Ever Dreamed Of Owning A Car Dealership? These Are The Brands To Buy

Sales

If you've got the investment cash, that is.

For many Americans it’s been a family-own business for years, perhaps decades. Owning a car dealership franchise has brought great prosperity to many families throughout the 20th century, and it’s very much continuing to do so in this century, too. But let’s say you weren’t born into one of these families and you wanted to buy a car dealer franchise; what should you buy? What brand or brands generate the most profitability by retaining long time customers and attracting many, many new ones?

According to a report from Automotive News, the best dealership investments are luxury brands, specifically those from Germany. In fact, the US is currently experiencing "the busiest dealership buy-sell market in decades…and luxury brands are red hot." BMW, Mercedes-Benz, and Porsche dealers are currently experiencing the highest “blue sky” values, which can be defined as the “intangible value of a dealership that’s expressed as a multiple of adjusted pretax value.” For example, the typical blue sky value for these “brands range from 7 to as much as 10 times adjusted pretax profit.” By the third quarter of last year, those brands’ had a blue sky range of 7 or 7.5 times earnings.

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Alan Haig, president of a dealership buy-sell advisory firm, stated that he doesn’t "see a Mercedes-Benz guy selling his store for less than 7 times." Blue sky values are also increasing for Audi, Lexus, and Jaguar Land Rover, but not at the same rate as it is for the aforementioned three. So how much will, say, a BMW dealership cost? No specific range was given, but let’s put it this way: a VW store would sell today for $500,000 to $3 million, and that’s taking into account recent heavy losses that wouldn’t even allow it to be given a blue sky rating.

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