What does it take to open a Ferrari dealer?

Easier to buy a Honda Dealership and own a Ferrari
Erik

 

Many millions of dollars

Serious connections in the car business (i.e. years being management/owner of a successful chain of independent dealerships, or a high-end franchised dealership)

A demonstrated ability to sell large numbers of cars - not just promises

A commitment to invest serious gobs of money whenever neccessary to grow the business

If you want to own a Ferrari dealership, get moving on becoming GM of a Bentley or Lambo or Ferrari or Rolls or something dealer. Also get really really rich - probably would want to have $30mm+ in assets before you even ask.

 

or you could arrange a meeting with these guys. they could help you out.
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5 mil and those guys will get you in too.

 

You need a little over a million USD liquid and connections to open a crappy new car franchise like Kia or Isuzu. You need insane amounts of liquid money, investors and SERIOUS connections to get a Honda/Toyota type dealership. Now youre talking Ferrari.

Ferrari wouldnt even sell you a brand new Enzo unless you had 2 Ferrari's currently titled in your name-- you think its gonna be easy to get a Ferrari point??

Open a used car lot, and own a few Ferraris. Definately more realistic and a LOT cheaper!!

 

I get asked this question a lot...

In a nut shell you have the answer CASH. You like me I am guessing don't have a lot laying around, so we have to work our way up from the bottom. I was very lucky to come into some money back during the dotcom days. So I bought a Ferrari from the then owner of my local Ferrari dealer. We became friends and when he went to start another store I offered my help. Well I did a few odd things for him and then before I knew it I was involved with the daily operations of the place. I am still only part time, and I wrestle with the idea of owning and operating the place everyday. One side of me says to stick with the known engineering job I have, the other side says go with your passion and do what you enjoy...I don't know...I am still sorting this out.


I guess I am saying there isn't a clear path, and one other thing I want ANYONE even thinking about the exotic car business to know. It is not all sunshine and red cars everyday. It takes a lot of time to learn the market. A lot of technical knowledge is needed, and of course a great reputation. It is a lot harder and a lot more involved that you can believe. Also you are never not working. Any given moment of any given day your phone can ring, your email can come in, or you meet someone interested.


Think long and hard about why you want to do this. Trust me...it is a lot easier to make money in other places and buy the Ferraris you want. Don't try to get into this business just to be able to drive the cars!

Well....that is my rant....feel free to PM me if you want any specifics answered

Ciao'

Steve

 

What I always wonder is what is the profit margin for the dealers? Even if we went with a crazy number like 50%, and the average sale price of their cars being $300,000, that's $150,000 each, but how many do you sell a year? I suspect the mark-up is closer to 20%, at which point I wonder how you make money. Now I remember, the $8,000 engine out services. LOL

 

20%....good grief I wished it was that high. The profit on these cars is not that great, and now with the internet and all the information out there you can find out what real wholesale,trade in, and retail prices are with 3 clicks of the mouse.

The service side is another business all to its own. Techs are not cheap,but parts have the mark up to make money

Steve

 

Dealers make their money on service not new cars. Here's what a dealer told me about the profit on a new car. If the dealership is a Ferrari/Maser store only, no other brands on the floor. The maximum profit is 12%. But there is a catch. FNA holds back 3% of the profit and returns it to the dealer at the end of the year based on CSI scores. It's possible the dealer will get some or all of the 3%.
If the dealer has other brands of cars on the floor then the maximum profit is 9% with FNA still holding back the 3%.

 

Jeff mentioned a very common practice not openly known to the retail buying public....the "service holdback"......every manufacturer has one, and to some extent, it's the biggest club that they wield over a dealer's head......your CSI scores fall.....your cheque is smaller......you won't renovate the showroom.....you are exporting cars....etc....etc....your cheque is smaller or non-existent. Every dealer has different spreads due to numerous variables....for example in the case of an MB/Porsche store here in Canada it's 3% (last time I asked)........that's $3-4K per car in some cases...........sell 300 new cars a year and do the math. It's also income the salesperson doesn't get paid on.

Common margins are 8-12% on high end cars and then the hidden service holdback on top of that. Having said that.......Steve is right.........there's a lot better ways to make the money you want for an F-car or anything else.........in the real world you don't get MSRP for your cars..........and even in "Ferrariland" as well.

 

WalMart operates on 15%, how can Ferrari operate on 9%? The dealership with inventory has to be a $10,000,000 investment. If you float half, @7%-10 years, you need $700,000/year just for the note. If we make the numbers easier and say the profit margin is 10%, a Ferrari dealer would need to sell $7,000,000 worth of cars per year to cover their loan. Employees, electricity, benefits, etc...all would mean more money required.

