A Look Through the Windshield at Auto Dealership Valuation

Bradley R. Carter, MAI, CRE, CCIM, CDEI

Typical Auto Dealership Transaction

Total Price: $10,000,000Personal Property: $200,000Intangibles: $1,800,000Real Estate “Price”: $8,000,000

Re-Imaging

• Required by the OEM• Standardization, Modernization, Expansion

o Best Investment = Expansion*o Best Investment = Standardization

Real Estate’s Worst Investment?

Photo courtesy of Alden Jewell, from his collection at www.flickr.com/autohistorian

https://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&ved=2ahUKEwjgs9HO8MfbAhWGpFkKHSqOC0AQjRx6BAgBEAU&url=https://www.freereferral.com/newsletter/summer2010.php&psig=AOvVaw0GwHBuYiYhP_NmEmGneOCt&ust=1528678231440166

Re-Imaging Case Study

Land Value: $2,100,000Cost: $7,950,000Depreciation (30%): ($2,385,000)Value: $7,665,000 (Prior to considering re-imaging)Cost of Re-imaging: $6,500,000Value: ???

– Prior to considering re-imaging

“Never try to teach a pig to sing. It wastes your time and it annoys

the pig.”

George Bernard Shaw

Photo courtesy of Alden Jewell, from his collection at www.flickr.com/autohistorian

Which is Worth More?A) A place where people go to pick out a car?

Or

B) A place where people go to pick up a car?

Source: Kerrigan Advisors, citing NADA

“The idea that maybe you don’t have to own a car if you only need one occasionally may catch on, just like time-sharing caught on in real estate.”

Steve Case, AOL

“Prediction is very difficult, especially about the future.”

Niles Bohr, Danish physicist