Ferrari of Washington

[JLuce]

I purchased my first Ferrari from FoW several months ago. Every time I showed up, the showroom was empty and I was permitted to look around on my own which is, for me, preferable to being hounded by a salesman. When I was ready to talk, I asked to see a salesman and was intro'd to Jonathan. I found him to be responsive to my requests and excellent at follow up.

Now, I wanted a PPI and had Competizione do it - best move ever. Competizione found multiple significant things that FoW's shop indicated were fine. When they were pointed out (for instance, the clutch was shot), they acknowledged there were, indeed, problems. The dealer wanted to fix in-house and I said "no thanks." In fairness to Jonathan, he has to rely on his shop to be straight with him and that doesn't appear to be happening.

When I presented Jonathan with the results of the PPI, he acknowledged that they did not want to sell a car in that condition and we negotiated a lower price to reimburse me for the costs I would have to invest.

I recommend working with Jonathan but, just like with all dealers, be sure to do your homework and, more than anything else, be sure to get a PPI (and get the repairs performed) at Competizione. Richard and Fernando are the best!

Good luck!

[muk_yan_jong]

Originally Posted by Retail

Bought our first Ferrari from Amir at FOW and then have used them for our service for two years. We plan to trade ours in eventually and get another one and it will be from them. We have found the entire team at FOW genuinely interested in giving us top quality service and being part of our great experiences enjoying Ferrari. I'd suggest if you do encounter poor service you talk to one of their leadership, they are clearly working hard to be the very best in every way.

This is so great to hear!

I wonder if the new owners will keep this incredible staff of Sales and Service enthusiasts?

<laughs hysterically>

[360gtracer]

Originally Posted by muk_yan_jong

I wonder if the new owners will keep this incredible staff of Sales and Service enthusiasts?

<laughs hysterically>

Understand where you're coming from, but it's not entirely fair to lump the whole sales/service staff into this hysterical laughter. There are still some good ones there. It's just too bad that the new owners have turned this once-enthusiast shop into a car dealership. IMHO.

gp

[muk_yan_jong]

True and as one of the casualties, I guess I should have been a bit more targeted. A rushed post and not meant to malign any of "the good ones" who still struggle there.

We'll see what happens during this next round of change.

[KJM3SMG]

I bought my car there.. no issues.. they've been great. Even service.

One time, I got a suspension light on.. which went off after a few minutes. I dropped it in just in case because I was going to the track that weekend.

When I called to check they said everything seems ok, we will take a deeper look. A few days went by so I called saying if all is still ok, I want to pick up the car. They said "it's not ready, the suspension and other bits are currently disassembled.. we need a day or two". That got me worried, because of how much this is all going to cost me.

Well when I did pick it up.. they charged me nothing and said all is good.

BTW I did buy warranty with the car so not sure how much that helped.

[360gtracer]

Originally Posted by muk_yan_jong

"...this next round of change."

??? Something else happening here ???

gp

[RedFlyer]

Originally Posted by 360gtracer

??? Something else happening here ???

gp

It's been well known, or at least widely soundboarded by people who should def. be in the know, for quite some time that the place is for sale. Again. After the current "management" ran the place into the ground.

I know one thing. After all the people worth anything were either fired or left on their own (ok there are a few very good and decent people left but they work in the shadows) and close to every customer has been alienated and become disgusted with the total ineptitude and indifference, the sale price better be magnitudes lower than what it was last sold for.

But knowing these guys they're probably asking for a premium after they destroyed the place and the overwhelming majority of the customer base.

What a joke. A sad sad joke.

I'm seriously surprised corp. hasn't forced something to be done quicker. The brand in the mid-Atlantic area has taken a serious serious hit.

[dsd]

Interesting to hear they are up for sale. Regardless of merit, they certainly have polarized the community and probably not for the better.

My 575 (bought from FoW) is getting its major done at Competizione right now. Interesting to see who steps in. Would really be interested to hear any gossip about what "corporate" thinks of all this. Do they even care?

-dsd

[Zinger]

Originally Posted by RedFlyer

It's been well known, or at least widely soundboarded by people who should def. be in the know, for quite some time that the place is for sale. Again. After the current "management" ran the place into the ground.

I know one thing. After all the people worth anything were either fired or left on their own (ok there are a few very good and decent people left but they work in the shadows) and close to every customer has been alienated and become disgusted with the total ineptitude and indifference, the sale price better be magnitudes lower than what it was last sold for.

But knowing these guys they're probably asking for a premium after they destroyed the place and the overwhelming majority of the customer base.

What a joke. A sad sad joke.

