Outsell LLC, the fastest growing Internet auto sales and marketing company, has signed a group agreement with auto dealer, Sheehy Auto Stores, which is expected to yield over $3,000,000 in gross profit for sales and service in 2007 via interactive marketing and live automotive chat.
“Outsell has been extremely successful in driving customers into our dealership,” said Roy Reutter, Corporate eBusiness Director at Sheehy Auto Stores. “Outsell was a great investment in 2006. Only 3 months into the program, we recorded a 18:1 return on investment. We are obviously looking forward to growing with Outsell in 2007.”
Sheehy Automotive has been using the IOL system corporately since 2002.
January 16th, 2007
Universal Dealer Consultants (UDC), a leading retail automotive consulting firm,is conducting a BDC and CRM Best Practices Seminar on January 9th and 10th. This seminar is open to all Automotive Dealership Management who currently work with, or are considering, a BDC and/or CRM solution for their store. UDC will be covering best practices for both Sales and Fixed Operations and will cover such areas as hiring and recruiting the right people, phone and email follow-up, business generating ideas, CRM Requirements/Set-Up and long term success and profitability.
For signup information, please call (866) 477-0424 and let them know which day you would like to attend. Each day will begin by reviewing best practices for fixed operations, followed by a catered lunch and will conclude with the presentation for the Sales side of the business. Questions or Comments can be directed to Clayton Stanfield at (866) 477-0424 or clayton.stanfield@udcnet.com.
Located in Irvine, CA, UDC has previously been awarded with a certificate of recognition from Mercedes-Benz USA for providing the “Best of the Best” in a recent marketing campaign.
January 5th, 2007
An article on 365Investing.com authored by Automotive Advisors of America, Inc. provides a useful overview on how to successfully invest in franchise automotive dealerships. The article discusses topics such as: When the right time is to buy a franchise, whether or not the dealership’s history matters, what it takes to be successful, and how to create a successful team. It also includes interesting case studies from successful dealership investors such as John Elway.
We feel that this information will be useful and insightful to franchise and independent dealers reading our blog. It is also an interesting look into the world of dealership investing for anyone with a general interest in automotive. We welcome your feedback on our blog.
Investing in Car Dealerships: How to Do It Right
The financial characteristics of the automobile dealership are attractive:
". . . moderate growth and risk and high returns. Franchised new car dealer revenues have grown at a 7.2% annual rate since 1992, about twice the rate of GDP. Moreover, this growth has come with only moderate risk, as the dealer body didn't lose money (on a pretax basis) for a single year in the last twenty - even during the 1989-1991 industry down-cycle. Finally, despite major changes in the auto industry's structure, dealer returns have remained high, with pretax ROE averaging 26.1% over the last twenty years". [MerrillLynch, April 19th, 2004 Report on "Automobile Dealers".]
Athletes from almost every major sport have invested in new car dealerships: Rick Hendrick, Roger Penske, John Elway, Troy Aikman, Evander Holyfield, Arnold Palmer, Michael Jordan, Scottie Pippen and Alex Rodriguez to name a few.
The idea isn't new. Johnny Lujack, 1947 Heisman Trophy winner and Chicago Bear Pro-Bower, started a business in 1954 that would eventually expand to 16 franchises; spread over 40 acres, with sales of over 10,000 vehicles and $150 million, per year. Lujack retired from the auto business after almost 50 years as a successful dealer.
WHEN IS THE RIGHT TIME?
"This is the time you have been waiting for", reports Greg Gilmore in the June 2005 issue of Dealer Magazine. Dealer Executive reported that last year (2004) ranked as the 4th best for new unit sales by franchised new-vehicle dealers. Total dealership dollars exceeded $714 billion, up more than 2% from 2003.
The fact is that anytime is the right time. In 1991, in the depths of an automotive depression, John Elway asked me, prior to signing his purchase contract, if "this" (1991) was the right time to buy. I told him that it is how you buy it and how you sell it that count. That year he made a $20 million investment. At the time he had a single Mazda store on Arapahoe Road, in Englewood. I sold the Mazda franchise for him and Nissan gave him its franchise to put in the old Mazda building. Shortly thereafter, I put together another transaction that had John buy the Mazda store on 104th Avenue, in Thornton. John then terminated Suzuki and put the Mazda store with his Oldsmobile and Hyundai franchises. After that he bought one more dealership (a Ford franchise) and then, in 1995, sold the entire package to Republic Industries for $86 million.
