Car Dealerships Chevrolet Silverado K1500 LT in Eau Claire WI

Car Dealerships Chevrolet Silverado K1500 LT in Eau Claire WI

February 15, 2018
Posted by: solfa_admin

If you or anyone you know is thinking of buying a new car, then here are just a few of the many tricks used by car dealers for you to look out for:

Bait and switch

The car dealer advertises cars offering great deals. But when you get to the showroom, either the cars featured in the ads have already been supposedly Your Best Choice in Car Dealerships Chevrolet Silverado K1500 LT Eau Claire WI 54701 or actually sold so you are offered a different, usually pricier, option. Or else, the salesperson skilfully steers you away from the lower price model to one with lots of extra bells and whistles which, of course, is more expensive.

The Slowdown

In most sales situations, the seller wants to get you through the sales process as fast as possible so they Chevrolet Silverado K1500 LT Eau Claire WI 54701 can close the sale and get their commission. But many car dealers take an opposite approach. They want to keep you for an hour to an hour and a half. They know that many customers feel uncomfortable in a car dealership and so the longer they keep you, the easier it is to sell you all kinds of expensive extras as Car Dealers’ Sales Tricks Chevrolet Silverado K1500 LT Eau Claire WI 54701 you’ll start agreeing to buy things just to complete the deal and get out.

Front-of-shop and Backending

Car sellers split the car selling process into two distinct phases. In front-of-shop they sell you the car. But they make surprisingly little profit on the car itself. The big money is made during what they call backending where they sell you all sorts of Chevrolet Silverado K1500 LT Eau Claire WI 54701 extremely profitable extras – special treatments, long-term warranties, GAP insurance and so on. Once you’ve agreed a price for the car, the salesperson will take you to an office to ‘do the paperwork’. It’s not unusual for the buyer to emerge almost an hour later dazed at all the extras they’ve been sold.

One Step Negotiation

In the West, we often feel Chevrolet Silverado K1500 LT Eau Claire WI 54701 uncomfortable haggling over price as we’re used to prices for most of the things we buy being clear and fixed. The car salesman knows this and will often give us some small price cut or concession in the knowledge that we’ll probably be relieved to have got something off the price and so will do the deal. Very few people will Chevrolet Silverado K1500 LT Eau Claire WI 54701 do two- three- and even four-step negotiations to push the price down further.

Absent Authority

This is a classic sales trick. If we try to bargain too hard, the salesman might say something like, ‘look, I can’t possibly cut the price any further. But I’ll tell you what I can do. I’ll go and talk to my sales manager and see Chevrolet Silverado K1500 LT Eau Claire WI 54701 what he says’. Off they’ll go to supposedly fight on your behalf with the sales manager. They might be away for five or even ten minutes – the longer this is, the more it looks like they’ve really been battling away to get you a better deal. Then they’ll come back with some further price cut or concession. The buyer’s problem Chevrolet Silverado K1500 LT Eau Claire WI 54701 is that they can’t negotiate any further as they can’t talk to the sales manager – the absent authority.

Price cushioning

If we’re paying for the car in monthly instalments, the salesperson will seldom mention the real total price we’re actually going to pay as we might be shocked by how much more this is than the sales price of the car. Chevrolet Silverado K1500 LT Eau Claire WI 54701 Instead they price cushion by only talking about the size of the monthly payments which makes the car seem more affordable. Moreover, they can reduce the size of our monthly payments by spreading them out over a longer time. Price cushioning also makes it easier for the seller to get us to buy lots of extras by saying something like, ‘you’ll Chevrolet Silverado K1500 LT Eau Claire WI 54701 get a long-term warranty for the price of a cup of coffee a month’ rather than focusing too much on the total cost of the warranty.

The Sneer

If a buyer is hesitating over the price the seller can offer to show them a cheaper model, thereby implying the buyer is too much of a skinflint to buy a quality car. This Chevrolet Silverado K1500 LT Eau Claire WI 54701 can be particularly effective – and embarrassing for the buyer – when a buyer’s partner or children are with them.

