Automotive News Spotlight
Legacy Automotive Capital was in Automotive News this week where CIO Todd Marcelle shared his view on the growing demand for sale/leaseback capital and how dealers are maximizing real estate values.
To view the full article, click here. Not a member with Automotive News? No problem, we provided the article written by Marc Spizzirri in full below.
Guest commentary: Dealerships face uncertain times, but real estate endures
Real estate remains the only constant in this mix of uncertainty, and many dealers are starting to take notice.
As a result of chip shortages, supply chain challenges and pent-up demand, 2021 saw historic dealership profits. J.D. Power reported more than $5,000 in profit per new vehicle in December 2021 — more than triple what dealerships made in new-vehicle sales for the same period in 2019.
2022 has continued strong. According to Kelley Blue Book, average U.S. new-vehicle transaction prices reached a near-record $48,094 in September, slightly less than the previous high of $48,240 in August.
Throughout the late 1990s and into the recession that began in 2008, I owned and managed dealerships in Southern California. The years prior to the recession were remarkable — an economic period characterized by good feelings and a sense it was only going to get better. We felt invincible.
In good times, it is easy to get complacent when it comes to expense control and dealership management. The economic crisis of 2008 left some dealers unprepared for the challenges they faced.
It was a tough lesson for some, a stark reminder that taking your eye off the ball in inventory management and expense control can prove catastrophic. Talking to dealers now, it’s obvious many are watching the shifting winds carefully and trying to identify next steps. Especially for those looking to continue their growth objectives, decisions can be difficult. Putting a value on a dealership in today’s market can be mystifying.