During the past couple of years, car dealers have hit the jackpot. They experienced historic profitability amid the COVID-19 pandemic. However, challenges such as threats to the franchised model and the transition to electric vehicle sales and service have many considering selling their business. Most are playing with the house's money, which only adds to their dilemma.
Years ago, conventional wisdom held that owning a dealership was not much more than a substitute for a job. Dealership value was found in its real estate, while blue sky was the icing on the cake. That changed with the arrival of public ownership and the consolidation of the industry. AutoNation founder Wayne Huizenga was the first to unlock dealerships' true value. It isn't hard assets where the ultimate value is found — franchise and earnings potential are where it's at. So rather than a job, dealers learned they had a valuable investment, which should be treated as such. What to do with the investment now? Keep rolling the dice, double down or cash in the chips?