Exotic Cars files for bankruptcy

For that sort of location/traffic, it's a real wonder why they would be going bankrupt.

 

HOW? Weren't all of their cars on consignment? And aren't they raking in $70k a day from tourists?


I'm interested to see more on this.......

 

Aren't these the same guys that just sold that Dino GTS on ebay last month that was over the asking price ( 220k) and the car wasn't even of average quality? A lot of people here questioned the validity of that sale. One F-chat member went so far as to call them to confirm the sale, and they told him it was in fact a "Real" sale. I think the "Buy it Now" was at 189K and the car had been listed several times previously and it was a no sale. The BK I'm sure explains a few things about whether the Dino sale was in fact legit.

 

I'm sure the rent on that spot was a killer,

 

With a BK does that mean they are going out of business? Or just protecting themselves?

The Dino sale more then likly played no part of BK, I mean the flooring cost are super high..and when you pay more for a car then you can retail it for, by coming to far down on the price...they can not pay off the cars instrock...so the Dino profits are used to pay the last sale...

 

I was there last month and they had switched over to American muscle cars. Only had 2 ferrari's on the floor.

 

They always had interesting inventory . Strange that it went under with that much publicity .

 

Isn't there a Ferrari dealership at the Wynn? Even for Vegas maybe there is too many cars for too few people.

 

Ferrari dealership at the Wynn, Lamborghini Las Vegas is opening soon at the Venetian

As pointed out above, the RENT at the Forum Shops is ASTRONOMICAL, IIRC the highest per sq. ft. in the country!

 

These dealerships opperate on a very low margin. 1/3 of all auto dealerships lose money each year. Specialty shops are even harder to run. The key is have a lot of bread and butter cars like BMW,Jag E types or Porshe's and sell one or two exotics a month.

 

+1,0000000

Could not have said it better myself!

 

this has everything to do with the economy right now. this is just the begining. I dont mean to be doom and gloom but this is going to get much worse before it gets better. If you think otherwise you are fooling yourself. Everyone is going to be affected, not just the average joe that works a 9-5. Unless you are super wealthy then you are in danger and should be extremely carefull. you will see that car dealers with low overhead will get thru this alot better off than ones with big overhead. Keep your nut low!!!!

 

I was there a month ago. The place was really cheesy. The retail space out front sold really cheap looking stuff. It didnt inspire me at all to go into the "showroom" at all and for anyone that knows me it takes a lot of Cheese to keep me out of a showroom. I think the Wynn dealership is much nicer and the Ferrari store is much better. As for multi Marque showrooms the one on the 13th floor of the Imperial Palace is better. Exotic went out of business ( or should soon go out of business) due to poor marketing and a bad business concept. Simply put...bad idea,bad marketing, bad location.... just plain bad! Jon in Delaware

 

Well said Mike about the overhead!! Though you know I feel very diffrent about everything else in your post.... The fact is right now there is diffence in perception...and a huge issue in sales floor midset themselfs..at your own dealership you are not seeing a drop in lot traffic, but you are seeing salespeople forgetting why they are there...we talk about this on our sales forum all the time! My feeling is, that with so much floor traffic the sales staff has come complasent at ECV...they just see everyone as a non-buyer and just tire kickers! Its big issue right now..over 80 years of automobile sales, and people are still trying to reinvent the processes...Dealerships closing was a huge topic on our sales fourm..and it laways comes down to floor sales staff...always!

Once I see floor traffic in whole drop, then I will belive there is ecomic factor here! As of now as a whole, even in domstic brands the lot ups have not gone down...

