More entrepreneurs and businesspeople with no automotive retailing experience are interested in buying dealerships. And why not? A dealership business model is appealing, has good cash flow and typically offers a 20 percent return on investment.
Although outsiders create more competition for existing dealers who might want to buy more stores, that competition also helps boost dealership valuations.
Having newcomers as dealers isn't new. In the past, some automakers have handed out franchises as parting gifts to retiring factory executives. Frequently, well-known sports heroes have been rewarded with dealerships. Some, like Hank Aaron, did well. Others, like Ernie Banks, struggled.
It is good to see successful, if unconventional, businesspeople looking to automotive retailing for new investments. Bringing ideas that have worked in other businesses to a dealership may open another dimension.
Rookies should be welcomed with open arms -- once they are properly vetted by the factory.