I notice that most auto dealerships have a lifespan of about only 5 years or so. It would stand to reason to me that they'd be handed down and kept in the family for generations . Few are. Any idea as to why? Are they not moneymakers? Just too big a headache? What's the story- anyone know?
I work at one that has been in the same location since the 70's. It's been through a few names but the current owner has a son who is ready to take the helm when he decides to retire (he's 70 yr old). Actually, in the greater Flint, MI area we have quite a few old names in the auto dealer biz. Applegate Chevrolet has been at the same location under the same name since 1923.
The family owned dealerships are becoming less and less all the time as the large corporate dealership groups are buying them up.
Just a handful of family owned dealers left in Houston, most of the ol time Olds, Pontiac guys are selling foreign.. I miss the Carny Barkers like Ralph Williams
Agree new cars have gone corporate for the most part. Agree, used car lots dont seem to last more than a few years, but seem to be the same owners start new lots frequently. Run up the bills and bankrupt it out?
The auto groups buy them up by me. Big conglomerates, no longer a mon and pop industry. The auto groups have the clout, the cash and are in the good graces of the car-makers if they push a lot of units every month.
The small mom-an-pop dealers are rapidly becoming a thing of the past. You'll still run into some (mostly in small towns where overhead and competition is low) but generally, they've either been gobbled up by national chains or a local steps up and forms a 'group'. Mostly the latter around here as far as I can tell, as most now sell several domestic makes (and not always from the same manufacturer) as well as imports from multiple locations.
I worked for a few "family owned" dealerships in my time. The last two were eaten up by corporate downsizing. Both GM and Ford want their dealers to be mega dealers. They don't want to support the small local dealers any longer. If you can't or don't buy and sell a certain amount of vehicles your out! They pull your franchise. Happened to a lot of dealerships around here. the Corporations steer their customers to the Auto Malls and mega dealers. Not that I'm in a position to buy a new car or truck any longer if I were I sure wouldn't want to mess with the mega dealers. I used to like the smaller dealers and had better success there. Joe
you can run a dealership for five years without paying mega taxes then you rebuild or form a new corp
Being an ex car dealer I can say that they're only as good as the people running them. You can sell a successful business, only to see it go to crap a few years later They can be a huge money maker, but you need to keep your finger on the pulse at all times. I got out because I was becoming a "prisoner to the premises" I've also observed that Car Salespeople and Marriage aren't compatible. So you need to really evaluate your ambitions in life.
I have to agree with Oldjoe on that. The mfg are pushing for regional Meehan dealers. Locally most of the dealerships are family owned going back generations. A couple chAnged hands but were bought out by family operations. Sent from my VS988 using The H.A.M.B. mobile app
Frank Pindar and Son here in Grand Gorge N.Y. started out as a livery stable and began selling Chevrolets in 1929. Went out in the early 1990's. The dealership closed Grand Gorge N.Y. is a very small town (500 people) when my dad was a kid we had three new car dealers, a farm machinery dealer, two feed stores, two grocery stores, a hardware store, and a dry goods store. Now they are all gone! A lot of family history for me- My father worked there as a mechanic. My Grandfather on my dad's side was a school teacher but worked in Pindar's office in the summers. My Grandfather on my mom's side was a body man there. This is a sales brochure I found in my Grandparents house.
Sadly it's just another example of the "homogenization" of America. Big corporations gobble up all of the former independent (family owned) businesses. It's not just car dealers. Try to find an independent funeral home or even a home insulation company. They may still have the old family name on the storefront but, they're now controlled by some distant entity that is all consumed by the bottom line only. The companies and employees become robotic, no personality beings, towing the company line or else. In my meager mind, it is capitalism gone wrong.
Drew Ford in La Mesa had a showroom that was similar to the Ford Rotunda. There was picture of Henry presenting the franchise to Joe Drew. Family operation for 80 plus years now a part of Penske.
The Ford Dealership here in Anderson,South Carolina was Blue Ridge Motors and this is where My wife's Grandmother Jessie purchased the 1954 Ford Ranch Wagon new off the show room floor and I restored a few years ago. This photo was taken in 1957. This is from the 1957 phone book. HRP
Its one thing to check out the look back machine at Blue Ridge like HRP posted above and see an inventory of 20 or so cars that all sold for less than $2000 a pop. It is another to look at the inventory at a modern dealer where the average Raptor pickup is $60,000 plus. I was watching MSNBC (I know, I know) right around the time of the Houston flooding after their last hurricane. The dealer president they were interviewing had 14 lots in the area, 2 heavily flood damaged. The interviewer asked about insurance converage and the president responded that there is no way to insure lot inventory anymore. All losses are out of pocket. Sure he can discount the flood cars and sell them off but the loss he took would bankrupt the majority of the mom and pop dealerships in the US
I worked in a small town Ford dealership that opened in 1913. I think the manager when I worked there was 4th generation of the founding family. Sadly, he was the last as it closed down in the '80's.
