Lease out body shop?

[cain12]

Anyone out there have a dealership where you have "leased out" your body shop to an existing company? I have an under-performing shop and not sure which route we may go, hire another manager or lease the facility out. If you have, how has it worked out for you?

Thanks!

[texaslp]

We lease ours out and it has worked very well. They buy all their GM parts from us and do all of our body work.

[cain12]

thanks... do you know the arrangements of the lease? do they also pay you a % of their gross or net profit? I assume they are not on your dealership's payroll at all, just leasing?

thanks!!

[texaslp]

Monthly rent only.

[Tyler Robbins]

I have been to a number of dealers that lease out space to an independant Body Shop, not usually because they have a body shop that is underperforming, but usually because they have the unused space and dont already have a body shop.

If the Parts Dept, Used Vehicle Dept or the Service Department was underperforming, is it an option to lease out that space??!!??

Since you have the space and a staff that is underperforming, why consider letting all of those employees go and abandoning that department altogether? If someone else can be profitable in that space, than you can too!

[scotstrong]

I am sure that this may vary by state, but at least in Ohio, the fees, licensing, inspections, safety & environmental compliances, etc. are more stringent (and more expensive) for a dealer-operated body shop than for an independent. That factor alone has pushed some dealers in this state to go "sublet" route.

[texaslp]

The headaches of running a body shop are not worth it.

[z28]

I beg to differ. We have an underperforming body shop, and just recently replace the manager. Well let me tell you it made a world of difference in the first month. A properly run body shop is a great gross generator. Why would anybody in these times let someone come in and use their facilty and only receive a rent factor and some gross on parts? Why not keep it all for yourselves? this is a great time to be in the body shop business.

[sp7128]

Z28

x 2

......the only reason a dealer owned body shop looks like it loses money is because of the expense structure the dealer has designated or poor management.

[PartsJD]

z28 - x3 - you hit it right on the head. It is all about the manager. Get the right guy/gal in there and you will be profitable.