Car Dealerships - Anyone familiar with the business model of these??

Based on the most helpful WSO content, car dealerships can indeed be profitable, but the business model can vary significantly between new and used car dealerships, as well as between large publicly traded entities and smaller, local operations.

Here's a bit of insight into the car dealership business model, particularly focusing on smaller, local dealerships like the ones you mentioned in Queens:

1. Inventory Acquisition: Smaller dealerships often acquire vehicles through auctions, trade-ins, or from private sellers. The ability to buy cars at a lower cost can lead to better margins, but it requires a keen eye for value and negotiation skills.

2. Overhead Costs: Local dealerships typically have lower overhead compared to larger dealerships. They may operate on smaller lots and have fewer employees, which can reduce operating costs.

3. Financing: Many car dealerships make a significant portion of their income from financing. They either provide it directly or partner with financial institutions, earning income from interest rates and financing fees.

4. After-Sale Services: Profit margins on services and parts can be higher than on the sale of the cars themselves. Offering maintenance and repair services can create an additional revenue stream.

5. Customer Service and Reputation: For smaller dealerships, reputation in the community can be a huge factor in success. Word-of-mouth and repeat business can drive sales without the large marketing budgets that bigger dealerships might have.

6. Market Knowledge: Owners of smaller dealerships need to have a deep understanding of the local market, including the types of vehicles in demand and the price points that local buyers are willing to pay.

7. Flexibility: Smaller dealerships can be more agile, adjusting inventory and pricing quickly in response to market changes, which can be an advantage over larger, less flexible competitors.

8. Margins: While it's true that larger dealerships might operate on slim margins due to higher volume, smaller dealerships can sometimes command higher margins due to their unique inventory, lower costs, and personalized service.

In terms of starting or operating such a business, it requires a combination of automotive knowledge, business acumen, and the ability to understand and cater to the local market. It's not without its challenges, but for those with the right skill set, it can be a lucrative endeavor.

Sources: If smaller banks say they offer juniors more deal exposure, why are bulge bracket positions still more highly regarded?, DCF Modeling Course ~ Pre-training text.pdf, Q&A: Credit Underwriter at Commercial Auto Finance Company, Investment Sales or REPE?, Long TSLA: History Repeats Itself (Money Where Your Mouth is Edition)