 

I think you have great points Chris. However I dont know about the rest of the U.S. but here in Ohio there has been a huge decrease in floor traffic. The people that kept things going with secondary credit are now coming into finantial crisis, and banks are really starting to clamp down on credit stipulations. People are losing there homes, losing there cars, and losing there jobs. Between the four stores that my dad owns, me being in the business and talking with just about every dealer in northern Ohio every week, and having a brother that sells new Lexus, everyone is saying the same thing. There is vey little walk in traffic!!! Right now dealers are trying to make the best with what they have which is not much and will increasingly go down over the next few years. We havent even got to the point of all the people that did these adjustable rate morgatges over the past 3 or 4 years that have been able to just scrape by paying interest only. What do you think will happen when later this year and and over the course of the next few years when thier morgatge payment doubles. Not to mention the strength of the U.S. dollar. We will get thru this but it is going to take its toll on a huge amount of people, and when they are losing homes and jobs, the last thing they will be able to do is finance cars.

 

Mike I would ask to see there log books! I would agree to extent about the credit market and how avb. it is to most people, however, sell the car, they will find away to get bought, besides the buyers have to be on lot as traffic to get denied in the first place and that is where the OTDB come from!!! I was reading about a couple of Midwest dealers that have recently closed there doors, citing that the US manufactured cars are out of step, and not selling, so the market is the reason cars are not selling!

I hear this excuses everyday from certain local here in Sioux Falls! I was at another dealership in town here vesting a friend that sells for a franchise store, and IMO this store is the model every dealership should follow. Anyway, while I was there, my friend was called upstairs along with rest of sales staff...since I am a well known dealer here in town, I was invited upstairs as well..When Every body (30+ sales people) got upstairs the sales manger was standing by a poster board with a free trip to Jamaica on it..to make long story short..or longer..lol..they ware having a contest to see who could sell 30 cars over a 90 period...and my friend had won the trip! 30 cars over 90 days?? 30 CARS in NINETY DAYS!! I was shocked! But my first thought was ok lot traffic is down...after the meeting and all the hi-fives and jealousy and what not..everybody got back to work...While I talking with my friend I asked how many up's and referrals did she have to have to sell 30 cars in 90 days...she told me she had around 500 up's during that time, she would guess since they do not track there lot up's! I said 500?

I guess the point I am trying to make is that in today's market place lot traffic numbers are not down, in fact The South Dakota Automobile Dealers Association (SDADA) estimates that there are in excess of 3000 customers per month in the market in Sioux Falls and surrounding communities ALONE. In Sioux Falls there are 19 independent dealerships, according to a survey by SDADA the average dealer here in town receives around 11 fresh new prospects everyday coming on the lot to look at a new automobile for purchase. Annual combined sales for the area is $182 million dollars per year, or just fewer then 40 cars sold per month, with gross profit of $2,000 per car... in fact after most dealers have cut there advertising budgets, lot traffic has remained high.

Local dealers seem to be falling short of the averages for our market, despite having more then enough opportunities and inventory in stock. For every 10 customers that visit a car dealership, 8 customers should be test driving, 5 should review and discuss numbers on paper, and 3 customers should be driving home in a new car, or 90 car sales per month. This is due largely in part to poor salesmanship and training. Most sales people just are not doing proper fact finding and vehicle presentations. Most area dealers are reporting fewer sales according to the SDADA, even though lot traffic has remained high. Premier Motorcars of Sioux Falls has seen a sharp decrease in lot traffic as inventory counts have reduced yet sales have remained the same.

Once you just look at the numbers for Sioux Falls alone, there is generally more then enough lot traffic to more then insure success! Now these 40 year old dealership that sell US manufactured cars, have more then enough orphan customers to insure there own success forever..so again it comes down the sale person ability to sale!!!!

 

I am a Fixed Operations Director for a Toyota store here in So Cal. Toyota sales are off roughly 3 percent, but our store sales are up 13 percent. The gross? The same. We are moving more cars for less profit to keep everyone employed and for the future of Fixed ops (Service & Parts). To me, a great business plan for the future of the company. We are owned by a Chineese company who owns 38 dealerships nationwide. The big corporations are where the dealership business is headed (Sonic, Penske, Power, Auto Nation, DCH, etc.). These guys have the deep pockets to withstand econimic hardships with a good business plan, such as our company.