The Law of Contrast

This is very useful during the backending phase of the sale. In comparison to the cost of the car, all the extremely profitable extras the salesperson pushes will seem cheap. So someone, who might try to save a Chevrolet Silverado K1500 LT Eau Claire WI 54701 few pounds or even pence when doing their weekly supermarket shop, might end up paying £400 or more for GAP insurance – insurance which covers you for the difference between a car’s value and what your insurance company might pay if the car is stolen or written off – when that insurance probably costs the car dealer only £40 or less

Chevrolet Silverado K1500 LT Eau Claire WI 54701

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    Car Dealerships Chevrolet Silverado K1500 LT in Eau Claire WI

    February 15, 2018
    Posted by: solfa_admin

    Most business valuations are driven substantially by the company’s historical financial statements, tempered by other factors such as: location, brand name, management and such. In truth and in fact, the dealership’s balance sheet represents less than half the information necessary to properly value an automobile dealership. The balance sheet is but a starting point from which a number of factors must be Inside the Buy Here Pay Here Car Dealership Chevrolet Silverado K1500 LT Eau Claire WI 54701 added and subtracted in order to determine the true value of the assets.

    Valuing new car dealerships has to do with projecting future profits and opportunities based upon the “dynamics” of the particular dealership being valued and of the automobile business itself.

    The Internal Revenue Service recognizes that valuations include more than financial statements: “The appraiser must exercise his judgment as to the degree Chevrolet Silverado K1500 LT Eau Claire WI 54701 of risk attaching to the business of the corporation which issued the stock, but that judgment must be related to all of the other factors affecting the value.” Revenue Ruling 59-60, Section 3.03.

    DEFINITION OF MARKET VALUE

    The definition of market value according to the American Institute of Real Estate Appraisers’ Dictionary of Real Estate Appraisal, is: “The most probable price in cash, terms An Introduction To Used Car Dealers Chevrolet Silverado K1500 LT Eau Claire WI 54701 equivalent to cash, or other precisely revealed terms, for which the appraised property will sell in a competitive market under all conditions requisite to fair sale, with the buyer and seller each acting prudently, knowledgeably, and for self interest, and assuming that neither is under duress.” American Institute of Real Estate Appraisers, The Dictionary of Real Estate Appraisal. (Chicago: American Institute of Chevrolet Silverado K1500 LT Eau Claire WI 54701 Real Estate Appraisers, 1984), 194 195.

    In Revenue Ruling 59-60, the Internal Revenue Service defines “fair market value” as follows: “…the price at which the business would change hands between a willing buyer and a willing seller when the former is not under any compulsion to buy and the latter is not under any compulsion to sell, both parties having reasonable knowledge and Chevrolet Silverado K1500 LT Eau Claire WI 54701 relevant facts.”

    The purpose of Revenue Ruling 59-60 is to outline and review in general the approach, methods and factors to be considered in valuing shares of the capital stock of closely held corporations.

    The methods discussed in the Revenue Ruling apply to the valuation of corporate stocks on which market quotations are either unavailable or are of such scarcity that they do not Chevrolet Silverado K1500 LT Eau Claire WI 54701 reflect the fair market value.

    The Ruling goes on to state that no set formula can be devised to determine fair market value of closely held stocks and that the value will depend upon such considerations as:

    (a) The nature of the business and the history of the enterprise from its inception.

    (b) The economic outlook in general and the condition and outlook of Chevrolet Silverado K1500 LT Eau Claire WI 54701 the specific industry in particular.

    (c) The book value of the stock and the financial condition of the business.

    (d) The earnings capacity of the company.

    (e) The dividend-paying capacity. The ability to pay dividends is often more important than a company’s history of distributing cash to shareholders, especially when valuing controlling interests.

    (f) Whether or not the enterprise has goodwill or Chevrolet Silverado K1500 LT Eau Claire WI 54701 other intangible value.

