OPEN POINT AND DEALER PROFILE PACKAGES: WHAT THEY ARE AND WHEN YOU NEED ONE

Buying a dealership is a significant decision, one that involves careful consideration of various factors and adherence to specific processes set by automobile manufacturers. Whether they are acquiring an existing dealership or securing an open point opportunity, prospective buyers must navigate through a series of steps to gain approval from the OEM. In this article, we will delve into the two primary ways of acquiring a dealership and explore the crucial documents known as Dealer Profile Packages (DPP) and Open Point Packages (OPP).

 

1. The first scenario in dealership acquisition involves purchasing an existing dealership from its current owner or ownership group. In this situation, the buyer is buying or leasing the real estate and acquires all assets of the dealership, inventory, and retains the existing staff. However, the decision on approving the new owner rests with the brand’s OEM. Indeed, prospective buyers must submit comprehensive business plans and financial projections as part of their application, and a comprehensive Dealer Profile Package (DPP) serves to bolster the odds of being approved by the OEM. These packages provide detailed insights into the buyer’s plans for operating and growing the dealership under the brand’s banner.

In addition to acquiring existing dealerships, Dealer Profile Packages (DPPs) are crucial for securing a smooth succession in family-owned dealerships. While it may be assumed that kin of the previous owner would seamlessly take over, OEM approval is not guaranteed. Therefore, presenting a comprehensive DPP outlining the successor’s qualifications, long-term vision and aspirations, business plan, and commitment to the brand is essential to obtain OEM approval. This strategic approach ensures the OEM that the dealership’s legacy continues seamlessly under the new ownership, maintaining both brand success and customer satisfaction. By leveraging their DPP, prospective buyers can navigate the process with confidence and increase their chances of OEM approval for their dealership acquisition goal.

 

2. The second scenario, known as an “open point” dealership opportunity, arises when the OEM seeks to establish a new franchised dealership in a specific geographical area. Typically, this area will be experiencing population growth and will be home to a significant number of brand-loyal customers. In the open point purchase scenario, the OEM notifies existing dealerships of its intentions and opens applications to prospective buyers so they can apply for franchise approval in the proposed location. Another scenario is when a potential buyer identifies an opportunity for a franchised dealership in an area and would like to present it for consideration by the OEM. Unlike purchasing an existing dealership, the winning candidate of an open point opportunity does not need to pay for multiple years of projected profits. Consequently, the price of acquiring an “open point” dealership is usually lower than that of an established dealership. However, a new dealership comes with its own associated costs such as construction, inventory, imaging, hiring and more.

In the highly competitive landscape of open point opportunities, applicants must distinguish themselves from other potential dealers and dealer groups applying for the same opportunity. While owning another dealership of the same franchise could be advantageous, it is not a prerequisite for consideration. Manufacturers award open points based on their assessment of the candidate’s qualifications, including their financial resources, operational expertise, potential performance in the market, and more. When submitting an Open Point Package (OPP) to the OEM, buyers must differentiate themselves from other prospective candidates, and demonstrate a track record of success, and their capability to open and operate the dealership successfully. This includes providing evidence of meeting working capital requirements and adhering to specific criteria outlined by the manufacturer, such as real estate and facility size. Moreover, finding and securing a suitable property for the dealership can be a complex process, often requiring approval from local government authorities, adding further complexity and time to the acquisition process.

 

The key to success In either scenario lies in the preparation and presentation of a compelling business case to the brand’s OEM. This is where Dealer Profile Packages (DPPs) and Open Point Packages (OPPs) come into play. In both cases, the quality and persuasiveness of these packages can significantly impact the likelihood of approval from the OEM. That’s where DSMA steps in. DSMA specializes in helping buyers navigate the complexities of dealership acquisitions and securing approvals from brand OEMs.

DSMA’’s Application Assistance Package (AAP) offers invaluable support for prospective buyers looking to acquire an existing dealership. With this package, DSMA takes the lead in compiling and submitting the OEM’s application package, ensuring all necessary documentation and information are meticulously prepared and presented.

With top-of-the-line Dealer Profile Packages (DPP) and Open Point Packages (OPP), DSMA ensures that buyers present compelling cases that resonate with OEMs, ultimately facilitating successful dealership acquisitions. Whether buying an existing dealership or seizing an open point opportunity, DSMA equips buyers with the tools and expertise needed to navigate the process with confidence and achieve their goals within the automotive industry.

 

Share This

Psst... we have cookies.

By clicking “Accept Cookies”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts.