| Author |
Message |
magoo (Magoo)
Advanced Member
Username: Magoo
Post Number: 3579
Registered: 2-2001
| | Posted on Saturday, November 23, 2002 - 9:38 am: | |
BOBd, I agree with you and the article is very true. What I was referring to was the exotic market like Ferrari and others. I feel that we are on the same page here but I just wanted to clear the air on my post. Regards, |
Manu (Manu)
Member
Username: Manu
Post Number: 548
Registered: 2-2002
| | Posted on Saturday, November 23, 2002 - 9:29 am: | |
Ferrari will not have it - it causes them problems - every new dealer opened causes uproar by other exisiting authorised dealers.... theoretical limited supply (of new Ferraris) divided by increased dealer numbers equals less pie for everyone... that's not to mention increased competition for used Ferraris and other parts... and which business owner like increased competition.... ? I don't - it sucks. |
BobD (Bobd)
Member
Username: Bobd
Post Number: 786
Registered: 3-2001
| | Posted on Saturday, November 23, 2002 - 7:32 am: | |
Magoo, not all cars get hit hard when the economy goes "sour". I believe you've mentioned you collect other cars as well... so you already know this. This article was in the paper yesterday... it basically says people are jumping out of the securities market and right into muscle cars. Muscle cars are going through the roof:
http://www.dallasnews.com/dmn/news/stories/112202dnbusauction.13772.html
|
Adam Goldman '86 TR (Icnsltmfg)
Member
Username: Icnsltmfg
Post Number: 465
Registered: 8-2001
| | Posted on Friday, November 22, 2002 - 11:56 pm: | |
If FNA wanted to open or own any factory stores, it could only do them in Some parts of CA, and Utah. The rest of the states do not permit Factory stores anymore, unless you were Grandfathered in. If did find a store for sale, FNA or any Factory would require a significant Auto background, esp in Retail operation at a Principal level. The capital required would be quite extensive, $1MM+ just for a building, and significant credit for the floor plan, plus parts inventory, tools, etc. Franchises are not as appealing anymore (any make) as they used to, unless you have several in your business stable. Most Factories are also very hesitant to issue any new franchises, because in most states your franchise is for life, and is difficult and expensive to break. Each state also dictates the radius of protection you have from another store, however the factory can increase that radius. |
magoo (Magoo)
Advanced Member
Username: Magoo
Post Number: 3569
Registered: 2-2001
| | Posted on Friday, November 22, 2002 - 9:35 pm: | |
The best situation is for the guy who has money to lose and likes to play cars. They are the hardest hit when the economy goes sour and with Ferrari turning the screw they have to sell a lot of cars to break even. Also we all know how hard it is even to place a order and how long it takes to get the car. The dealers depend on high priced service and high priced parts to keep the doors open. Again you would have to have big time backing financially because a bank will not want a flock of these on their floor plan new or used. |
Hans E. Hansen (4re_gt4)
Member
Username: 4re_gt4
Post Number: 560
Registered: 4-2002
| | Posted on Friday, November 22, 2002 - 7:43 pm: | |
Ferrari oil change, repairs, etc.:
Seems almost a regional thing. I hear the most complaints from you guys in the east and south. It seems the farther north, and the farther west you go, customer/dealer relations tend to improve. Generalization, of course. YMMV locally.
Ron Tonkin, the F-dealer in Portland, OR has very reasonable rates, almost competitive with the independants. I say *almost*, as I think they probably are worth a bit of a premium. Nice guys, hard core gear heads and racers, all of them. |
WMontgomery (Fiorano1999)
New member
Username: Fiorano1999
Post Number: 42
Registered: 11-2002
| | Posted on Friday, November 22, 2002 - 7:30 pm: | |
Ferrari is God. Ferrari is all-perfect. Ferrari is being. Ferrari never rips me off. Wait a minute here.
How is that Horsefly?
Interesting story Hans. Thanks for taking the time to educate us who care about those things.
will |
Hans E. Hansen (4re_gt4)
Member
Username: 4re_gt4
Post Number: 558
Registered: 4-2002
| | Posted on Friday, November 22, 2002 - 7:09 pm: | |
Will:
Here, used cars are *at best* a break even proposition. We do about 50 new/mo., about 75 -100 used, so we're small peanuts.
We've never (and this dealership has been under same family ownership for nearly 80 years) done any of the rustproofing, etc. scams. If anyone wants the stuff, we do it for reasonable parts/labor.
Corvettes: NEVER have sold one for over MSRP.
Allocations for these (and all GM) cars are based on inventory turn for that model. If it's a new model, inventory turn for something similar is substituted. The trouble with this method is that it's a lot like a dog chasing it's tail. You can't get them unless you sell them, and you can't sell them unless you get them.
We were on a Corvette allocation of about 2/year back in the '70s and '80s. Then we decided to be a distributor for Callaway. The allocations came directly from Callaway, but when the cars were sold, they were considered Corvettes to Chevrolet. This bumped up our sales considerably, which, according to the distribution formula, increased our allocations a bunch. So now that we were moving some considerable iron, err, fiberglass, we were getting more Corvettes than dealers 10 times our size. When the ZR1 came out, we received approx 1/4 the allocation for the state the first year.
Fast forward to 1995-1996: The C5 was on the horizon, and sales of the C4 virtually stopped. Chevrolet reminded us (that's ALL dealers) of the distribution formula. If you didn't agree to take your allocation of 1996 cars, you wouldn't have the necessary inventory turns, and you wouldn't get many, if any, 1997 C5s. This can't be considered 'tying', it was just the application of their age-old distribution formula. Nothing sinister, no conspiracy. Just simple math. We thought long about it, and decided that we'd pass on the proposition of losing $3K - $5K per 1996 just to get some 1997s. So we received 0 (that's zero) 1997s. Was this a smart business decision? We think so, but who knows? Our C5 allocation has been ramping up, so we're not hurting too bad. |
Horsefly (Arlie)
Member
Username: Arlie
Post Number: 421
Registered: 5-2002
| | Posted on Friday, November 22, 2002 - 7:08 pm: | |
Will, that comment brings you dangerously close to slandering the almighty Ferrari and its supporting dealer network. Are you even suggesting that $300 is too much for an oil change? You might want to sit back, take a few deep breaths, and reflect upon your near sinister comments. Chant the mantra: If it's Ferrari, it's good! I have been flamed for even mentioning Chevrolet or Corvette which is a far less infraction! |
Raleigh Smith (288gto)
New member
Username: 288gto
Post Number: 30
Registered: 10-2002
| | Posted on Friday, November 22, 2002 - 7:06 pm: | |
I was being very sarcastic. I would change my own oil depending on the car. I spoke with James at Norwood and he said that you can change it on a 308/328. He said that it may be to complicated to change the oil on a 355/360. Seeing as I am looking for a 348 and my wife is scared to death of the service fees, anything I can do myself betters my chances of getting my first Ferrari. |
WMontgomery (Fiorano1999)
New member
Username: Fiorano1999
Post Number: 40
Registered: 11-2002
| | Posted on Friday, November 22, 2002 - 6:55 pm: | |
We amaze me. You just said ONLY paying 300 for an oil change was a good deal. Funny how your frame of reference changes when you get involved in these things.
I have heard of PPI's for 300 - 500.
Will
|
Raleigh Smith (288gto)
New member
Username: 288gto
Post Number: 29
Registered: 10-2002
| | Posted on Friday, November 22, 2002 - 6:47 pm: | |
I'm not for sure of the oil price per quart, but if you take your 308 to Ferrari of Dallas to get it changed every 5000 miles it is only $300. Norwood actually charges $75 an hour for service.
What is a good price for a PPI? |
WMontgomery (Fiorano1999)
New member
Username: Fiorano1999
Post Number: 39
Registered: 11-2002
| | Posted on Friday, November 22, 2002 - 6:38 pm: | |
Raleigh,
God, 75/hour is a bargain at FNA stores. Have them wash it for you too at those rates! Is your oil also 15 a quart?
When I was "involved" in a GM dealer in the late 70's we were moving maybe 40 new and used cars in a good month and 6 in a bad month. It cost about 2k a day to open the doors each day. Caddys were about 10k then and the Smokey and the Bandit Trans Ams were 6600. The Caddy margin was 22%, the Trans Ams 15%, etc. So, my point is no real money in the new ones - at least nowhere near enough to keep the store open. Service and used and LOL rustproofing, ScotchGuarding and paint protectant floated us. Some flunkie in the body shop at 3 bucks an hour would take three hours squirting about ten bucks worth of rustproof crap in a few holes for $150 a car. Who cared about the warranty as the thing was written such that the owner had to bring it back within three days of teh delivery date each year to have it inspected - no one did that. You'd make more profit on that stuff than on a Sunbird or whatever small car you moved. Do you still get F&I kickbacks out there?
Hans, on the east coast, dealers were paying a couple over to get a Corvette especially when the C5 came out. And getting substantially over when they sold them.
Will |
Raleigh Smith (288gto)
New member
Username: 288gto
Post Number: 27
Registered: 10-2002
| | Posted on Friday, November 22, 2002 - 6:12 pm: | |
So you all are saying that it really doesn't cost the Fcar dealer $75 an hour to do the work, and it doesn't really take two and a half hours to change spark plugs? (wink, wink) |
Hans E. Hansen (4re_gt4)
Member
Username: 4re_gt4
Post Number: 555
Registered: 4-2002
| | Posted on Friday, November 22, 2002 - 5:58 pm: | |
Weird. In mid and late '90s, we were begging for crew cabs, none were available. We were buying up what we could find for $1000 - $1500 over invoice. |
Frank K Lipinski (Kaz)
New member
Username: Kaz
Post Number: 26
Registered: 11-2002
| | Posted on Friday, November 22, 2002 - 5:50 pm: | |
Will - regarding your question on Bev Hills and Orange County - I just purchased my first F-car last week from F of SFO, the only remaining factory owned dealership. They told me that two brothers purchased BH & OC. Their father is a senior VP at the Factory & assisted the purchase. |
WMontgomery (Fiorano1999)
New member
Username: Fiorano1999
Post Number: 38
Registered: 11-2002
| | Posted on Friday, November 22, 2002 - 5:47 pm: | |
You may want the pickup today Hans as the world has changed or your location is much differnt than mine. But in 1998 I bought a brand new 1996 dually that had sat for two years and was kept company by quite a few of its 96 and 97 brethren. He took way less than invoice including holdback (23.5k msrp for 16K) to get it off the floor plan. When I asked why so many laying around, the owner, not salesman, explained that taking the trucks in about the 10:1 ratio was the only way he could get the Corvettes which he got sticker for. Loehmann-Blasius Chevy, Waterbury, CT. Don't tell me dealers lie!?! I think he offered two for 30K if memory serves.
A dealer's gross should be bigger on a Corvette based on the smaller number available and, having once been in the business in a somewhat unusual capacity, my dealership was given allocations of certain vehicles - you could never have all of the Corvettes you could sell. I was not privvy as to whether we had to take x for y back then.
GM's nut is bigger on big stuff. An average of 12K for each Suburban they dump on you. Per Automotive News a while ago it is their most profitable vehicle.
Will (not on a car dealer's computer) |
Hans E. Hansen (4re_gt4)
Member
Username: 4re_gt4
Post Number: 554
Registered: 4-2002
| | Posted on Friday, November 22, 2002 - 5:19 pm: | |
Oh, BTW, tho. WMontgomery is correct that Ferrari uses 'tying' to sell 456s, and to some extent, 550/575s. At least according to the sales manager at a nearby F-dealership. |
Hans E. Hansen (4re_gt4)
Member
Username: 4re_gt4
Post Number: 553
Registered: 4-2002
| | Posted on Friday, November 22, 2002 - 5:17 pm: | |
Actually, Chevy does not, nor never has had 'tying' arrangements. At least not in the 30 years that I have been actively involved with them. Each model stands on it's own. Now, there has been a few, but very few, bad apples in the various regional offices who would 'reward' dealers for favors. But when they were caught, they were shown the door.
Chrysler, OTOH, was notorious for tying. Lee Ioccoca himself outlined the program at a national dealer meeting. That's how he got rid of a zillion LeBaron Convertibles.
BTW, I'd rather have a Crew Cab Dual Wheel pickup over a Corvette any day. They are in huge demand and sell faster. Maybe less gross per vehicle, but better inventory turn and more profitable use of dealer capital.
Hans. (Writing this from a Chevy dealer computer.) |
WMontgomery (Fiorano1999)
New member
Username: Fiorano1999
Post Number: 37
Registered: 11-2002
| | Posted on Friday, November 22, 2002 - 4:58 pm: | |
It is even worse than your scenario Jeff. You have to take what they give you whether it is in demand or not. The dealer I like had to take X number of 456's for every Y 550's and z 355's/360's. They had a few sitting there two years old and ended up selling around their invoice which means they lost big considering interest and overhead. Chevy does it with Corvettes - take ten dually four door pickups to get one Corvette. Chevy's profit is largest on the Duallys and Suburbans but they don't sell themselves like Corvettes do in America. So the small dealers get one car a year.
An acquaintance resigned his RR/Bentley dealership when they kept dumping car after car on him when the market could not bear it and the floor plan interest killed him. He is now independent.
Bruno hit a good area - you really stay in business from the service not the profit on a few new sales a year. When you consider the number of new F's sold per year in the US, that isn't much margin. Ahhhh, used cars you say. Yes, that is where the money is as well but there is competition there. And if you can buy them right and not get caught in market swings (like now) it is OK.
I'll take Krispy Kreme or Dunkin' Domnuts too. Some Dunkin's aren't yet tied in to teh corporate computer to monitor sales and it is a cash business if you get my drift! The average cost of a cup of coffee at Dunkin' regardless of size, including, cup,labor, lid, etc, is 5 cents. Not bad margin. Coffee is also about 85% of what they sell.
Sorry for the tangent,
Will |
Bruno (Originalsinner)
Member
Username: Originalsinner
Post Number: 747
Registered: 5-2002
| | Posted on Friday, November 22, 2002 - 4:40 pm: | |
Next step. NO. They wont even authorize you as a service facility.Regardless of who you hire or how much of an expert you are. I was dissappointed. It seems if you do it you need investors with tens of millions,buy some one out, and better treat it as a expensive hobby. |
Bruno (Originalsinner)
Member
Username: Originalsinner
Post Number: 746
Registered: 5-2002
| | Posted on Friday, November 22, 2002 - 4:37 pm: | |
Cant be done.All "franschises" are allocated in U.S..I tried back in 80's. You got to buy someone out.And they all want more than you can ever make back. |
KCCK (Kenneth)
New member
Username: Kenneth
Post Number: 26
Registered: 10-2002
| | Posted on Friday, November 22, 2002 - 4:31 pm: | |
Pardon me for being inquisitive, but don't car dealers have to "swallow" a certain minimum figure as their yearly target sales?
If you do not meet the target, it is either put up or close up. |
Jeff (Jeff_m)
New member
Username: Jeff_m
Post Number: 26
Registered: 9-2002
| | Posted on Friday, November 22, 2002 - 4:09 pm: | |
I think love and money don't mix too well and although the thought of owning an exotic dealership sounds great, it is probably one of the more risky businesses to get involved in. Im with Will in the fact that to do it right would be many millions and by no means a sure thing.But the idea of getting to drive whatever you wanted and looking at beautiful cars all day.. Hey I could probably do that with a Krispy Creme franchise for a lot less headache!! |
Howie (Brokerofexotics)
Junior Member
Username: Brokerofexotics
Post Number: 217
Registered: 11-2001
| | Posted on Friday, November 22, 2002 - 3:23 pm: | |
Matt and Raleigh -
You could always start as an independent Ferrari dealer. And with regard to inventory, accept the cars on consignment, at least initially. |
WMontgomery (Fiorano1999)
New member
Username: Fiorano1999
Post Number: 34
Registered: 11-2002
| | Posted on Friday, November 22, 2002 - 3:22 pm: | |
Considering Krispy Kreme needs 1.5M to open and another 1 in liquid capital for a donut shop I would think the money end would be many times higher than that. I would also think that you would need to already be in the inside circle and be invited to do so the way they invite loyal customers to buy F50's, etc. Subscribe to Automotive News and check the prices for Ford and Chevy stores and that may put it in perpsective.
What did Ferrari do to Ogner in LA? That is probably the latest dealer to at least have a different name? The Orange County dealer is one and the same as BH so new people there? Just asking.
Will |
Raleigh Smith (288gto)
New member
Username: 288gto
Post Number: 26
Registered: 10-2002
| | Posted on Friday, November 22, 2002 - 2:51 pm: | |
I had the same idea to do in Southlake. Then ECW came about. My idea was to be more of an aftermarket parts store with a few exotics thrown in the mix. High end exhaust like tubi and HRE wheels. Things like that. I also thought of trying to put a Ferrari dealer back in Fort Worth. |
Matt (Matt_lamotte)
Junior Member
Username: Matt_lamotte
Post Number: 64
Registered: 10-2002
| | Posted on Friday, November 22, 2002 - 2:31 pm: | |
I have had many thoughts as to how hard it would be. Maybe not an exclusive Ferrari store but sell various exotic cars. I am sure it takes a good amount of money to start and get the ball rolling as well as good contacts. Any dealers here with any advice? |
BobD (Bobd)
Member
Username: Bobd
Post Number: 785
Registered: 3-2001
| | Posted on Friday, November 22, 2002 - 2:24 pm: | |
Mark, your last name needs to have an i on the end. |
Hans E. Hansen (4re_gt4)
Member
Username: 4re_gt4
Post Number: 550
Registered: 4-2002
| | Posted on Friday, November 22, 2002 - 2:20 pm: | |
You'd probably have to buy an existing dealership.
Most manufacturers give dealers a protected area, or in the case of urban areas, so many dealers for a given population.
Unlikely Ferrari would open up additional 'points', as they are referred to. |
Taek-Ho Kwon (Stickanddice)
New member
Username: Stickanddice
Post Number: 44
Registered: 11-2002
| | Posted on Friday, November 22, 2002 - 1:23 pm: | |
I don't think it's possible anymore. I've heard that any dealerships that do open are going to be opened by Ferrari themselves. |
arthur chambers (Art355)
Member
Username: Art355
Post Number: 816
Registered: 6-2001
| | Posted on Friday, November 22, 2002 - 1:22 pm: | |
First off you have to know someone to get the opportunity to get the site. Then you have to show experience in the auto industry, with exotic auto sales experience. Then you need to have or show access to sufficient capital, I would suspect that Ferrari would ask for at least 1 - 2 million in captial, maybe more.
Art |
Mike Clark (Vipersrt)
New member
Username: Vipersrt
Post Number: 4
Registered: 10-2002
| | Posted on Friday, November 22, 2002 - 1:18 pm: | |
What would be invloved in such a operation? How much start up as far as intila investment would you think? Just a little curious at this point. Thanks! |