A lot of people were afraid to buy a dealership in 1991 and thought that John took a big gamble. But, he didn't "gamble". He structured his purchases and sales correctly, and then capitalized on his investment.
For example, although GM and Ford lost money (as they did in 1991), individual dealers made millions, according to NADA (National Automobile Dealers Association) and Automotive News statistics, the average dealers' pretax margin varies between one and two percent of their total sales. Why? The dealers capture a broader business base than the manufacturer. While the manufacturer makes its money on new car sales, the dealers have the additional balance of the parts departments, service departments, used car departments, finance departments, insurance departments and, in some instances, body shops. Consequently, while the manufacturer is dependent upon each year's new car sales, a dealer's success is based more on the total number of vehicles in operation.
DOES THE DEALERSHIP'S HISTORY MATTER?
A little, but don't be intimidated by it. After Jimmy Vasser won the CART racing championship for Target, I put together a transaction for Jimmy to buy a dueled Chevrolet-Toyota franchise, in Napa, that lost money for the previous 10 consecutive years. I put Jimmy together with a dealership manager and Jimmy's dad, who had some previous used car experience, signed-on as used car manager.
Subsequently, after going to dealer school and passing through the chairs, Jimmy's dad took over as General Manager; the store thrived; and Jimmy not only bought the dealership land and facility, but bought the Ford store in the next town, and is currently building a new Toyota store so that his Chevrolet and Toyota franchises can have separate facilities.
WHAT DOES IT TAKE TO BE SUCCESSFUL?
Good advice. Good advice is both important and hard to find. In the words of Trace Armstrong, past president of the NFL Players Association: "There's just so much bad advice out there being given to these guys. It's really kind of scary." [Reported by Eric Fisher, March 27, 2000.]
As with the Entertainment and Sports Industries, there is so much money in the car business, that everybody wants to get a piece of it. Consequently, everybody thinks he or she is an expert in analyzing and structuring deals, when in fact they just want to be a broker that gets a commission from the deal. Sidebar: New car dealership revenues reached almost One Trillion Dollars in 2004. The dealerships and dealer related industries account of over 15% of the Gross National Product of the United States.
HOW TO CREATE A SUCCESSFUL TEAM?
An investor needs a team. Generally, it's the same team they have, supplemented by an expert in the car business. Don't get lulled into a false sense of security that loyalty is synonymous with the "factory" or "bankers".
For example, Ford made one of its black dealers (a superstar athlete) the point man, brokering meetings with senior executives and acting as a conduit between the company and Jesse Jackson. He mediated disputes between Ford and its dealers, and he promoted the company in public appearances. He even had a close relationship with some Ford family members.
"He had some friends in high places," said John Clissold, a retired Ford Credit executive. "[The head of Ford Credit] was a very strong supporter." But, when trouble came, it didn't matter. Business was business. " . . . one factory executive familiar with the situation summed up the prevailing feeling at corporate headquarters: '[the superstar] was headed for a cliff and we weren't going over with him.'" [Story by Bill Vlasic and Mark Truby / The Detroit News Sunday, May 26, 2002.]
The fact is that the factory and bank employees have a duty to do what is best for the factory or bank, not what is best for your client. It's the law. They have a legal obligation to their shareholders - no matter how nice or how close your client is to them.
Financial statements and an accountant are not enough. Your client needs a member of your team that is a student of the industry. A profitable automotive statement can be certified and comply with every principle of accounting, yet still convey a false impression of success. There are so many nuisances in defining and structuring automotive transactions, that your client needs an expert in the field who can determine both what automotive deal is best for the athlete and what is the best way to get it.
So while your team may consist of accountant, attorneys, agents and managers that are excellent at their jobs, unless a student of the industry is added (someone who does nothing but structure buys and sells everyday), a key ingredient to success will be missing.
Think of it in terms of any sport or business. If a person wants to create a championship team in a particular sport, is it created with people who play the game 50% of the time, 75% of the time, or someone who plays it everyday?
Remember: The nicest thing they ever said about Richard Nixon was: "He looks like a used car salesman."
John Pico holds a Doctorate of Jurisprudence, is a vice president of Automotive Advisors of America, Inc. and in the last 33 years has completed over 1,000 dealership transactions. In addition to lecturing about buying and selling automobile dealerships, Mr. Pico has published two books and numerous articles on the subject. For more tips, sources and a list of references and experience, go to http//:http://www.automotiveadvisors.com
© Automotive Advisors of America, Inc.
