PreOwned Dealership Idea

no as easy as it sounds

 

sounds like High Margues in Morristown, NJ although they deal primarily in Porsches.
Check them out.
Ron

 

+1. Not saying don't do it, but give me a call...I considered this prior to opening my current business moving exotics.

MB

 

I have been approached a few times over the years with ideas like yours, I do not want to tell you what to do, but it is very difficult to make money with that type of operation, and in this economy even harder than it used to be You would also need a pretty decent amount of capital. I love cars, and I would not do it.

 

sorry for all the negativity but everyone is being honest. to be more specific consider the following. Obviously you aren't thinking consignment but actual sales through acquisition by you from auctions or desparate sellers.

To do so, you need a facility. This equals rent, utilities, insurance, personnel, etc. Now you need inventory. So, you start with your 10 car example of creme dela creme.

4 F430s wholesale (2 coupes, 2 Spiders) - $500k to $550K?
4 F360s wholesale (2 coupes, 2 Spiders) - $340?
1 F355 Spider wholesale $40k?
1 512TR $60k?

* btw, I have no clue about pricing. I just buy them and sometimes not well (another discussion for another day

so, capital cost to start the business is maybe $200,000
Inventory per the above is $1 Million
You need a salary drawn $______

Now, especially with Ferrari purchases, you need to convince a buyer why you are a reputable Ferrari guy and why they should buy from you versus the Algar, Miller, Central NJ, FOW, etc who are ALL siting with stock they've owned for more than a year now.

I LOVE YOUR IDEA theoretically, but when you add all of the above and then try to derive a ROI on your $1.2 to $1.5 million, what you do think it is?

 

The model obviously DOES work, but it looks like it's more region-dependent than anything else. Southern Florida has these guys from Boca to Coral Gables (Jenkins, Formula1)-- and they've been in business for a while; however, they have an infinitely larger market down there.

I'd be careful trying to replicate this up here for that reason alone.

That being said, I think something we HAVEN'T seen is a "guy" who has "high milers" that you know are perfect. I'm talking about 25k mile 430s, LP560s, Stradales, and other Italians. 35k mile Porsches. All of them pristine, but not outrageously priced.

Over time you'd develop a reputation that very few people have by offering such a unique product.

 

The other thing to consider, especially since you are in the Lehigh Valley, is that some people like marble, artwork , and an exclusive "atmosphere", while some don't care what surrounding the cars are in. All of that "atmosphere" costs an awful lot of money, adding to your overhead. It also does nothing to establish your legitimacy.

I made a purchase from a very prominent dealer in this mid atlantic section with all of that "atmosphere" , and I found out later from the car's original owner that it had been represented incorrectly by said dealer. I do love the car and I really have no problem either with the dealer in spite of this, so I'll leave it at that. For comparison, I also have a Porsche that I bought from a gentleman's garage where the only "ambience" or "accoutrement" to the atmosphere was the sound of crickets echoing against the concrete walls of the garage .... this car is a 4 time PCA Parade winner, has been featured in Excellence and Panorama magazines, and has won it's class at every major concours I've entered it in up and down the east coast.

I guess my point in all of this is to think long and hard about pouring tons of $$ into a showroom, as true car guys probably won't care. Good luck though, I envy you if you have the means to make a dealership of said cars happen !!

Art

 

Let's spin this in perspective...Car enthusiasts want to see this kind of facility, but don't want to build a place like it for whatever personal reason as an entrepeneur. It isn't that they would not be consumers, clients, or end-users. It is that they don't want to take on such a project.

If you are still interested in your venture despite all the negative advice to the contrary, then you have passed the first barrier faced by every successful entrepeneur.

 

Certainly can't argue with that.

Art

 

Unless you have the exotic car business in your blood, you might want to consider something more certain, such as owning an opera company or an airline.

 

Unless I missed it, you haven't mentioned targeted gross sales or gross sales potential either in dollars or volume of cars moved.

What's your best estimate at this early point as to the level of sales you would need to support a commissioned sales staff, other direct costs, and all other aspects of overhead and profit? I'm guessing that product turnover is low, which poses a challenge to significant sales volume. And are you reasonably sure you can generate sufficient foot traffic, internet interest, and referrals (of which some percentage would convert to sales) with a 10 to 15 used car inventory? Is part of your business model to be a "broker" who shops for cars for interested buyers?

Finally, the service end of the business for dealers generates significant revenue. Does your business model work without a service component? Is it your plan to outsource all of your servicing needs to a nearby independent or dealer for car preparation (at a minimum) and warranty repairs? I'm assuming that a new owner's needs will be his responsibility at a facility of his choosing.

 

I agree, but I am telling you to contact me first so I can provide some perspective since I have now been in business for about 1 year moving exotics. I have a LOT to tell you.

Regards,
MB

 

Hi Matt,

I was agreeing with Neonzapper on the entrepreneurial spirit thing is all, I think the one you want to talk to is ForzaMar23 (Mario), he's the thread starter.
BTW, PM if you want, I'm pondering a car in NC. I'm wondering the cost to move it from NC to Philly.

Art

 

"Unless you have the exotic car business in your blood, you might want to consider something more certain, such as owning an opera company or an airline."


Given the source, an interesting post.

 

laughed out loud, Dave!

looking thru this thread, it occurred to me that even brokers are having a tough time in this market, and that's without the overhead that having a building/showroom, utilities, RP taxes, insurance, prop etc. that a "dealer" would have.

 

Gotcha Shark, and I knew that - just commenting on the overall scenario if the OP was following. PM sent on the move. Hope we can do it for you.

MB

 

With inventory moving slowly these days, why not combine the dealership with an exotic car share? Philly needs one.

 

I've been a dealer for 20 years, own a Ferrari, love Ferraris and still choose not to deal in Exotics. Many reasons, but primarily PA is a very small market for these cars. In addition, in todays market as a dealer you can't compete with private sellers that are cutting cars loose out of necessity at distressed prices. Another thing to consider is you will be held to a higher standard than a private seller as a dealer. In other words, your cars need to be nearly perfect from a mechanical standpoint prior to their sale and if not you'll be dealing with it after the sale. Dealing in nearly new inventory will somewhat shield you from mechanical issues, but no guarantees there either.
Another large issue is supply of inventory. There are many dealers and wholesalers in your area that are "in the know" so to speak. Their phone rings when another dealer is looking to trade an exotic and looking to place it. Yours I'm guessing does not. At the very least I would make an attempt to contact guys like Eddie Karram and see if he's willing to help supply you with inventory.
I would set up a shop on site with your buddy that is a Ferrari tech and unless you're very mechanically inclined have him do a check on every car you plan on buying. Correcting issues on these cars after the fact will burn profits at a record pace. Also, buying at auctions is buyer beware. You buy it with only an educated look and hope for the best once you get it home and up on a lift. Manheim no longer offers post sale inspections on any exotics, so only mechanical defects that you can find yourself within an hour can be arbitrated, although frame damage is still covered for 1 week from purchase date.
In my opinion, you'd be better off in a warehouse with a service shop on site and advertise primarily on the internet. I'm willing to bet you will be able to count on one hand the amount of units sold due to foot traffic in a years time. To buy, service, market and sell 5 cars in a month would be a remarkable success in my eyes. Especially for one new to the game. Base your numbers on that.

My .02
Good luck,

Spang

 

I totally agree....

 

Good post. Good advice.