Used Car Dealerships

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September 08, 2022

by a searcher from Louisiana Tech University - College of Business in Houston, TX, USA

Does anyone have experience acquiring used car dealerships? Are they good acquisition targets and can they be run as an absentee owner ? Currently looking at a couple and any tips and advice would be helpful

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Reply by a searcher
from Campbell University in Emerald Isle, NC 28594, USA
Once upon a time I worked as an accountant for a multi-car dealership co. (both new and used dealerships totaling 4 lots) and the owner of the business was pretty involved. He spent a good deal of his time traveling to auto auctions across the southeastern US to buy cars at auction and would have them shipped back to us. We would cut checks left and right for all kinds of payables, especially on used cars (many of the used cars bought at auction needed various repairs and cosmetic touch ups). Not to mention that the owner's son (GM), twin daughters (sales and CFO), wife (office manager), and an uncle that ran to the DMV and the bank all worked in the company!

From my experience and vantage point, running a car lot, especially a used car lot wouldn't be an absentee situation. Perhaps the owner could've hired someone to go to auction for him, but I'm sure he had his reasons to do it himself.
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Reply by a searcher
from IE Business School in Brattleboro, VT 05301, USA
Hey Olu. I spent the previous chapter of my career in car world. Happy to chat with you on this but it is definitely not a good business for an absentee owner. I would discourage you from buying one without an experienced operating partner whose acumen you can verify -- it's extremely easy to lose money in used cars. For one, we're talking about a tight margin industry where, outside of the last 24 months, your inventory's market value erodes on a *daily* basis.

The guy in Elisandro's example has some other reasons for "keeping it in the family," which would take a while to get into here.
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