To put this into perspective, major manufacturers have thousands of Dealer points across the country. The overwhelming majority of these are closely held, family owned operations. Yes, the mega chains do come into certain areas and buy up some long-established stores, but don’t feel bad for the families – they are laughing all the way to the bank. The chains account for a very small percentage of Dealer locations, even though in some metro areas it seems like they own everthing. The reason Dealerships do not stay in business forever is because Dealer children (known in the industry as winners of the lucky sperm contest) have no desire to work in the business. That’s a good thing, because 98% of them that do give it a go usually end-up driving it under. The car business is brutal, both in terms of hours, stress and capital. Successful stores require a Dealer/Operator that is a real car-guy. Not a car-guy like a guy or gal that loves collecting, working on, or fabricating cars, but someone who has devoted their life to the industry – all facets of the industry. Dealers must have very well developed financial/accounting/marketing skills, and be able to perform, not just try. If the target is to sell 100 new and 85 used this month, they can’t try to make it happen, it must happen. And, when the 1st day of the next month comes around what you did the month before means nothing – it all starts over again. Contrary to popular folk lore, margins in this business are razor thin. While a large store can reach tens of millions or even hundreds of millions of dollars in sales, the Dealer never looks at that figure because it means nothing. A $45,000 sale that produces an $1,100 gross means the Dealer took in $1,100. The rest of that 45 grand goes to pay-off flooring, sales tax, and registration fees. On top of that, overhead (including commissions) come out of that $1,100, so there is no room for error. Volume is how you make money – period. As time goes on there are fewer and fewer “new” family owned Dealerships. Sure, there are always people that want to give it shot, but the obstacles today are difficult to overcome. Would you sign a long-term lease for an AutoMall facility for $60,000-120,000 a month? Can you qualify for a $20M flooring line? It is not unusual for a store in a metropolitan area (trading area of 150,000+ people) to have a monthly total overhead that approaches or exceeds $1M per month. Think that’s easy to cover every month? Used car Dealers are a different animal altogether. The cost of admission is fairly low as is the overhead. Used car gross averages 3x what a new car does so it’s an easier hill to climb for a small operation. And, as someone pointed out, if it goes bad, just BK it and open it up again under another name. So, the short answer is yes, they are headache. You can make a ton of money or lose your ass. A little bit of luck, and a hell of a lot of skill, and hopefully you don’t have a franchise like VW that cheats on emissions because that can put you under in a heartbeat. I spend half of my 40-year career inside GM, and the other half as a new car Dealer. Both had their challenges, but at GM I slept like a baby; as a Dealer I don’t remember ever sleeping at all. Playing around with hot rods beats the hell of doing either....
Hatfield Buick family owned in Redlands, CA since 1913. The sales room was remodeled and GM almost forced it to close in the early 2000's but its been at the same location since I moved to town in 1966 and was there for many years prior from what I've been told. Service Department still looks the same as it did when my mom bought her Buick Skylark in 1966 except the Snap On tool boxes are much bigger and the alignment rack is computerized.
The Chrysler Plymouth dealership I worked for started with buying out the company that had been in business since the 40's with one set of brothers in 1960. It has been in business under the same family ever since with the son now the GM. And they now have several more dealerships also from GM and Ford in the same family.
I work for a dealer group local to our area (9 marques in 2 cities). The big dealer groups like AutoNation, Lithia, Maita et al. are slowly snapping up the independent dealers. As mentioned previously, this is largely in part of old-school owners retiring with nobody to pass the torch to.
I worked at dealers from 1971-2003, all family owned stores. Those have all gone by the wayside now and were snatched up by AutoNatzis for the most part (I will not deal with that group at all or do business with them). Being with my GF when she went new car shopping about 3 years ago. Man has it changed. Each car has 3 or 4 "packages" that you can get for options. You get this color of car... you get this interior. Want Navigation? Buy this package to get it along with a glass sunroof (not good in Texas)...... but to get that package you have to get the other two. That is why everything is generic and has no class.
I have been a used car dealer for 44 years and have seen a lot of turnover in the new car dealerships in that time in my area. It is something a lot of businessmen want to be in. Some are successful like Rick Hendrick who I just bought a new Honda from for my wife but many others don't find the glamour in it they expected. There are also many family owned dealerships in the small towns around Charlotte that have been in it longer than me.
..............Seems like I read somewhere that Hendrick at one point owned 83 dealerships! Guess that re-enforces that concept of "it takes volume to make money".
Also keep in mind that taxes may mean that the dealership is sold when the current generation passes as the next generation can not pay the taxes and handle the line of credit needed for floor.
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