I'm seriously surprised corp. hasn't forced something to be done quicker. The brand in the mid-Atlantic area has taken a serious serious hit.

FOW was sold a few years ago correct? So the dealership is for sale again? I am curious to know the going rate of a Ferrari dealership like FOW. SOO much potential at that location.....

[Gh21631]

Their expenses are too high. I bet they are not profitable so you would be purchasing based on fixed asssets, franchise and any other intangibles that have value.

IMO, a better option would be to start a full service shop that also consigns and sells used cars. By full service I mean everything from upgrades, detailing, paint, service/repair, etc. The location would need to be close to DC but have lots of room and cheap rent. I would even consider car storage.

This could be my next venture if I had my way.

[Arjun]

Heard through the grapevine that FOW (along with a bunch of other large Ferrari dealerships all over the country) are owned through a series of cross holdings of an investment firm that Luca runs. Ferrari can't legally own dealerships in the US (not without getting into serious antitrust issues) and apparently uses this mechanism to control the dealership network while bypassing antitrust laws. This way they get to control both the primary and a large chunk of the secondary market.

Given this story, I don't think FOW is for sale.

[muk_yan_jong]

Change of Management may be a better term.

As mentioned above, aside from physical inventory, there is nothing left to value and it would take a VERY special and patient group to step in to what happened there.

There has been suspicion for some time about the layers of holding companies leading back to one place...

[Zinger]

I heard from a reliable individual that sells high end cars in the NOVA area that FOW was in fact privately for sale for $25,000,000. I am not sure if this is true or not or maybe the number is a "anything is for sale at the right price" number but $25,000,000 is a steep/unrealistic price for a business that is so called "not profitable". In addition, I'm not sure if the land is owned by FOW or not. I know the project was built initially on the Lerner Corporations land so if the property is on a land lease the 25M is really out of line.... Like I said this number may be a hoax but I thought I would share anyhow.

[Piper]

Originally Posted by Zinger

I heard from a reliable individual that sells high end cars in the NOVA area that FOW was in fact privately for sale for $25,000,000. I am not sure if this is true or not or maybe the number is a "anything is for sale at the right price" number but $25,000,000 is a steep/unrealistic price for a business that is so called "not profitable". In addition, I'm not sure if the land is owned by FOW or not. I know the project was built initially on the Lerner Corporations land so if the property is on a land lease the 25M is really out of line.... Like I said this number may be a hoax but I thought I would share anyhow.

I find it hard to believe they're not profitable. My understanding is they are allotted some 75 new ferrari's a year, and hardly a one ever hits the showroom floor unsold, just a cali here and there. If they make, just a WAG, let's say $30k a car, that's well over $2M in gross profit from just new ferrari sales. I'm not dropping in there much anymore as I'm going a different route for a while, but they turn over plenty of Maser inventory as well, so I'm assuming a good margin there. No idea about the Lambo side. Guessing perhaps they're grossing $5M in gross profit from new car sales. Their service bay is always full. They're making plenty in service. These are total guesses, but it wouldn't surprise me at all if their annual gross profit is $10M or better. Having no other data, $25M for a company doing those numbers isn't suprising. No idea what their real numbers are, gross, net, EBITDA, but that sale price doesn't surprise me in the least. A buyer isn't going to care about popularity or quality of service if the numbers otherwise are solid. Investors care about making money, period.

[Zinger]

Originally Posted by Piper

I find it hard to believe they're not profitable. My understanding is they are allotted some 75 new ferrari's a year, and hardly a one ever hits the showroom floor unsold, just a cali here and there. If they make, just a WAG, let's say $30k a car, that's well over $2M in gross profit from just new ferrari sales. I'm not dropping in there much anymore as I'm going a different route for a while, but they turn over plenty of Maser inventory as well, so I'm assuming a good margin there. No idea about the Lambo side. Guessing perhaps they're grossing $5M in gross profit from new car sales. Their service bay is always full. They're making plenty in service. These are total guesses, but it wouldn't surprise me at all if their annual gross profit is $10M or better. Having no other data, $25M for a company doing those numbers isn't suprising. No idea what their real numbers are, gross, net, EBITDA, but that sale price doesn't surprise me in the least. A buyer isn't going to care about popularity or quality of service if the numbers otherwise are solid. Investors care about making money, period.

Piper,

I agree with you 100%, I was just passing along the content I have heard in conversations with other individuals regarding the business at FOW. As I was typing in my last post I was asking myself "how could a dealership that has cars on a 2 year waiting list not be profitable?". I dont know the inner workings of a Ferrari dealership but Im sure the carrying costs are very very high. I bet the payroll at FOW is enormous. I doubt they are pulling 10M a year in gross profit, no way. FOW sells very few preowned cars. I bet the preowned sales is one of there weak links. They go for higher profit per unit vs volume, we all know this....

