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Strategies & Market Trends : Speculating in Takeover Targets -- Ignore unavailable to you. Want to Upgrade?

To: E_K_S who wrote (6914)	2/6/2024 9:40:54 AM
From: robert b furman	1 Recommendation Recommended By E_K_S Respond to of 7265

Hi E_K_S, My senior partner who gave me the opportunity of my lifetime to buy into the Chevy Buick dealership (which was debt free, but underutilized). His time and energy went into Heavy Duty truck franchises. He and his lifetime friend built a large part of Texas with Peterbilt, Volvo and Mack truck franchises. He has described all HD truck makers as very guarded about changing drive train components from their specific design to generic brands. When you go to generic brands it allows remanufacturers to take some of your market share. That was a mistake that GM made with their HD truck lines. That had Detroit Diesel, Deere, Cummins that customers could select in the build. As emissions changes became more frequent, The established HD franchises had to morph into not only their engine designs but also their Emissions systems. This became very complex and forced farmers into relying only on the OEM franchises service departments to do all repairs. Although not received well by the farmers, it has resulted in very reliable and powerful tractors. DE is the poster child of that transition. In my opinion it has forced all others to follow. They are the best of class and their dealer body is very well capitalized and rock steady. I can't think of a DE dealer that went broke! Even car makers have this designed into their products. Certain emission tweaks can only be done via a franchised dealer as only they can call up the factory's computers and tweak the drivetrains. An example of this is when a municipality buys a police car package. The additional performance is only an electronic phone call to the factories computers. Similarly when you buy a John Deere tractor you pay more for the greater horsepower - which is a phone download from the factory. It is amazing technology that the same engine can be many levels of horsepower. Bottomline it keeps the dealership's service departments busy with lucrative service and parts business. During recessionary time where the fleet is over populated with excess rigs, it keeps the dealer body in business and very profitable. Deere is a very profitable franchise business. It is comprised of very well capitalized investors. It also has a very few number of dealers who have multiple franchised locations. HD Truck makers made it a point to reduce the number of dealers but retaiunthe number of dealer points. We are currently seeing this same approach with auto dealers and their "All EV transition" being a Trojan horse approach to reduce the number of dealers and dealer points. GM bought back 1/3 of their Cadillac points and GM just recently announced the buyback of over 50 % of their Buick dealers. Ford has a similar plan, but not as aggressive in buying back For points. Technology does provide change, and it so far has always leaned on bigger is better. Bob