OFFICIAL PUBLICATION OF THE CHICAGO AUTOMOBILE TRADE ASSOCIATION

Pub. 1 2023-2024 Issue 3

Knowing the Value of Your Dealership: A Key Advantage

According to our team at DSMA, which has carried out over 1,700 dealership evaluations across North America, knowing the true market value of your business is the most important asset a dealer should have in 2024.

Why Is It So Important To Conduct This Valuation?

Proactive companies in any sector instinctively know that they cannot wait for an event or a crisis in either their industry or the financial markets in order to be prepared to react. A regular dealership appraisal provides the owner with a much-needed accurate picture of its tangible and intangible business assets.

By having this assessment in hand, the dealer demonstrates that he or she is ahead of the eventualities his or her business may face. He or she knows what needs to be improved to be among the best in the industry — and financial partners love that! In fact, more and more North American financial institutions are using DSMA appraisals to grant loans to dealers who request them.

Knowing the value of your dealership also helps you to be well-prepared for succession, to be able to navigate troubled waters in the event of tight cash flow, or to obtain financing for expansion plans. A signed DSMA assessment also helps to cope with personal events such as separation, divorce or even death. These events can affect the dealership’s day-to-day operations from one day to the next, and having a business valuation in hand can help you get through these difficult times.

How Does the Valuation Process Work?

From the moment the dealer calls on our services, our team — composed of financial analysts, CPAs and economists — begins a thorough and meticulous evaluation of all departments affecting the business. Departmental activities, loans, vehicle fleet, financial reports … everything is examined with a fine-tooth comb. Even better, there is no need for the owner to travel in 2024 — everything can be done remotely. By email, text message or virtual chat, and all document exchanges and dealer responses to our questionnaires are secure and confidential.

Just like in a tax exercise, it is essential that the dealer gives a true picture of all his or her activities and assets for the valuation to be accurate. In general, the process, which is carried out between the dealer and a member of the DSMA team, takes between two and three weeks to complete. We recommend carrying it out on an annual basis, particularly at the beginning of the year, between January and April. In many cases, this is the period when most car dealerships complete their financial year, a time for preparing taxes and financial statements with their accounting teams. This is an opportune moment, as dealers already have most of the documents they need to carry out the appraisal.

What Are the Other Advantages of a DSMA Evaluation?

No one wants any unpleasant surprises. Our dealership evaluation remains the best preventative exercise, providing a quick visualization of good (and not-so-good) dealership practices.

Thanks to our expertise and the incalculable data provided by our QUOTUS data analysis tool — a confidential and secure digital platform with over 3.5 million dealer data points — our assessment helps maximize the value and continuity of the business. It offers a solid boost to dealers wishing to improve their performance and identify any shortcomings in their departments.

Our qualified staff of dealership experts can detect business trends at an early stage so that the dealer doesn’t leave money on the table, whatever the market or location of the dealership.

Out of the thousands of evaluations we’ve carried out over the past 10 years, the results of many have been more than 20% off the dealer’s expected value. A difference that is generally higher … but sometimes lower than the dealer’s expected value.

For all these reasons, we at DSMA are convinced that our evaluation service is the most effective tool for ensuring the growth of motor-vehicle dealerships operating not only in the automotive sector, but also in the motorcycle, heavy-duty truck, marina and heavy-vehicle industry. To date, we are the most reliable business intelligence team in the North American automotive market. 

Get Social and Share!

Sign Up to Receive this Publication in your inbox

More In This Issue