While a number of good dealers would like to exit the industry, the current market conditions are less than ideal. It may be at least two years before the dealership transactional market returns to acceptable levels.
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By Phil Villegas
Dealers who have been through either the purchase or sale of a dealership know the stresses associated with executing that.
From the seller’s perspective, stresses can come from the thought of exiting the business, informing employees, negotiating the purchase agreement, tax implications of the sale, winding down operations and the ability of the buyer to close the sale.
Newer, smaller and more innovative automotive companies are emerging.
The early success of many of them will fuel speculation and capital investment into current and future automotive start-ups, under the belief that the traditional retail automotive network and its manufacturers are obsolete, and that these newer, leaner, edgier companies are the way of the future.
While the actions taken by Chrysler and General Motors to reduce their dealer counts are necessary for purely competitive reasons, the costs associated with these actions will extend far beyond those dealerships targeted to be closed.
If you’re in the market to purchase a dealership and have been sitting on the sidelines waiting for the market to bottom out, the next 90 to 120 days may yield some of the best buying opportunities that we will see for a long time. The key to making a good acquisition in this market is to be emotionally and financially disciplined.