It'd be an ideal time to renegotiate terms of the building lease for starters. Incidentally that margin in the motor industry looks good to me. I have a friend who is the dealer principle for a group of four Ford main dealerships in the West Yorks area and on a turnover of £75m plus his profit is £330k
this is ebitda not profit. They will be underwater IMO once inters etc is added. Maybe its been leveraged so much the interest is unsustainable. Get ready for PE backed management buyout without the debts
The company that owns the land and buildings seems to be closely connected to the same people who own the dealerships. Its possible the land and buildings finance might have come to the end of its term and is diffcult to refinance in the current climate.
Ducati Glasgow had a great wee place on Great Western Road for years. Going into these purpose built premises has no doubt done them no favours.
Or, if they had any sense they set it up as OpCo & PropCo, took a commercial mortgage to buy the property which they then leased to OpCo. If the business goes tits up they’ve still got the land and bricks & mortar into which another business, NewOpCo, can go that’s bought the bust business and shafted all the creditors. Happens all the time.
Yes, but they had outgrown the premises in Gt. Western Road. With neither enough showroom not workshop capacity. To keep up with demand and expand the business they had to move to a bigger premises. Perhaps though, with hindsight the decision to go for a purpose built newbuild premises was a mistake.
How to make a small fortune? Start with a large one and buy a motorcycle dealership! Without seeing a balance sheet it's impossible to form an informed opinion but with that level of turnover and margin how does one arrive at 177K? My little business nets more than that and is basically just me, my son and a bunch of sub-contractors!
I’d imagine whatever you sell or do doesn’t come with a 90% cost to sell before you look at general business overheads
That is indeed true. I can imagine the cost of sales is enormous and you would have to seriously want to be in the business of selling motorbikes.
Won't have been solely their decision. Ducati will have been nudging them with "build it to this size / spec in this location or lose your franchise", same with the requirements for showroom and accessory stock, demo bikes and courtesy bikes, workshop equipment and special tooling, spares stock etc. Unfortunately Audi seem to believe that their high volume / low margin / finance / PCP strategies will work with Ducati... there perhaps isn't the same volume of opportunity (no fleet sales / servicing etc) for bikes as cars. The industry models are changing, for the worse. Ducati Peterborough was unwelcoming and sterile (an achievement given the building) and in a terrible location really, Ducati Worcester was newly opened when I went in and again was unwelcoming and disinterested... I had an afternoon while my daughter was at a uni open day and they could easily have had a few accessory quids out of me if they'd tried as I was bored and needed some new gloves and other bits. Didn't even get a hello. Far prefer nosing around a dealer with charismatic (even if shabby) premises with little nooks and crevices and interesting old stock bargains, staff that enjoy talking bikes or any other nonsense and that provided a bit of a distraction from everyday life for an hour or so. I don't mind a chipped mug of tea over a Nespresso but then I'm not perhaps the target audience...
Which is what they appear to have done. Ducati Glasgow trades as R3 Red Ltd but the property is owned by another company. That said I wondee if the property is worth what they have invested in it unless someone opens another dealership in the premises.
I spoke to them this morning to check on the status of my 959. Firstly they did answer the phone! As far as the person I spoke to was concerned its business as usual and they don't expect that to change. I appreciate they would say this but they certainly havent closed the doors yet.
