# Time to Quit Bitchin' about what Tractor Dealerships Charge??



## Bob Driver (Nov 1, 2017)

It's easy to bash Dealerships today for what they have to charge in their Service Departments, until you've looked at their books and realize what they have to cover in the way of overhead cost before they ever make $.10 of profit. If it was that profitable of a business model, you'd see them popping up new like Dollar Generals. When was the last time you saw a new tractor Dealership opening up? Most of what you see today are "legacy" Dealerships that Grandpa started 50+ years ago when their customer base was much larger and their overhead cost was much lower. Everything new sitting on their lot has monthly floor plan cost, everything used is a trade-in they're expected to warranty and has $$$ tied up in it, until if/when it sells. They've got $500K in their parts inventory they have to hustle to turn once a year if they really keep on top of it. Annual overhead cost on the building runs $15-$20 a square foot if they own it out right in a State with low Ad Valorem tax and energy cost. Even their B-class mechanics cost at least $20+ hour plus 30% for benefits, even in rural areas, or they move on. Their top guys are 55+ years old and looking to retire ASAP and there is very little in the way of talent coming up behind them. They are not raking in the $$$ by any means, even with a $300 pickup/delivery fee and charging $100+ hour shop rate. On warranty work, they're waiting 45-60 days for OEM reimbursement, at 75-80% of their normal shop rate..... Once you realize all this and you have any business sense, you start to see most of them have a grim, unsustainable, future down the road


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## Tx Jim (Jul 28, 2020)

Due to me being employed 35 yrs ago for a dealership for 21 years I'm amazed the companies that want to own/operate many different locations that the companies do today. I worked in all the dealer departments of management, whole good & parts sales & service dept. It wasn't/wouldn't be for me today.


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## Bob Driver (Nov 1, 2017)

Tx Jim said:


> Due to me being employed 35 yrs ago for a dealership for 21 years I'm amazed the companies that want to own/operate many different locations that the companies do today. I worked in all the dealer departments of management, whole good & parts sales & service dept. It wasn't/wouldn't be for me today.


I hear you Bud.... Youngest Local JD dealer here has been around for 50 years and the oldest has been open for 100... Typical "Legacy" dealerships. With your background, you understand what I'm talking about in regard to their pricing structures barely covering their overhead cost. 3rd generation runs them both and who knows how long that can last. Wades is the big Dealership chain here in North MS and probably the only reason they have survived for that 100 years is they have several locations they opened years ago when overhead cost were so much lower. Where you going to find the financing you would need to open a new tractor Dealership today and how are you going to convince them to loan you that much $$$ money on a tractor dealership? That's like going to a banker and asking them to loan you the money to start up an old school, full service, 2-bay, gas station.....


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## Skramer360 (6 mo ago)

I worked at a Gravely dealership for about 15 years. Nearly everything you said was true of our dealership except the cost of the floor plan. We did not have to pay anything for the mowers and tractors we had at our dealership until we sold them or if we had them for over a year before they sold.


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## Bob Driver (Nov 1, 2017)

Skramer360 said:


> I worked at a Gravely dealership for about 15 years. Nearly everything you said was true of our dealership except the cost of the floor plan. We did not have to pay anything for the mowers and tractors we had at our dealership until we sold them or if we had them for over a year before they sold.


Depends on your Dunn & Bradstreet rating how your monthly floor plan payments are structured. Even with a sketchy rating, it's usually interest only on the wholesale dealer cost from the OEM....... I'm hearing with the economy slowing down and the Feds playing with interest rates, the OEM's are tightening their floor plan structures to match current interest rates if you are paying monthly and limiting the count of what they'll spot on the floor if your deal is like what you had at that Gravely Dealership. New models usually start shipping in January (to warmer climates), but next years floor plan is usually settled no later than Q4, so the OEMs can adjust final production #'s. Feds are up 225 basis points since July when the OEM bean counters first started their 2023 planning, so naturally they are nervous about the floor plans. Imagine dealing with your 2023 floor plan changes if you're a lawn mower Dealer in California.....


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## oletrapper (5 mo ago)

Bob Driver said:


> I hear you Bud.... Youngest Local JD dealer here has been around for 50 years and the oldest has been open for 100... Typical "Legacy" dealerships. With your background, you understand what I'm talking about in regard to their pricing structures barely covering their overhead cost. 3rd generation runs them both and who knows how long that can last. Wades is the big Dealership chain here in North MS and probably the only reason they have survived for that 100 years is they have several locations they opened years ago when overhead cost were so much lower. Where you going to find the financing you would need to open a new tractor Dealership today and how are you going to convince them to loan you that much $$$ money on a tractor dealership? That's like going to a banker and asking them to loan you the money to start up an old school, full service, 2-bay, gas station.....


Most of the local dealerships around here have been bought up by one of the BIG corporate dealerships.
They tend to keep the present employees however. That seems to make for poor service because of bad attitude about being bought out. JMHO OT


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