    (g) Sales of the stock and the size of the block of stock to be valued.

    (h) The market price of stocks of corporations engaged in the same or a similar line of business having their stocks actively traded in a free and open market, either on an exchange or over-the-counter. With respect to an individual dealership sale, the Chevrolet Silverado K1500 LT Eau Claire WI 54701 best comparable is the amount the public company paid or received for buying or selling a similar dealership, not what the public company’s stock value or earnings multiple, per se, that is reflected on the stock exchange.

    In practice, in arriving at the fair market value of a new car dealership, several different formulas have been used:

    1. Return on Investment (or earnings valuation) Chevrolet Silverado K1500 LT Eau Claire WI 54701 Formula: The value of a business to a particular purchaser based upon a return on investment analysis. This value varies from purchaser to purchaser, according to the purchaser’s investment criterion, and it may or may not reflect fair market value. The National Automobile Dealers Association (NADA) refers to this value as “Investment Value.” A Dealer Guide to Valuing an Automobile Dealership, NADA Chevrolet Silverado K1500 LT Eau Claire WI 54701 June 1995, Revised July 2000.

    The capitalization rate is determined by the stability of the dealership’s earnings and the risk involved in the automobile business at the time of sale, investment, or valuation. This method is highly subjective as the capitalization rate is based upon the particular appraiser’s perception of the risk of the business; consequently, the lower the appraiser perceives the risk, Chevrolet Silverado K1500 LT Eau Claire WI 54701 the lower will be the capitalization rate and the higher will be the price he would expect a potential purchaser to pay for the business.

    In short, the capitalization rate is the appraiser’s opinion as to a rate of return on investment that would motivate a prospective purchaser to buy the dealership. Considerations include those specified in Revenue Ruling 59-60, as well as Chevrolet Silverado K1500 LT Eau Claire WI 54701 available rate of return on alternative investments.

    2. Adjusted Net Worth Formula: Net worth of the company, adjusted to reflect the appraised value of the assets used in the day to day operations of a business, assuming that the user or purchaser will continue to make use of the assets. To this “net worth” value will be added blue sky or goodwill, if Chevrolet Silverado K1500 LT Eau Claire WI 54701 any. The “Adjusted Net Worth Formula” is the most common method used in purchasing and selling a new car dealership.

    3. Orderly Liquidation Formula. This method values the assets as if all of them had to be sold – not at a “fire sale,” but in an orderly manner and without time constraints. Normally, if the dealership is profitable, some value will still Chevrolet Silverado K1500 LT Eau Claire WI 54701 be placed upon goodwill.

    4. Forced Liquidation. The lowest of all values, forced liquidation means that all of the assets must be sold at a forced sale such as an auction, creditors’ sale or by order of a bankruptcy court. A bankruptcy proceeding regarding a new car dealership almost never brings goodwill. This might be the most appropriate formula if the dealership has Chevrolet Silverado K1500 LT Eau Claire WI 54701 no lease (or only a short term remaining on its lease) and cannot, as a practical matter, relocate.

    5. Income Formula. The income formula is basically taking the store’s earnings and multiplying it by an appropriated capitalization rate. The trick here is the definition of “earnings.” In determining “earnings” a perspective purchase could use any combination of the following:

    (a) current earnings

    (b) average Chevrolet Silverado K1500 LT Eau Claire WI 54701 earnings – add the last five years together and divide by 5

    (c) weighted average earnings – usually an inverted weight with the current year multiplied by five, last year by four, the year before last by three, four years ago by two, five years ago by one, then adding them together and dividing by 15

    (d) cash flow – net income Chevrolet Silverado K1500 LT Eau Claire WI 54701 plus agreed add-backs such as depreciation, LIFO, personal expenses, excess bonuses and such

    (e) forecasted earnings – future projected earnings discounted to present day value.

