Some Lincoln Dealers Hesitant to Updgade

[akirby]

I know Ferraris sell for over MSRP. I also know that you can't build a business off a few quick scores, as in that Lambo broker here in town. How many F40s were made? 40? Now how many of those could your dealer sell? 3? 4?

 

Would I loan $10M to a guy selling Ferrari F40s out of briefcases at 1:30AM? Not on your life.

 

Actually new Ferrarris do not sell for over MSRP - that's not allowed. They do, however, sell a lot of "gently used" Ferraris with only a few miles on them for more than MSRP.

[campbell53]

somehow that "2013-going-into-2014" sounds like a more reasonable time to expect to see significant changes arrive at the dealers than the full "4 years" (ie late 2014) that's been mentioned since the big meeting.

 

however

Campbell, ONE of the things I don't understand is the apparent/imho change of direction regarding a Focus-based CAR for Lincoln (ie getting just the KuGa-based cuvlet: "MKG"?)

Imho the small Cuv (for those who prefer 'capacity') would be ideally complemented by a sportier-than-anticipated Lincoln small-Car

 

now I'd 'never' want to drag this off-topic by posting non-Fomoco pix LINK-1 or (worse yet) chops LINK-2

but I'd love to ask you (a real dealer!) if you think you could sell my LincolneTTe LINK-1 or mkS & mkSS LINK-2

which imho would sure help you guys stay in business thru 2013

 

I don't know....looks a little "Crossfire" to me. I was hoping more for the concept C version shown a couple years ago. But the whole MKFocus idea disappeared.

[Deanh]

I know Ferraris sell for over MSRP. I also know that you can't build a business off a few quick scores, as in that Lambo broker here in town. How many F40s were made? 40? Now how many of those could your dealer sell? 3? 4?

 

Would I loan $10M to a guy selling Ferrari F40s out of briefcases at 1:30AM? Not on your life.

those transactions took place that way for a reason...to avoid public knowledge of people paying such outrageous #'s....the people wanted to be "under the radar"........and we were selling 10 Ferraris a month..........of various types...it was CRAZY

[Deanh]

Actually new Ferrarris do not sell for over MSRP - that's not allowed. They do, however, sell a lot of "gently used" Ferraris with only a few miles on them for more than MSRP.

refer to post #145.

[Deanh]

I know Ferraris sell for over MSRP. I also know that you can't build a business off a few quick scores, as in that Lambo broker here in town. How many F40s were made? 40? Now how many of those could your dealer sell? 3? 4?

 

Would I loan $10M to a guy selling Ferrari F40s out of briefcases at 1:30AM? Not on your life.

youve forgotten Jaguar, Land Rover , Aston Martin, and Lotus......it wasnt just the Red cars Rich......

[akirby]

refer to post #145.

 

Oops - missed that one.

[Deanh]

Oops - missed that one.

Loved selling those cars...funny story, had an 80 year old gentleman come in, talked like a Mafioso ( his name was Alan Squittieri ....not sure of the spelling )...really nice gentleman, a nd the 512TR's had just come out. I was reading a glowing Road and Track article...he stole my mag. His words were "Forged aboud it, its gonna make yous some money...."......well, he called back, had to go get his trade ( 2 month old 12 cyl Jaguar XJS w 900 miles ) and two days later he came in with a suitcase. Whta funny is when it came to delivery he exclaimed ...THIS IS A STICK SHIFT!.....lol, well, may thanks to Martin Philpott ( ace Ferrari mecahnic ) for teaching a bunny hopping 80 year old guy how to drive the beast...HILARIOUS!.....

[RichardJensen]

it was CRAZY

Exactly. That's unacceptable risk. I wouldn't loan someone $900k to buy a 1500 sf single story ranch style with a 40 year old kitchen in Silicon Valley either--even if I knew that the owner could turn around and sell it for $1M the next month.

 

I mean seriously, guy comes up to me and tells me that he's clearing mid to high six figures on individual sales of F40s and he wants to borrow $10M, I'm telling him, "if you're clearing $600k on Ferrari sales, you don't need to borrow $10M unless there's something seriously wrong with your business."

Edited October 28, 2010 by RichardJensen

[Deanh]

Exactly. That's unacceptable risk. I wouldn't loan someone $900k to buy a 1500 sf single story ranch style with a 40 year old kitchen in Silicon Valley either--even if I knew that the owner could turn around and sell it for $1M the next month.

 

I mean seriously, guy comes up to me and tells me that he's clearing mid to high six figures on individual sales of F40s and he wants to borrow $10M, I'm telling him, "if you're clearing $600k on Ferrari sales, you don't need to borrow $10M unless there's something seriously wrong with your business."

I would say a construction loan at low interest or interest only...and remember the building was built during GOOD times, my guess he wanted to use others money as his was doing better elsewhere....may be a stretch i know as i rightfully do not know why he chose to use Tokais $....then again why do Ford stores floor vehicles when they could probably buy and pay them off?....

[RichardJensen]

I would say a construction loan at low interest or interest only...and remember the building was built during GOOD times, my guess he wanted to use others money as his was doing better elsewhere....may be a stretch i know as i rightfully do not know why he chose to use Tokais $....then again why do Ford stores floor vehicles when they could probably buy and pay them off?....

Assume $10M loan at 8% interest over 10 years: $120k per month.

 

$120k x 120 = 14.4M = $4.4M in interest costs.

 

Your boss, in this scenario, is paying a 44% premium, net, on his money because he doesn't want to bank the outrageous profits he's making on those F40s.

 

Now here's my question: What is he doing with that money to build his business? If he's not going to put it toward a new showroom, what's he doing to build his business?

 

Or is this a scenario where he wants to borrow the money so he can blow these outrageous profits on his (home|wife|mistress|2nd home|3rd home|kids|cocaine|cars|boats|etc)?

