Dealership Factory Accounting

“You cannot effectively run, buy or sell a dealership without understanding your dealership’s factory financial statement. Although there are similarities with all statements, manufacturers also have significant differences. A General Motors store, for example, is capitalized differently than a Ford or Toyota store. Blue Sky is treated differently amongst the factories and financial companies.” – John Pico

During more than five decades of consulting with automobile dealerships nationwide, I have found that many costly mistakes result from a misunderstanding of factory accounting rather than poor business decisions.

Automobile dealership accounting differs significantly from accounting systems used in most other industries. Manufacturers have their own accounting requirements, financial statement formats, capitalization standards and performance measurements. Lenders may evaluate those statements differently, and buyers may overlook accounting issues that materially affect a dealership’s value. Understanding those differences is essential when buying, selling, financing, valuing or managing a dealership.

As a service to members of the industry, Advising Automobile Dealers LLC has compiled the following resources to promote a better understanding of dealership accounting and financial reporting. *

IRS Audit Guide

And, as an aide to Controllers and Business Managers, we have the following:

Advising Automobile Dealers LLC
Insight that Makes a Difference

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