    6. Fair Value. NADA also refers to a third value in addition to “Market Value” “Investment Value,” which it calls “Fair Value.” NADA describes “Fair Value” as being “…primarily used when a minority shareholder objects to a proposed Chevrolet Silverado K1500 LT Eau Claire WI 54701 sale of the company in assessing liquidating damages.” and defines it as: “The value of the minority interest immediately before the transaction to which the dissenter objects, excluding any appreciation or depreciation in anticipation of the transaction and without reference to either a minority or non-marketability discount.”

    The NADA guide states: It is not common for auto dealers to run across this particular Chevrolet Silverado K1500 LT Eau Claire WI 54701 valuation standard. This author has never used, nor has ever seen this value used with respect to valuing automobile dealerships.

    As can be seen in this report, this author in discussing valuations excludes what NADA describes as “Fair Value”.

    7. The Greater Fool Theory. The National Automobile Dealers Association publication (A Dealer Guide to Valuing an Automobile Dealership, NADA June 1995), bemuses, in part: Chevrolet Silverado K1500 LT Eau Claire WI 54701 “A Rule of Thumb is more properly referred to as a ‘greater fool theory.’ It is not ‘valuation theory, however.” (In its “Valuing an Automobile Dealership: Update 2004” NADA dropped the reference to “fool” and simply states that the theory is “. . . rarely based upon sound economic or valuation theory,” but advises sellers to “Go for it, and maybe someone Chevrolet Silverado K1500 LT Eau Claire WI 54701 will be stupid enough to pay [it].”

    The considerations for valuing new car dealerships are more complex than those used for valuing most other businesses. Dynamics such as the unique requirements of automobile manufactures and distributors can limit the amount of monies that may be paid for a dealership, regardless of what perspective purchasers may offer to pay for the store.

    Therefore, the value Chevrolet Silverado K1500 LT Eau Claire WI 54701 of a new car dealership varies based upon the needs and ability of the purchaser and, consequently, the same dealership could have two different values to two different purchaser and both values would be correct.

    Thus, our valuation of the subject dealership should be considered in the context and limitations of the facts and history of new car dealership sales as delineated herein.

    Chevrolet Silverado K1500 LT Eau Claire WI 54701

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    Car Dealerships Chevrolet Silverado K1500 LT in Eau Claire WI

    February 15, 2018
    Posted by: solfa_admin

    There is never a wrong time to buy a car dealership, only a wrong way to buy one.

    In 2009 there have been dealerships (both domestic and import) that have made over half a million dollars in one month, yet the majority of the pundits said that 2009 was not the time to buy a dealership.

    Remember “If you wait for perfect conditions, you will never get anything done.” Ecclesiastes 11:4. It is not the “conditions” How to Find Unadvertised Discounts on New Cars Chevrolet Silverado K1500 LT Eau Claire WI 54701 that count; it is your “analysis.” The fact is that most car dealerships that closed in 2009 were bought or established during what the pundits now describe as “the good times.” The times when owners and the experts lamented were “the right times” to buy and build.

    Case in point: In 2008 Automotive News ran a front page story on a fellow that was building a Toyota dealership on the freeway, across from the Oakland Chevrolet Silverado K1500 LT Eau Claire WI 54701 Coliseum — a $35 million store, with five floors and a four-story glass showroom. The experts proclaimed about the dealer “… has a broader vision about the relationship between real estate and car dealers than you would ordinarily find.”

    On February 24, 2009 The Oakland Tribune reported: “New Toyota dealership in Oakland closes”. In that article the dealership’s customer relations manager lamented: “I’m kind of in a state of shock because we thought we had Car Dealerships: The Difference Between Pre-Owned and a Clunker Chevrolet Silverado K1500 LT Eau Claire WI 54701 such a bright and opportunistic future here, and with this, it just leaves an empty taste… ”

    When one analyzes that situation, the dealership was supposed to fail.

    For a plethora of reasons, not the least of which was the store’s rent factor, the dealership’s success would have been contrary to the laws of nature. Analyzing that situation, however, is left for another article. For this article, the object lesson learned is: Even though the factory Chevrolet Silverado K1500 LT Eau Claire WI 54701 approves a transaction, the lenders finance it and the trade publications applaud it, those endorsements provide no guarantee a dealership is going to succeed. Having said that, there are many buyers who will still believe those endorsements mean success.