 

Because if the scenario is such that he'll take out a $10M loan so he can basically do this in the short term:

 

 

then you can see exactly why I'd consider it the height of foolishness to loan him the money.

[RichardJensen]

And, of course, Ford dealers floorplan because as my landlord once said, "It's not what you can buy, it's what you can borrow."

[Deanh]

Assume $10M loan at 8% interest over 10 years: $120k per month.

 

$120k x 120 = 14.4M = $4.4M in interest costs.

 

Your boss, in this scenario, is paying a 44% premium, net, on his money because he doesn't want to bank the outrageous profits he's making on those F40s.

 

Now here's my question: What is he doing with that money to build his business? If he's not going to put it toward a new showroom, what's he doing to build his business?

 

Or is this a scenario where he wants to borrow the money so he can blow these outrageous profits on his (home|wife|mistress|2nd home|3rd home|kids|cocaine|cars|boats|etc)?

 

Because if the scenario is such that he'll take out a $10M loan so he can basically do this in the short term:

 

 

then you can see exactly why I'd consider it the height of foolishness to loan him the money.

but that doesnt take into account tax writeoffs...who knows Rich....Newport Beach Lexus is in the same boat....he built a site to combat Fletcher Jones Mercedes and the one-up-manship again got carried away.....apparently his lease and Construction loan runs him $600k a month...and thats BEFORE payroll....makes the scenario at N Imports look like practice.....

[RichardJensen]

....apparently his lease and Construction loan runs him $600k a month...

There will almost always be a loan officer somewhere ready to take that risk, either with eyes open or eyes shut. The economy is basically like a giant game of Kaboom, and there's always some rube at some bank who makes that last dumb loan---

 

And nobody ever thinks it will be him.

 

This is what? your second California bust? And how many people learned from the first? Judging by the state of affairs out there, the idiots in commercial lending just moved over to residential, and changed not a whit of their idiotic ways.

[97 F350]

Hey - I live 2 miles from this dealer - sounds like you're a neighbor! Couple of corrections. NOT small business ownership. Part of Planet Ford/Randall Reed chain. Also own Texan Hyundai next door. Was hoping they were going to turn the empty Hyundai dealership into LM store - but no luck. They bought out the local owner (Dub Miller) about 5 years ago - a couple years after he moved the location from Highway 90. (Now United rentals store)

 

Last year when we were looking at Taurus X/Flex's, we went in there. Only 1 Lincoln on the entire lot. No Mercs. So no big loss there. The local LM dealer they absorbed wasn't doing much better, they were combined with Toyota (moved up to 59 and 99) and maybe Mitsubishi?

 

You are right about the upgrades needed. The store is in good shape - but it is entirely a Ford store that happens to have a couple of L-M vehicles on its lot. No differention at all and would have to build a new building to have room. Plus as you said Southwest LM up the freeway is an institution in the area and seems to be doing as well as possible with the lineup. They always have a complete full selection of new and do a healthy used business.

 

I've often wondered if Legacy FLM has even sold enough L-M vehicles to pay for the signage they put up a couple of years ago.

 

 

A tidbit from my long-time salesman.

 

Background: dealer is in an up-and-coming suburb of Houston. New Ford store (early 2000's vintage), excellent location. Dealer absorbed the local Lincoln-Mercury franchise three years ago. Small-business ownership.

 

The salesman told me they would cease selling Lincolns soon. He specifically mentioned "we just didn't sell enough to make it worthwhile," and "the cost of advertising two brands didn't make sense to us." I will generally agree, the whole Lincoln part of the dealership seemed like an afterthought; the town has a blue-collar flavor and as such, trucks are king. (In hindsight, maybe they didn't want the Lincoln-Mercury side of the business all that badly...??...) Based on what I read here, I would guess the dealership would need some facility upgrades, which was likely part of the decision. Also, what I consider a 'flagship' stand-alone Lincoln store is about 15 miles up the road.

 

So, I was surprised at their decision, but certainly not shocked. It will be very interesting to watch what happens in Houston and other metro areas.

 

Aside: I really appreciate Campbell53's comments on this subject. Nothing like having someone on the front line offering his thoughts.

[630land]

Local L-M dealer is closed. They were once doing good business, but in last decade only catered to old timers in Member's Only jackets, comb-overs, and gold chains. Still had 1970 wood paneling in tiny showroom.

 

They would get used Ford "program cars" and compete with the Ford dealer a mile away for used sales. In mid 2006, they still had never titled 2005s on the lot. They just couldn't get younger customers from the Honda and Toyota dealers on same street. So now huge empty lot with weeds for past 2 years.

Edited November 3, 2010 by 630land

[Anthony]

There will almost always be a loan officer somewhere ready to take that risk, either with eyes open or eyes shut. The economy is basically like a giant game of Kaboom, and there's always some rube at some bank who makes that last dumb loan---

 

What banks allow their loan officers to underwrite their loans? Yikes!

[RichardJensen]

What banks allow their loan officers to underwrite their loans? Yikes!

Places where the bank manager is a glorified rubber stamp.

[roush235]

97 F350, thanks for the additional info. I have had several casual visits with the "owner" (he lives in my neighborhood), I knew he came from a managment position in the Planet/Randall Reed organization, so the fact there is a financial connection is not a surprise.

 

I bought two Lincolns from them, maybe I paid for the signage (ha).

 

--------------------

 

After hearing Campbell53's cool response, PremierDrum's analysis that Columbus OH may end up with only one Lincoln dealer (I have some familiarity with the Columbus market), and my dealer's dropping of Lincoln, I've been thinking more about the whole situation. It may be that this will indeed be a major shake-out of dealers, and we may be shocked in x years how few stand-alone Lincoln dealers remain.