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Southern MN | They are not dumb by any means, but it is a nasty business. Some shops are very profitable, many struggle to break even. Seems hard to believe from the outside looking in but shops can be a struggle. One of the biggest problems is keeping young techs, you lose money for several years as they learn. It seems about the time they become profitable they are married with kids and they look for different jobs that don’t require the time commitment for the busy 3-4 months a year. Dealer shops have a lot of overhead. Inventory management is of course the worst. By the huge number of dealer inventory reduction sales in December it was pretty obvious dealerships were/are trying to stay in front things. But I will almost guarantee there will be some more mergers that are a result of this. 8% interest on 100 million plus of inventory can get ugly in a hurry. The big groups have way more than 100 million I am sure. Parts are the cash cow most dealerships can count on, but interest rates affect that also. Don’t remember exact number I believe we had 5-7 million of parts at 4-5% interest. Same amount of parts is probably 15 million plus with 8% interest that makes things a little more tricky also. I personally believe the majority of the dealers will be okay as the lots I see are not overflowing, but am glad it is them and not me negotiating the next couple of years. | |
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