School me on buying an Auto Dealership/Service/Performance shop

I have the opportunity to buy a business that specializes in German import auto service and performance tuning. They also carry some cars in inventory to sell. I've long been casually looking for the right opportunity in motorsports to present itself over the past few years.

Now, rubber is meeting the road with a real opportunity. I would basically be "buying a job" performing as the GM and onsite owner with hopes to grow the business over time. I have a good handle on business in general and of course have spent decades in and around the motorcycle performance/racing scene.

What do I need to know, or what do I need to ask the current owners, specific to this industry?

 

cant help with some of what your asking....but if its fixing German cars...you have a never ending supply of customers.

I would say make sure you dont blow all your cash buying it as there will most likely be same rough quarters ahead with the full effect of the covid closures manifesting in 3-9 months.

Good luck.

 

never make a hobby your job... you WILL grow to hate it. your results may vary. Ski

 

Does the property come with the business.

If they are leasing that would be the first thing I would need to look into.

 

I'm no expert but bought a forklift company, without knowing anything about them. PM me if you want to talk. What is the adjusted net and how much do they want for it, to me that ratio is one of the most important things when I was shopping for a business to buy.

 

Yes they own the property

 

Great money in selling cars if you know how to buy the right inventory - it’s not as easy as some people make it . Good money in repair if you have good mechanics too . The car business is always a winner in my
Opinion , it just takes the right personality and knowledge base to make it work .

 

It takes a lot of money to keep a used car inventory. Two things to really watch for:
Part of the aquisition will be your purchase of the existing inventory. Be sure that you know how long each used car has been there. Well-run dealerships will adhere to a maximum of 45 days for each used car. Maximum. When a unit reaches 45 days, you will have to turn it over - either wholesale or retail, but you have to turn them over. I hesitate to sound like the typical used car dealer, but you have to be extremely tough about the values of the inventory that you buy initially.
Secondly, there is a hidden cost to trade-ins. When you take a car in trade, quite often your cash position goes backwards. All of the profit that you think you have made on the car you sell will be sitting out on the lot tied up in the trade. This is one of the reasons that used car dealers often seem to be really brutal about trade-in values. You must be able to turn a wholesale profit on the trade-in or you will likely wind up with a net loss.
Best advice is the simplest. Buy low, fix nothing, sell high. This absolutely has nothing to do with being a good person, or behaving in an ethical manner.
Used cars can be very good business. You just have to be very tough about the numbers.

 

The best part of being a used car salesman is that you’re more likable than politicians and dentists.

 

Go work there for a while to understand what you're actually getting into.

I had a similar experience working for a fellow that went out and opened his own power sports dealership after retiring from his corporate gig. He burned thru significant amount of the family cash before cutting his loses and going bankrupt. He was a numbers guy but not a business man and didn't have enough working knowledge of the industry to make sound decisions. Simply put, he didn't know what he didn't know.

Don't be that guy.

 

How are you with dealing with the public and screaming Karen's because you will have to deal with that.

 

I had a good friend that did he same thing...in MC's. He was always a big Honda guy and dreamed of getting into the next big thing like Honda's in the sixties. Was into all the various Chinese brands trying to find THE one. Needless to say he went broke. He wanted me to be a silent partner, the friendship went south shortly thereafter.

 

Hope you like working late nights and weekends.

Buddy of mine is a GM at an Audi dealership. They also sell a ton of preowned exotic cars. I'm guessing he easily pulls in 600K a year, probably closer to 800K based off his lifestyle and expensive taste......with the said, he is ALL THE TIME working.

Not sure the money is worth it but he has no kids of his own so.....not sure he's missing much.

 

one profit source on the used cars is a service contract or warranty of sorts. People love them the W word.

 

How much do you know about German cars?
How much experience in the auto industry in general?

My opinion is never get involved in a business you don’t fully understand and can’t run when people leave or are out sick.
JMO

 

I worked as a buyer for a car wholesale company back in college. If you play your cards right this is a very lucrative opportunity. German car repair fetches big $ in my experience so this is a good one for sure. I’d suggest finding a trustworthy/experienced car guy (if they exist lol)to join in with you on this venture.


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Thank you everyone for the advice. I can't share too many exact details due to NDA. But I'm taking every comment to heart and if I don't already have a plan for that risk I'm adding it to the list.

 

Yep...plenty of slubs lining up to empty their wallets becasue it was made in Germany....

 

Guy who owned a dealership/repair shop that I wound up becoming very friendly with through the wholesale job was a plumber for the police dept before he bought into the business and he did VERY well for himself. He teamed up with a car guy as his partner and they made big $ together so it’s been done!


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The biggest thing I hear from every repair shop around here is how difficult it is to find qualified technicians. Local transmission shop had two locations with all of the business they could handle. Had to shut down one location because he couldn't find enough people to staff it.
Finding employees in general seems to be a major challenge these days.