The New Car Dealers Association of B.C. will be hosting sessions on succession planning through 2012 following a recently issued report by PricewaterhouseCoopers and DesRosiers Automotive Consultants that showed 30 per cent of auto dealers planned to retire or leave the business within the next year. Approximately 75 per cent of single point dealers expect to exit the industry within the next decade.
“If people are going out of the business in the next 12 months, there is a lot of work that needs to be done by folks very quickly so they know how to make those changes (if businesses are being passed to family members),” says New Car Dealers Association of B.C. CEO and President Blair Qualey. Some dealers no doubt will decide to fully exit, either selling to groups or deciding to close shop and sell for land values, which are strong today.
The report indicates that these individuals exiting, as well as those staying in the business, are amongst a large group of dealers — 45 per cent — that have no succession planning in place.
Qualey says the association plans to host a number of sessions throughout the year to help dealers. However, he says, dealers can help by notifying his office with the type of questions and information session content that they need. He says that his office would then try to find the professionals to answer the questions and host information sessions.
Succession planning can take various forms, both short and long term. It can range from emergency short-term planning such as a sudden death, severe accident injury or illness of key management members. Who will transition over this period? In family operations, is there more than one person who has signing authority, bank access, or knows where key information is kept?
Long term succession planning can look at longer transitional periods such as identifying the individuals who will take over the business and preparing them for new roles. It can also look at different financing arrangements that can occur — for example, in case, a family dealership was sold to a group for cash but also provided the dealer’s son with a shared interest in one of the group’s dealerships.
Qualey says that tax and legal planning is another aspect of long-term successions as dealerships move from the hands of one generation to the next. Manufacturers may also want to have their concerns addressed. “Where does the manufacturer stand on your kids running the business?”
Contact the association with topics and questions regarding succession planning.
