When Holly and Tim O'Brien had their Chevrolet dealership reinstated in 2010, they looked forward to spending the rest of their working lives as car dealers and handing down the store to their son.
Today, the O'Briens are former dealers.
In October, they sold Joe O'Brien Chevrolet, a family business for almost 38 years in Hastings, Minn., to a local dealership group after determining that they couldn't afford to spend as much as $1 million on renovations sought by General Motors. Those renovations were a condition of reinstatement, Holly O'Brien said.
"This is what ended up making the decision," said Holly O'Brien, who declined to give the dealership's selling price. "We just don't have enough time to recoup that type of monetary investment in this economy."
The O'Briens aren't alone. Pressure to spend big money to comply with manufacturer image programs is one of the main drivers of sales of dealerships, say dealers and dealership brokers. The challenges affect both mom-and-pop dealers such as the O'Briens and larger operators -- though the biggest groups typically have the deep pockets needed to pay for expensive projects. Dealerships in need of renovation attract a smaller pool of buyers and likely lower offers, too.
Mark Johnson, a dealership buy-sell adviser in Seattle, said as much as 40 percent of the buy/sell deals he works on have a facility-improvement component.
"Over the last few years, facilities have driven a lot of guys, who really didn't want to sell, to sell," Johnson said. "They just didn't want to deal with the pressure from the manufacturers to do a big, new facility."