Last week I stopped by The Auto Gallery, a Ferrari and Maserati dealership here locally. I wanted to see if the had any used 550s. It was 7:00 PM on a Friday night (still daylight) and they were locking up. As I got out of my car a saleman approached me and told me they were closed but could he help me. I explained what I was looking for, and he promptly replied that this is an excellent time to buy. I responded with, why has it been slow? He stated no, we giving excellent deals right now and business is very good. He handed me a business card and got in his Bimmer and drove off. Make of that as you will, but my overall impression was business was good and he didn't need to take the time to get my personal information for a possible future sale. I also thought closing at 7:00 PM on a Friday night does not produce additional sales. I have been in the dealership business for over 35 years and found this to be odd. Are Ferrari dealerships any different?

 

I was in there a few months ago as well, and the place was sinking then. very little traffic, nothing in the back to cause anyone but a few kids to pay up for admission. No way these guys were getting 7,000 visitors the day I was there, and out of the 10-15 visitors I saw, no one was in any position to buy.

Jumping to Muscle after the peak doesn't help either. They had a lot of floor space.

 

Any good sales person gets your personal information no matter what the time is. This sounds to me like someone that has been sitting around all day maybe making a few calls, and an appointment or two, that is in a hurry to get wherever he is off to. I dont care what your selling. Salespeople who dont get personal info are just plain lazy. If you owned that dealership and watched a salesperson dust a customer at the end of the day on a $100k vehicle, would you be mad? Ferrari does good business, and for the most part people buying these cars are not nessesarily in finacial crisis. However when a store has salespersons with that kind of mentality they are sure to lose business over time. Also when was the last time that a customer came in to your store and a sales person began with "we are so slow", if you tell a customer that they are in the drivers seat to take over control of the deal because you are giving an impression that you need every deal you can get. It just isnt a great sales tactic. You are extremely right when you say that dealers are going to be part of big corporations. The little guys that have huge expenses will not be able to compete. This is why I say if you are one of these independent dealers, the only way you will get by and make money is to watch your expense structure and work every customer,no matter what time it is, like it is your last.

 

we all close at noon on Saturdays...Most exotic dealers bsuiness is online and over the phone..at 6:00 pm it closing time!

 

Chris, I know you and I know that if you had a live customer in at any time that you were at the store, you would work them until the bitter end. The difference is that you value every bit of business you get. This guy was obviously being cocky and had somewhere to be. No store is too busy to talk to customers, even if you are walking out the door. This is a case of downright laziness.

 

Thats right Mike and thats my point! Dealerships closing are a direct result of the sales staff and the management of the staff! Lot numbers are the same, but sales people refuse to do the basics..and why not when they are paid guentees! With what they say 7,000 customers per month coming through the door, the sales staff soon thinks everybody is just there to look and dream! According to that 7,000 number and the fact that Las Vegas is a HUGH tourist town here are some figures

Even if you charged every person $5.00 USD

5.00x7000= 35,000

35000x 26 days= $910,000

$910,000 x 12 Months= 10,920,000

That's almost 11MM without even having anyone buy a car if you can't work with that what can you work with I wonder what they where doing out there in Vegas..

As many here know I take phone ups 24 hours a day and work every lead that comes in....The issue with dealership congurency is much deeper then the markets are down..... There was post over on our sales board....

"Old line dealerships closing down is not an unusual thing in today's automotive business climate. More and more non-car corporations are trying to break into this lucrative trade, and the business model of an individual owner running his dealership for years and then handing it over to his kids is giving way to a corporate model being run by executives responsible to boards of directors where the "bottom line" is the bottom line.