Headed back to our $300,000 cars, now at 10%, we have $30,000 profit each (not factoring in our expenses to make them showroom perfect). How many cars are dealers selling on average? Let's go crazy and say the average dealer sells 30 Ferraris a year, that would be $900,000 in gross profit.

$900,000 (gross profit)-$700,000 (loan), we have $200,000 left?

My crayon is getting dull, where is the profit again?

 

A Ferrari store sounds cool, but looking at it with the eye of someone who has been in biz 30 years myself, it looks like a tough biz to me. Even though Ferraris are expensive, there just aren't enough of them to keep a store going, so you have to hustle other brands, used cars, etc. What would really worry me are recessions. These cars are top of the food chain and get killed when the economy goes south, especially the used business. Just look at what happened in the early 90's when many Fcar stores went out of business and others were reorganized. FNA has helped (forced?) some dealers in recent years move to upscale neighborhoods and build fancy new facilities. Our local store is one. Everytime I go there, I think "wickid overhead" "debt service" etc. If I were to try to get a franchise, I would wait until the next recession and buy one cheap.

Dave

 

Parts and Service.

And you left out the interest free loans (deposits) that the customers give to the dealers to hold their spots in line for the latest and greatest from Maranello.

 

Here is my 2 cents. No, dealer can survive on sales alone, and anyone that was in this business in the late 80s early 90s will tell you. The only way he kept his head above water was with fixed operations. (parts and service)
Keep in mind, when I say sales alone, that is more directed at new car sales. Used, is another story.

 

outxlr8,
Nothing wrong with having a dream--good for you! Yours is a big one, as I'm sure you've noted from the above posts. You've probably also noted from the posts that realizing such a goal may not be all cakes and ale. Such is often the case with our dreams, and I've often thought that sometimes having a dream is way better than realizing it--as you might discover if your dream comes true.
That being said, take to heart what N24RE has offered, and good luck! I wish more young people would 'dream big' like you.

 

I'm curious-- Anyone have a guess as to how many true stand-alone Ferrari dealerships there are, as opposed to dealerships which are part of a larger group?

For example, my local dealer is theoretically a "stand-alone" Ferrari-Maserati store. However, the owner of the dealership is one of the largest car dealers in the area. I think it's safe to say that his Ferrari dealership is more of a way to ensure he gets his Enzo and SuperAmerica at cost, rather than a significant source of his income.

I would guess that is the case for most Ferrari dealerships-- any one know?

 

Our local dealer is a part of the Remo Ferri Group of Automobiles. He's got BMW, 2 Ferarri/Maserati, and about 4-5 other makes that I can't remember off the top of my head right now. I can't even begin to fathom his wealth.

 

If F dealers make most of their profits on parts & service, is it a stretch to theorize that when you pay $8000 for those engine-out services, you might not really get a "fair $8000 worth" of parts and labor in return? Might Ferrari even over-recommend the amount of maintenance their cars "require", to keep that cash flow coming?

I'm asking as an NSX owner who chose my car over a Ferrari due to its $1300 timing belt/water pump changes, $600 30K intervals, etc, and never understood why the cost difference is so huge.

No flames please, just asking.

 

The ability to suck the chrome of a trailer hitch is a good start. You'll have to suck a lot.

 

BINGO! I've been speculating this for years.

 

That is a fair enough question. 2 things.
A - I wouldnt consider an annual maintenance over-recommending.
B - It is a Ferrari.

If one wishes not to have this $8,000 engine out service, then they need to do as you have. Look at another brand. With that being said I will tell you. Most of the guys I know will trade them when the big service comes due.
You could look at your above scenario of over-recommending with any manufacture in percentages of the expense of the vehicle, and maybe that will help.

 

Also one point to think about is the Used Ferrari aspect of the Ferrari Dealership. Alot of these dealerships seem to have their customers trading in cars for newer (or different colors/ spiders for coupes/ 360 for 575/ etc) ones all the time. For instance (just an example) someone would buy a 2003 360 Spider for 190K, then when the 2004's came out they would be on the list for one of those so they would trade in their 03 for what they paid, get the 04 and the dealer could then sell the 03 at a premium, say 225K. Is there be a large amount of profit doing this?

 

bingo. they make money off the same car multiple times.

now a question I have for you guys is what about a Maseati dealership? We have one in Tulsa, OK so they can't be that hard to open compared to Ferrari.

 

Just send me all your money now....I will burn it for you...and save you the pain of doing it over time.

=)

Steve