When longtime general manager Ryan Kirkpatrick finally found the Ford dealership he would end up buying, it had fewer than 20 vehicles in stock and sales of about 13 cars a month.
Working in large dealerships his entire career, Kirkpatrick had saved his money for years. He also cashed in his 401(k) and sold his house to buy the store in Sealy, Texas. But even with a partner, he only had enough money for a fixer-upper.
"I couldn't have afforded a large store," said Kirkpatrick, 53. "My store was broken, but it was probably one of the cheapest out there."
Kirkpatrick's dilemma is the same facing other talented general managers who dream of buying their own stores. Dealerships have risen in value so much since the late 1990s, when formation of the public retailers began pushing up prices, that few managers can afford to buy out their owners. A high-volume metro store can easily cost $10 million, even $30 million in blue sky - the intangible value of the dealership. Multi-store groups often top $100 million, dealership brokers say.
On the flip side, rising values have narrowed exit paths for dealers. Not only is it harder for them to sell to a manager, it's also increasingly complicated to pass their stores down to the next generation.
That's driving more owners to the open market, dealership advisers say.
"In the late '80s or early '90s, probably the first avenue of sale was to your general manager," said Joe Ozog of Ozog Automotive Group Inc., which brokers dealership sales. "And now you don't see it because of the absolute dollar amount."