Domestic Dealer Franchises Worth Bupkis
The Big 2.8 have been having something of a problem with vehicle depreciation over the last few years, thanks to fleet sales, over-production and the fact that the general public doesn't value their products as highly as the transplants'. Automotive News [sub] reveals the not-so-shocking fact that the same principle applies to Motown franchises. "Dealer and property developer Bruce Toll owns and operates two auto malls in suburban Philadelphia. He says a domestic brand dealership, including its real estate, that might have sold in his market for $4 million a few years ago would be lucky to fetch $500,000 today." Ouch. "When Detroit 3 dealerships sell at all these days, many bring only the value of their real estate and parts inventories. 'Blue sky' — the intangible value of a franchise — is often virtually nil for a Detroit 3 store." Double ouch. For some reason, speculation that the D2.8 may file for bankruptcy or kill brands is depressing prices. Depressing as in eliminating. "Sheldon Sandler, an investment banker in Skillman, N.J., specializes in working with big auto retailers to buy dealerships. He says his company, Bel Air Partners, 'won't bother' with Detroit 3 dealerships. 'They are just worth parts,' Sandler says.
This might be picky of me but when referring to the "Big 2.8" versus "transplants" this seems a tad euphemistic. Is this not still a domestic/foreign line of thought? I acknowledge that products sold under domestic brands can be imported in whole or part and the alternate is true of foreign brands. However, when referring to a corporation is it still not right to call GM/Ford/Chrysler "domestic" and everything else "foreign"? Transplants make it sound as if Toyota, Honda, Nissan, etc have relocated all their operations to the US. Just asking.
Many of the Detroit's dealerships are worth less than land value. I'm waiting to see a certain Pontiac/GMC dealer in town turn into a strip mall. Or a (cringe) Wal-Mart.
Back in their good days GM, Ford and to a lesser extent Chrysler supersaturated the market with dealers. Now that they have gone from 85%+ combined market share to roughly 45% and counting there are far too many dealers. They can't afford to buy them all out so I suspect that absent at Ch11 cram down they will just be Isuzu'ed. The Detroit news did a whole series on the 2.8s bloated dealer network a while back.
Hmmm I actually work minutes away from where Toll has a mall, and the place is massive. It's only recently that they started bringing in "imports" to sell along side the domestics.. But the only difference in the two is.. The domestics owned the Imports.. Ford / Mazda GM / Suzuki I dont believe Toll has a Honda, Toyota or Nissan dealership.. just a clump of crap no one wants.