It would be interesting to know the sale price of Algar up in Philadelphia in comparison. Algar changed hands/sold about a month ago. Algar remodeled the old dealership into a start of the art facility. Algar may not be as large of a dealership as FOW but I would assume the new car sales/allocations are comparable to that 75 cars per year number you mentioned. Algar service is very well known and respected, they have some of the best technicians in the business so I know the service bays at that facility do very well. I would be curious to know the sale price, perhaps it will leak on Fchat.

Either way I hope the dealership remains in our neck of the woods no matter what the outcome is. But, at $25,000,000 I dont think anything will formulate....

[muk_yan_jong]

A Ferrari/Maserati service department full of warranty work is *not* profitable. It is a consistent and predictable loss. FoW has not retained enough non-warranty customers to even begin to reach the black.

Non warranty service is what keeps a dealership open. New car sales don't make any money. Used sales make some, but not much.

Even in the best of days when we were staffed with the best techs, good writers, and our loyal customers, it was a struggle.

[Piper]

Originally Posted by muk_yan_jong

A Ferrari/Maserati service department full of warranty work is *not* profitable. It is a consistent and predictable loss. FoW has not retained enough non-warranty customers to even begin to reach the black.

Non warranty service is what keeps a dealership open. New car sales don't make any money. Used sales make some, but not much.

Even in the best of days when we were staffed with the best techs, good writers, and our loyal customers, it was a struggle.

You've got a point there. But I'll tell you, I've gotten quotes both ways and FOW came in at the lower price for my annual. As it turns out, I'm not getting an annual. My car's being purchased with it still outstanding.

EDIT: Whenever I'm down there, seems a good percentage of their work is on older models as well, 355, 360 especially. I think the notion that they're no getting much out of warranty work is probably not correct.

[Zinger]

Originally Posted by muk_yan_jong

A Ferrari/Maserati service department full of warranty work is *not* profitable. It is a consistent and predictable loss. FoW has not retained enough non-warranty customers to even begin to reach the black.

Non warranty service is what keeps a dealership open. New car sales don't make any money. Used sales make some, but not much.

Even in the best of days when we were staffed with the best techs, good writers, and our loyal customers, it was a struggle.

Can you explain how "New car sales dont make any money" ? When every new Ferrari is sold at MSRP I would assume the dealer would make a good 30-40K on each Ferrari unit sold NO?

[muk_yan_jong]

Originally Posted by Zinger

Can you explain how "New car sales dont make any money" ? When every new Ferrari is sold at MSRP I would assume the dealer would make a good 30-40K on each Ferrari unit sold NO?

Salesman commissions, GM commissions, salaries, Floorplan insurance, general overhead, and filling in the holes when Ferrari denies high-dollar warranty claims months later.

It is a tough business with math that I have never been able to figure out.

Service makes the most money for any dealership, but it has to be consistent loyal work. If we didn't have $120K (just on Ferrari-side and not including Challenge race tickets, Maserati, or Lambo) closed every month, we got a talking to. I highly doubt FoW can make those numbers anymore. I was a good writer (Josh was great) and had the old team as technicians. We struggled mightily, but then again that was after Competizione and the other wonderful local independents were created out of our Service Manager's incompetence with the department.

[RedFlyer]

That profitability calculus probably has some half-valid inputs. $30k per car gross is not unreasonable #. However, profitable service op.s I’d say is a bad guess. The service bays may be “full”, and service parking area may be “full” but believe me that might not tell the whole story and I’d say this is a classic case of looks can be deceiving. First off look at how big the service area is and the overhead allocation attached to it, secondly look at how badly the few independent shops around are totally eating their lunch and handing their a-s to them, thirdly look at the caliber and level of experience and over all aptitude of the people in the service area, techs and service writers, and look at turnover and the caliber of people who were “let go” or left on their own (FoW had one of the top-rated techs in the country, they let him go supposedly b/c he wanted not some huge sum of $$ but merely some measure of predictability in his paychecks and they wouldn’t give him that), fourthly see how many of those cars sitting around are waiting for parts, and waiting and waiting b/c the service back-end is so dysfunctional and incompetent, fifthly and perhaps most poignant look at the comments people have regarding going there for service. Conventional wisdom and so say people in the know, the service op.s there are a dog, not a cash cow, and from what I’ve heard from people in the business service op.s are a critical piece of the profit and cash-flow in any car dealership

