Dealer Best brand to start dealership? Branson / LS / TYM

[MessickFarmEqu]

most people are trying to get out of this business, not in. Its incredibly hard to be profitable. We just had a local Brandon \ Mahindra shop open up and and soon as their inventory came off floor plan they returned it all and canceled the contracts. To be competitive, figure a $800-$1200 profit on a tractor, nothing sells anywhere near MSRP. You need hundreds of machines to pay the bills.

 

[dalola]

If you were starting a dealership and could pick only one brand, at least initially, which would you go with and why? Branson / LS / TYM

Also, anyone have input on outsourcing the warranty service & repair work to a third-party shop? Can this work out well?

Any dealers on here who can answer this from experience?

Thanks!

Sticking to your original criteria, I would choose LS.

As others have mentioned, they've been tops in the mfg'r/dealer relations index for several years, and seem genuinely interested in making headway in the NA market under their own name. I also think they have a solid product, tho it does need some refinement compared to the orange & green offerings, but I think they'll get there.

As to the business side of it, can't really help much there, but prolly wise to heed the words of those currently in that business.

 

[Ortimber]

I looked into starting a NH dealership in our area. I met with several NH corporate guys and spoke with dealers in neighboring territories. Everyone agreed that having a single store would not be profitable.

 

[Turbys_1700]

You can't survive on just selling. You make your money in service. Tractors are for the most part very dependable sans issues with some of the newer Tier 4 units. You have to sell parts and service to remain profitable. Folk will pay for service. If you're not going to service the units might as well set up a web site and sell only online. Major lines will not allow that. If I want to go into business with large margins the tractor and implement business is not one of them.

 

[airbiscuit]

I think it would be difficult to start a single stand alone CUT dealership and be profitable. It would make more sense to add a CUT line to a professional lawn and landscaping business. I would pick Yanmar or Kioti as my choice (followed by LS and Mahindra), and add a couple of decent 3pt implement lines.

 

[wagne223]

As far as outsourcing service......
Can't do it. Part of being a franchise dealer is you have to service what you sell.

Service sucks, everybody wants to sell not service. If the manufacturer did not make service part of the contract then there would be no service.

 

[jcbGM]

My user id no longer reflects my job. I'm now the VP of of a construction equipment dealership. We're a dealer for one of the big 4 heavy brands. Been in the industry for 16 years. I can tell you that dealers of major brands have nearly 100% absorption. Meaning, you pay all the bills and make your budgeted profit without selling a single machine. The only reason to sell a new unit is to further populate your territory for future parts and service sales. Margins on things like CUTs and SSLs are low single digits. Whereas margins for parts and service range from 30-40%. This is why it's so difficult to get into the business. It's capital intensive and once floorplan expires it's impossible to survive without P&S carrying you. Sub-contracting service would be lethal.

Oops. Quick sidebar. There is some margin in attachments. Say 10-15%. Still not much unless you're a huge volume dealer.

I can't imagine having a stand alone CUT dealership unless it was one of the major brands with an installed base

 

[AndyMA]

Yanmar will give a dealership with little to no service dept.
There is a guy down the hill that sells toro lawn equipment. He only has a service dept. large enough to work on mowers, not tractors..
Person working there said they started selling the yanmars a couple months ago.

As far as the quality of yanmar tractors. I have one that was built in 79-83 and is still a strong running tractor. Yanmar has been building tractors for a very long time.
They even built the green ones for a long time

I think they know what they are doing with tractors.

They still build the engines in many green ones.

 

[Btown]

My user id no longer reflects my job. I'm now the VP of of a construction equipment dealership. We're a dealer for one of the big 4 heavy brands. Been in the industry for 16 years. I can tell you that dealers of major brands have nearly 100% absorption. Meaning, you pay all the bills and make your budgeted profit without selling a single machine. The only reason to sell a new unit is to further populate your territory for future parts and service sales. Margins on things like CUTs and SSLs are low single digits. Whereas margins for parts and service range from 30-40%. This is why it's so difficult to get into the business. It's capital intensive and once floorplan expires it's impossible to survive without P&S carrying you. Sub-contracting service would be lethal.

Oops. Quick sidebar. There is some margin in attachments. Say 10-15%. Still not much unless you're a huge volume dealer.

I can't imagine having a stand alone CUT dealership unless it was one of the major brands with an installed base

Someone should tell that to the tractor dealers up here in the northeast. I think we have the highest tractor prices in the USA. They are priced about 5-6K higher than other most places in the country. When I was looking at new tractors back in 2013-2014 the quotes I got for 40-50 hp non cabbed tractors was more expensive then the same brand tractors with a cab less than 500 miles from me 4 states away. But I agree your repair and parts business should keep the business in the black. Selling new tractors should just increase that business.

 

[conkli48]

Another point to bring up, is no matter what brand you go with. Try and offer some used tractors, even some 60s 70s and 80s, People still use them they are cheap, you can take in on trade and make more from the new tractors you sell. I would also say that it would be good to offer some general outdoor power equipment like log spliters, chainsaws, weedwhackers, and push mowers. Like husqavarna or stihl. Depending on dealerships in area. But those alone could keep things going while you increase install base for service. In the area around me, the local kioti dealer does some small service, but also does engineering and custom equipment. Other dealers already offered general tractor repair or welding. IT could be seen as an added income. But stand alone cut dealer is a tough one. We have a lot of local brands in the area as far as which one, LS and Kioti are my picks for quality. dont know on dealer networks