    With the epidemic of lawsuits today, factories and lenders cannot give business advice because if the dealership did not succeed, it is the factories and lenders that will get sued. Consequently, one must rely on oneself Chevrolet Silverado K1500 LT Eau Claire WI 54701 and advisers that are not afraid to contradict the boss.

    As an aside, be careful not to associate with habitual “deal-breakers.” Some advisers are perpetual naysayers because advisers do not get sued for telling a client not to do a deal. They only get sued when a client gets into a deal that goes sour because it is never the client’s fault. It is the bank, the factory, the accountant, the lawyer, the business advisor Chevrolet Silverado K1500 LT Eau Claire WI 54701 (anyone other than the client) that is to blame.

    The bottom-line is that there are two critical factors in buying an automobile dealership that will help ensure success for the long term: (1) How it is bought; and (2) How it is managed.

    Each factor has a story, but those are the two keys. How the dealership is bought and how it is run will determine its long-term success or failure. We say “long-term” because car Chevrolet Silverado K1500 LT Eau Claire WI 54701 dealerships provide enough cash-flow that some deals could take five years to fold.

    Buying a Car Dealership

    What is the right way to buy a car dealership in bad economic times?

    In the “good times,” buyers were paying premiums for dealerships, based upon brand names, pretty buildings, nice locations, and so forth. The fact is, in good times or bad, dealerships should be valued in the same manner: by how much the buyer expects to earn after Chevrolet Silverado K1500 LT Eau Claire WI 54701 the purchase. In other words, upon expected ROI (return on investment) — not the brand, or the building, or the location.

    Determining what a store can earn after its purchase encompasses more than math. Regardless of how often the “multiple of earnings theory” has been proved wrong, members and associates of the trade still perpetuate the myth that the purchase of a car dealership can be that effortless.

    As a natural consequence of the ROI method, Chevrolet Silverado K1500 LT Eau Claire WI 54701 purchase prices will fluctuate because one would tend to expect to make more during “good” times, versus “bad.” Therefore, when one states that the values for blue sky or goodwill are dropping, their statement has nothing to do with the “value” of the dealership. Furthermore, there is no information in the foregoing statement to help one decide a reasonable value to pay for a dealership. Rules of thumb are only guides. Guides are good Chevrolet Silverado K1500 LT Eau Claire WI 54701 servants, but bad masters.

    If a dealer is going under and throws a prospective purchaser the keys to the building and says: “It’s yours. I just want out.” That act does not make the dealership worth more or less. The questions a buyer must ask are– (a)” what is it going to cost me to open the doors?” and (b) “what do I think I will earn after I own the store?” In other words: Chevrolet Silverado K1500 LT Eau Claire WI 54701 “What is my expected return on the investment?”

    At one time there was a dealer group in Colorado that presented an offer for the existing dealer to pay them (the buyer) $2,000,000 for them to take-over the stores. The offer was based upon projections of what the stores would lose while buyer tried to turn them around. The seller refused and ended-up losing several million more before the stores closed. The dealerships properties were eventually Chevrolet Silverado K1500 LT Eau Claire WI 54701 sold to a church.

    A good checklist for valuing car dealerships can be found in IRS Revenue Ruling 59-60, published by the Internal Revenue Service in 1959. While the ruling (59-60) was intended to outline and review in general the approach, methods and factors to be considered in valuing shares of the capital stock of closely held corporations for estate tax and gift tax purposes, the methods discussed are applicable to valuing an automobile dealership Chevrolet Silverado K1500 LT Eau Claire WI 54701 and valuing blue sky in an asset sale simply by backing-out the amount of the stock valuation attributable to goodwill/blue sky.

