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Would You Appraise an Auto Dealership Right Now?

Discussion in 'General Real Estate and Real Estate Finance' started by Terrel L. Shields, May 15, 2009.

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  1. Terrel L. Shields

    Terrel L. Shields Elite Member
    Gold Supporting Member

    990
    May 2, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Arkansas
    quote from the bubble thread

    conspiracy theories aside, what do you think the impact of driving some 5,000 - 7,000 dealers out of business will do to GM & Chrysler?

    To me it is a win-win for other car companies...particularly the Indians, the Chinese, and the Koreans. And with Toyota set to launch a dually diesel truck, the high margin vehicles like SUVs and Pickups will shift to Toyota and away from Dodge and GMC, Chevy...

    I think the only thing most of these dealers can do is take on Kia, Hyundai, Baolong, Foton, Chery, and Dadi - a pickup manufacturer. From India get used to Mahindra, who already makes tractors for the U. S. market and has an auto relationship with Reneult.

    Do you think these dealers will pack up and go away? I think not. I think they will scramble in desperation for whomever will take them on, develop new relationships with foreign or domestic manufacturers and in the end will be another nail in GM and Chrysler's custom government issued coffin.

    The idea that low profit margin, high start up cost, small electric cars are going to be the auto of the future is a cruel hoax. As electric costs skyrocket, just like corn prices did when ethanol become all the rage, people will be turned off by these short distance, high maintenance cost, POSs and GM and Chrysler will be doomed to expire. If Ford can keep out of the Government till, they stand to return to the prominence that they haven't had since the Model T.

    BTW, I wouldn't appraise a dealership right now for $15,000.
     
  2. MikeinLA

    MikeinLA Junior Member

    24
    Jan 6, 2009
    Professional Status:
    Certified General Appraiser
    State:
    California
    Silly boy. Take the 15 grand and sub it out to an AMC for 500 bucks.:rof:

    Mike
     
  3. Mountain Man

    Mountain Man Elite Member

    35
    Jan 15, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Georgia
    I'd take a dealership request, there are still plenty of viable alternative uses in my area.
     
  4. Michigan CG

    Michigan CG Moderator Staff Member Moderator

    574
    Nov 1, 2006
    Professional Status:
    Certified General Appraiser
    State:
    Michigan
    After the announcements Wednesday for Dodge dealerships and today for GM dealerships I wouldn't touch one.

    Appraisers need to know their limitations and I have no idea what the effect on value is as of the recent revelations. I will let the appraisers who are a lot smarter than I take those.
     
  5. Terrel L. Shields

    Terrel L. Shields Elite Member
    Gold Supporting Member

    990
    May 2, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Arkansas
    I don't believe those dealers will roll over and play dead. I think someone will take them on. And that spells even more competition for GM and Chrysler. It seems far more sensible to have altered the contracts with independent dealers so that financing of cars came thru 3rd party banks, delivery costs could have been upped slightly, etc. Small towns that lose their dealership will be a turn off against the auto maker. That means die hard GM people start driving Nissan's, not that they drive 100 miles to do business with a stranger. And if their local dealer somehow survives and takes on say, a Subaru dealership, then expands with a Dadi (which could move into America soon) pickup, what do you think? I think I might be driving a Chinese truck instead of my Dodge.
    The big three had the large pickups (diesel, dually) all to themselves for decades. That is about to end with Toyota's new offerings. Diesel, dually. Say goodbye Ram. Say goodbye Chevy. Say goodbye Ford tough.....you got REAL competition now. Face it. The big profit margins were on the full sized trucks, SUVs, and people did not stop buying them because of fuel costs. They stopped because many of them were contractors, builders, bricklayers, carpenters, and other construction people needing heavy duty equipment. With 80% of those people idled, they are not buying anything. The number of working drill rigs has collapsed in the U. S. down by over 50% and falling fast. Drive onto any one of them and look at the vehicles. No one is driving a car. So there is another 'hit' to oversized (read profitable) rigs.

    Our auto makers can blame themselves for much of the problems. They had no contingency to downsize autos in the face of recession and high fuel costs. There is no reason that if they can sell a pickup now for $22,000 that they couldn't have 4 years ago. I bought a 2000 and paid $2,000 more for a regular cab pickup than i did for the 2008 crewcab truck I bought last fall. Clearly, they have had a high margin of profit. But when fuel went to $4 a gallon, they should have been rolling out the 4 cyl. diesel in a small pickup that gets 30+ mpg. If VW cars can get 45 mpg..why can't a GM or Chrysler product? Failure of management to be flexible and to have "shovel ready" designs to crank out as they saw big car sales lag.
    30,000 engineers at Chrysler and not one was working on a viable small pickup that got high gas mileage and sold for a reasonable price. not one.
     
  6. Workbox

    Workbox Elite Member

    3
    Mar 2, 2005
    Professional Status:
    Certified Residential Appraiser
    State:
    Colorado
    TS, you hit some very good points, My next door neighbor is a commercial roofer and he has always purchased Crew Cab Dodge Diesel Longbeds for work and he and his son turn them in every 50k. I'll asked him about your post.
     
  7. Restrain

    Restrain Elite Member

    90
    Jan 22, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Florida
    We've got some abandoned dealerships here. One was converted to office space. A smaller one became a tire shop and car rental. Another is vacant and has been for years. However, there's a Wal-Mart and a Sam's going in on some vacant land across the road, so it will probably be a tear-down. It's had interim uses as a RV dealership, etc.

    There's a very large GM dealership that will probably move now and convert the land to retail/office due to its location.

    However, there's a couple of dealerships (Jeep, Dodge) that will probably set empty for years.
     
  8. Workbox

    Workbox Elite Member

    3
    Mar 2, 2005
    Professional Status:
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    State:
    Colorado
    Talked to my neigbor, he will continue to buy Dodge Trucks. His gets better gas milage than his older kids new Toyota Tundra.
     
  9. Lloyd Bonafide

    Lloyd Bonafide Senior Member

    0
    Jan 15, 2006
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    One thing I don't understand is how closing a bunch of dealerships will financially benefit GM or Chrysler.

    I know it will benefit the remaining dealers, because they should be moving more vehicles, but how does it help the manufacturer?

    If you live in a small town, and the only dealer now is Nissan or Toyota, and the closest GM dealer is now 90 miles away, you are more likely to buy a foreign pickup. So it seems that GM and Chrysler will be selling less units with less dealers, so how does that help them, their UAW workers, or their domestic parts suppliers?
     
  10. Austin

    Austin Elite Member

    1
    Jan 16, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Virginia
    LLoyd; You missed the whole point of the thing. Dealerships are closing because they are competing against each other. The object of the game is to maximize profit and not to sell more cars. Would you not rather manufacture 100,000 cars and make $3,000 per car as opposed to building 4 million cars and lose money? This is all about eliminating market competition so they sell less cars and make more money.:new_all_coholic:
     
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