The modern car business gained its prominence on the shoulders of WWII veterans coming home and opening dealerships. For the most part, they were propserous and the automobile industry flourished. In the mid-seventies, foreign manufacturers saw the US market as a potential gold mine, and started staking claim to that business. The environment in which we are now working is the end result of three things: the incursion of foreign manufacturers, the dying off of the veterans who built the early dealerships, and the corporatization of the business by companies not normally involved in the selling of cars.

These things, along with the presence of the internet, have so changed the industry that the old paradigm of how to effectively sell cars is essentially unable to keep up with what customers demand from the sales profession. Unfortunately, this new business model has failed to understand that the salesman is still the most important part of the sales equation - they would rather try to save money on training and compensation , and/or replace us with processes and gimmicks, such as "no-dicker" lots, etc. This has resulted in an incredibly unprepared and inefficent sales force, across the board. Most sales people are so poorly trained in basic sales techniques and product knowledge - and as a result, have such poor motivation - that they can barely make a living at their jobs.

This is a failure of leadership.

The dealer body, along with the manufacturers, needs to reassess the way sales people are hired, trained, compensated, and most importantly, treated. They need to redevelop these jobs into professional positions that are well trained, compensated, and respected, not just by their peers, buy also by their employers. On the other side of the blade, however, the sales force needs to step up and understand they have professional positions that require them to know their products, and know how to offer them to the buying public.

Until we all do these things, stores will keep closing, salesmen will keep turning over/making subsistence incomes, and customers will continue to believe we are just a bunch of liars, thieves, and con artists."

 

I agree with everything that you say except for the lot traffic, and this may simply be that your market out there is a little better than the market here at this point in time, but I believe that over the course of the next few years the entire U.S. will be affected in a negative way. All you have to do is turn on msnbc every morning and watch squawk box.

 

And thats the issue Mike, turning on MSNBC every morning gets the sales persons mindset to there is not any OTDB anymore everybody is going through a ruff time, so no up's today are buying! Reminds of a story:

A man lived by side of the road.....and sold hot dogs.

He was hard of hearing so he had no radio. He had trouble with his eyes so he read no newspaper, nor did he watch TV. But, he sold great hot dogs.

He put a sign up on the highway telling how great they were. He stood by the side of the road and cried, “Hey, You, want to buy a great hot dog?” And people came and they bought. So, he increased his meat and bun order. He bought a bigger stove to take care of his trade.

Then one day his son came home from college to help him.

His son said, “Dad, haven’t you heard the news about the recession? The economy is really bad. The unemployment situation is terrible. The energy situation is even worse. The housing market has went down the drain, and everyone is suffering”

Whereupon the hot dog man thought, “Well my son’s been to college. He reads the newspapers and listens to the radio, he ought to know.” So the father cut down on his meat and bun order. He took down his advertising signs. He no longer bothered to stand by the side of the road and yelled, “Wanna buy my hot dogs?” And his hot dog sales fell almost over night. “You’re right son.” The hot dog man said to his boy. “We certainly are in the middle of a bad recession!”

Like I said ask your freinds and family to take a hard look at there log books..My guess would be they are not logging everyone that comes in and choosing who there ups are going to be, and why they are not buing..like you said, credit has tightened up, so there must still be buyers coming through the doors... Like the sales person we ware talking about a second ago..he has no idea how buesy or how slow he is...I bet he would say behind closed doors that the tarffic has slowed down, and not even reconzie that he had a OTDB right in front him a few days earlier at closing time!

Mike, I am sure you know this, but all the old timers will tell you that in december through Febuary are slow months, why? They say well lot traffic is down...See in The months that are busey sales people have a large number of up's so they feel buesier then they really are! The fact is the best months in car sales are Oct. Through January. Why because you may only have 3 up's per day to work with you work each up harder, inturn making more sales!

Most sales people use the number game as an excuss for sloppy sales, in other words "hey i sold 35 cars last month, I kick ass" but what they forgot was the (during the busey months) was 500 OTDB (opp. to do business)! Ware had if the sales person just worked each up harder they might have sold 50-75 cars..