    The Five Biggest Mistakes Buyers of Automobile Dealerships Make:

    1. Thinking that when they verify earnings they have completed a major task. The truth is, what the seller made or lost does not matter. A plethora of details and formulas need to be applied to determine what the new owner can net. What rent Chevrolet Silverado K1500 LT Eau Claire WI 54701 factor PNUR can the store afford? Do those numbers correlate to the percentage of gross requirements?

    2. Overestimating vehicle sales projections. The first question is: “What can the new owner realistically retail?” We have seen too many dealerships that went under because the buyer could not accurately predict potential sales. On more than one occasion we have seen factories and lenders approve dealerships where the prospective purchasers projected sales volumes that exceeded the volume of Chevrolet Silverado K1500 LT Eau Claire WI 54701 the area’s historical sales leaders.

    3. Famous buyers thinking their names alone can turn-around dealerships or sell cars. We can name more unsuccessful, former car dealers that are famous, than successful car dealers that are famous. We have one photo that depicts a famous athlete getting a business award from the President of the United States. He went to the White House and received the award the year before the factory closed his stores. Either Chevrolet Silverado K1500 LT Eau Claire WI 54701 nobody saw it coming, or nobody cared.

    4. Thinking that buying a store at a low or zero multiple of earnings means they got a bargain. The biggest misconception of a bargain is when the factory awards a new point. Most people think they got something for nothing. They really did not. The ones that do succeed, however, usually succeed because of the timing and the location — not because of the dealer.

    The fact is, Chevrolet Silverado K1500 LT Eau Claire WI 54701 it takes about a year to build the service department of a new point, yet the dealer must capitalize the store as though it were already operating on 8-cylinders. In many instances, a new point suffers through months of losses until, if ever, it finally becomes a successful store. Those losses are “blue sky.” In other instances, it is the second owner that makes a go of it and in some instances, such as Chevrolet Silverado K1500 LT Eau Claire WI 54701 the Englewood store mentioned above, the point goes away.

    The savvy purchaser understands there is a value to buying a dealership that has its number is in the phone book, a loyal service base and repeat customers. The main value is that the day after the store is sold there are people lined-up for service, people buying parts and customers coming back to the store. That is worth a bonus (blue sky) to the owner Chevrolet Silverado K1500 LT Eau Claire WI 54701 even if the store has been losing money.

    5. Thinking there is some “magic” formula that will make a store successful. The only formula that will work most of the time is a mixture of hard work and knowledge of the retail automotive business. Each of those words is an operative word: “retail” and “automotive.” Knowledge of another business is not enough.

    One last bit of advice to rookies. When making changes in the retail automotive Chevrolet Silverado K1500 LT Eau Claire WI 54701 business act swiftly. Erasers are made because people make mistakes. We have yet to meet the person who has never used one, although in today’s world one might substitute the word “eraser” with “backspace” or “delete. When a mistake is made, the trick is to analyze, decide and act quickly. Do not hesitate to correct errors and bad decisions.

    That advice has been around for thousands of years, both in the proverbs one learns as Chevrolet Silverado K1500 LT Eau Claire WI 54701 a child (such as “A stitch in time, saves nine” and “He who hesitates is lost,” and so forth), and in Ecclesiastes 12:12 “But, my son, be warned — there is no end of opinions ready to be expressed. Studying them can go on forever and become very exhausting!”

    In summation, do not hesitate to buy a car dealership in a bad economy, just buy it correctly. Read the articles referred to above and act Chevrolet Silverado K1500 LT Eau Claire WI 54701 upon them.

    “A dealership should be bought for one reason and one reason only — to make money. It should not be bought because it is close to home, because the buyer likes the franchise, because a partner wants to provide a job for a relative or, because the building is attractive. A dealership is purchased to make money and, in order to make money, it has to be “bought right”. A Practical Guide to Chevrolet Silverado K1500 LT Eau Claire WI 54701 Buying and Selling Automobile Dealerships, National Legal Publishing Co. (1989), at page 2-4.

    That was written twenty years ago. It was true then and it is true today.

    Business Results 1 - 10 of 20

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