The one place to go for advice when investing in an automobile dealership is Automotive Advisors of America, Inc.
January 4th, 2007
Yahoo! Autos recently commissioned J.D.Power & Associates to determine the online habits of auto shoppers. The survey revealed that 85 percent of online shoppers consider consumer-generated content to have significant relevancy in their quest for purchasing a new vehicle.
The full details of the study were presented at the J.D. Power and Associates Automotive Internet Roundtable in Las Vegas from Nov. 1 to Nov. 3 so if you had the chance to review this information then your comments here are encouraged.
According to the article on AutoRemarketing about the survey, ratings and reviews on actual carlines are what generate the most activity with online shoppers, but auto-enthusiast sites, online forums/message boards, blogs and question and answer sites are also growing in popularity.
Here are a few automotive-related online resources targeted toward the auto shopper and enthusiast:
AutoBlog.com
A car enthusiast blog site
Edmunds Inside Line
An Edmunds site that gives consumers and inside look at specific vehicles
Edmunds Women & Family Car Guide
An auto consumer site for women run by Endums
AskPatty.com
Automotive advice for women
CarSpace.com
A car enthusiasts automotive lifestyle social networking site run by Edmunds
Be sure to check them out today and see how these sites can be benefitting your dealership.
December 11th, 2006
Kentucky-based CarJockey.com, the Internet's largest wholesale used vehicle network for franchised dealers, this week said the company has exceeded 3000 vehicles in its dealer network. CarJockey.com is powered by HomeNet's Inventory Online (IOL) system.
Network fees are completely success based; members pay no setup fees, no monthly fees, and no listing fees. Dealers eliminate excess inventory without additional maintenance and purchase retail-ready vehicles with confidence from reputable franchised dealers, the company said.
"Our dealers now have access to 10 times the number of franchise dealer's vehicles they might see at a traditional auction on a weekly basis. They are available 24 hours a day and all vehicles come with a guaranteed vehicle condition report," said John Moore, founder of CarJockey.com.
"We will increase the inventory immensely over the next year, but the growth in usage, the increase in completed transactions and our overall dealer response is most encouraging."
In a recent survey, more than 90 percent of CarJockey.com dealers rated the service as good to great, the company said in a press release. "We have found the system an excellent tool for both buying and selling vehicles. We have sold vehicles over 400 miles away and have access to retail ready vehicles from other franchised dealers," said Ryan Burton of Cain Motors in Canton Ohio.
CarJockey.com's unique system provides dealers a human component to the process and allows buyers and sellers to complete transactions at market values efficiently. Utilizing the dealers' current data management systems, CarJockey.com automatically loads the dealer's excess inventory in the Network. Buyers can search the inventory and make offers based on market values for vehicles that fit their desired inventory or customer specific vehicles. CarJockey.com's automated notification system then alerts sellers when a legitimate offer has been established.
Currently most vehicles in the system are in a six state area, including Kentucky, Tennessee, Georgia, Indiana, South Carolina and Ohio.
"We have spent the last six months learning from our dealers and building the system around their needs, we will be expanding our marketing in the very near future. We hope to grow our presence in California, Florida and the Southwest markets soon. Based on recent growth and our expectations, we plan to have over 1500 dealers and 20,000 vehicles by the end of 2007," said Moore.
November 9th, 2006
Automatic Data Processing (ADP) recently announced the acquisition of BZ Results, a move that indicates ADP is serious about its dealership Web initiatives.
Details of the deal have not been announced, but ADP officials confirm that BZ President Sean Wolfington will remain with the company as a part of ADP’s digital marketing management team. Wolfington became part owner in BZ just a few years ago alongside founders Dave Sima and Adam DeGraide.
"With BZ Results comes the proven ability to drive sales in greater volumes from online marketing efforts, as well as improved success in closing deals when online prospects arrive at the showroom." — Steven Anenen, president, ADP Dealer Services
BZ has been a partner with HomeNet since they entered into automotive website marketing in 2001. HomeNet provides a full service inventory solution for BZ websites which includes the Buzzlot inventory search and display system that appears on almost all BZ sites.
Source Article on Wards.com
March 17th, 2006
The Women's Automotive Association International (
HomeNet, Inc
HomeNet, Inc.