I too have heard from potential buyers that the place has been being shopped for a long long time and that the price is mere fraction of that $25 mill. figure, and yet still way too high given what fixed assets it represents (basically some furniture, tire equipment and Arnie’s collection of racing paraphernalia (some of which is probably his) and considering that the goodwill value of the operations has been beat down to about zero (or negative if that is possible as a matter of accounting definitions) over the course of this current “ownership”.
I’ve heard from knowing sources the property is leased, so given the terms of that lease that alone could be a major drag on the operation’s profitability and cash flow and could certainly impact any current valuation. Aside from the liabilities and stepping into whatever leases and contracts that will survive the sale you are basically buying the franchise rights and I am sure they have some real value. Especially considering that Ferrari have closed territories for new sales. You can’t just go buy a new Ferrari wherever you want. You have to buy from your area franchise or there are stiff penalties to the dealer selling out-of-territory. Were it not for that, FoW in its current form would have been buried long long ago. Basically, that 75 car allocation times X$ profit per car equation presumes anybody could just sit behind the door there and sell and collect money and make money regardless of how they treat people and execute on sales and service, and I just don’t think that is the case. Thankfully. To an extent it may be true, but I am certain that at the time of the last sale and going forward to any current sale, the overall business proposition takes into account some measure of goodwill and customer loyalty that especially plays into pre-owned sales and non-warranty service. The question, or conundrum, is finding an outfit that feels they can reasonably resurrect that goodwill and service capabilities.

Look at the caliber and connectedness of the sales people who have left there. I’m not saying they are bad guys, but the ones who are still there are the ones who probably don’t have better, more legitimate and honorable opportunities available elsewhere. Some of the sales guys left are well and widely known to have said outright and in very forthcoming ways “as soon as I land another gig I’m out of here”, and they’ve been saying that for a long long time but haven’t left. And why? Probably because they have nowhere else even half commensurate compensation wise to go when you supposedly get 75 really expensive cars a year that sell themselves. The ones with deep client books and real skills and knowledge and a sense of self-respect have been long gone. And there have been top notch sales guys who have come on under this current “management” and it took them all of a couple months to read the tea leaves and get the hell out of there.

I know it could seem like a lot of these FoW posts over the past couple years are just mudslinging exercises because so and so liked so and so for service instead of FoW or so and so ex FoW employee isn’t there anymore, or so and so really enjoyed the camaraderie and track events that the old guard so unselfishly and wholeheartedly provided, but what one really has to look at here is the kinds of people you’re dealing with. According to people who should know, i.e. staff who talk openly about it, one of the top “managers” there uprooted and moved his family (wife and kids) from their home in California to pursue the opportunity at FoW. Within a matter of months he had acquired a mistress. Within a matter of weeks after that he had given his mistress a sales job at FoW. Mind you this is a person who supposedly had no, zero, zippo experience in the automotive industry much less with the most storied brand on the planet. Supposedly this person was then in a position to skim crème off the top of the commission pool, commissions being earned by some who were very experienced, very connected, very hard working sales folks who had been in luxury and exotic sales for decades. Sometime within months after being installed in that crème sucking spot and making what is said to be zero sales herself, that person was removed. This manager however retained his personal relationship with her, got her pregnant, got divorced from his wife he uprooted and moved from California and had his new baby, all in that order. These are the kinds of people you are dealing with.

I will be the first to say that personal matters are and should be personal matters. Everyone should be entitled to their own personal life and making their own personal decisions. But when you drag what many would consider to be very questionable and slimy personal decisions into your business and the brand you represent and directly impact the employees you are charged with managing with these personal decisions, that is just wrong by any measure. And the fact that manager is still there, that is just total ineptitude and indifference on the part of whoever sits over top of him.

This is why certain sales people who work there pull no punches in widely saying to anyone who will listen “these guys (management) are so f-cking stupid it is unbelievable”. This is why a certain very well respected sales person who came in good faith and dipped into his deep book of contacts that he spent decades amassing and sold like mad for a couple months, only to see a good chunk of his $ siphoned off to his boss’ mistress, is famous for saying of this manger anytime he asked of his debacle of a decision to ever go there in the first place “I wouldn’t piss on him if he were on fire”.

And when you think of it, maybe it really is calculated theater. Maybe they really are making money hand over fist and are insulated by some complex web of holding companies Luca has concocted and they are intentionally creating this mystique; it is after all very Enzo-esque, hiding mistresses and babies all over the place. But as far as I know not even Enzo brought them into his work to siphon money off the top of his employees’ hard earned remunerations. Tisk tisk.