Dealers and industry related dealers account for more than 15% of the United States Gross National Product.


Investors need a team. In general, this is the same team they have, added by an expert in the car business. Don’t be lulled in the false sense of security that loyalty is synonymous with “factory” or “banker”.

For example, Ford made one of its black leather dealers (superstar athletes) the main person, brokered a meeting of senior executives and acted as a channel between the company and Jesse Jackson. He mediated in disputes between Ford and its dealers, and he promoted the company in public appearances. He even had close relations with several members of the Ford family.

“He has some friends on high ground,” said John Clissold, a retired Ford Credit executive. “[The head of Ford Credit] is a very strong supporter.” But, when the problem comes, it doesn’t matter. Business is a business. “… a factory executive familiar with the situation summed up the feelings at the company’s headquarters: ‘[superstars] headed to the cliff and we won’t go with him.'” [Story by Bill Vlasic and Mark Truby / The Detroit News Sunday , May 26, 2002.]

The fact is that factory employees and banks have the duty to do the best for the factory or bank, not what is best for your clients. That’s the law. They have legal obligations to their shareholders – no matter how good or how close your clients are to them.

Financial statements and accountants are not enough. Your client needs your team members who are industry students. Profitable automotive statements can be certified and comply with every accounting principle, but still give the wrong impression about success. There are so many distractions in defining and compiling automotive transactions, that your clients need experts in their fields who can determine what automotive agreements are best for athletes and what is the best way to get them.

So, while your team can consist of accountants, lawyers, agents, and managers who are very good at their jobs, unless an industrial student is added (someone who does nothing but buy and sell structures every day), the main ingredient for success will be lost.

Think about it in any sport or business. If someone wants to make a championship team in a particular sport, is it made with people who play the game 50% of the time, 75% of the time, or someone who plays it every day?

Remember: The best thing they ever said about Richard Nixon was: “He looks like a used car seller.”

Mr Pico served as a court appointed “Consultant for Debtors” in the case of bankruptcy, “Court Designated Mediator” in an automotive dispute, “The Court Appoints the Arbitrator / Appraiser” in a partnership dispute, “” Court Approved Consultant for Recipients “in a check – kiting case, as a “High Court Mediator” in litigation lenders / lenders and has been recognized as an expert witness at the State and Federal level.

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