What Happens When a BHPH Dealer Hangs It Up?

October 23rd, 2015 by

Calling it quits on anything can be difficult, especially when you’re considering shutting down a business you’ve kept running for more than 40 years. That was the case for Julian Codding, a former dealership owner and member of the National Alliance of Buy Here-Pay Here Dealers Hall of Fame. Instead of approaching the situation with a negative attitude, Codding decided to embrace the change.

“We’ve all known people who have retired, gone home, sat in a rocking chair and made everyone around them miserable,” Codding added.  “If the season has come for a change in your life, welcome it with the same positive attitude you did when you started your business.”

This information is not only useful for dealership owners, but it could also be utilized by potential buyers, as they can identify where to get the best deals. Before you head out to a Cincinnati Buy Here-Pay Here car lot, check out our guide below. Of course, Codding also has a number of strategies for slowly ending a BHPH dealership, as he told AutoRemarketing.com.


The easiest thing for a retiring car dealer to do is shut the business down and then collect the vehicle installment contracts until the respective cars have reached maturity. When units are still left over, the businessman can simply take the leftovers to an auction. If they want, they can even keep the finance-part of their business operating, allowing them to “take payments and service the portfolio.”

An alternative option is what Codding coined the “50-percent times two rule.” This basically suggests that during the business’s first six-months of their “wind-down process,” they should cut their sales volume by 50-percent. This would allow the owner to cut his operator overhead.

If the owner truly wants to move on, he can just take his selection of vehicles and sell them all for one lump sum.

“Get one bid for everything with no recourse to you,” Codding said. “Get bids from finance companies first, and then if you trust one of your competitors, get a bid from them. They are in a position to pay more if they have the financial resources.”

Perhaps the most innovative suggestion is passing the business on. Codding says a dealer could take on a “junior partner” who buys-out the former’s business. When utilizing this strategy, Codding says to “have $1 million in outstanding notes, a credit facility for floorplan, as well as a credit line for another $1 million to originate more contracts as well as have working capital available.”

“Many new-car dealerships have changed hands in this manner,” Codding adds. “There are a lot of positive factors if the person you sell to is the right person and the controls are in place.”

Of course, you’ll also have two other issues to deal with: disgruntled (future) former employees and dealership service providers. Codding says to be prepared for angry employees, although he adds that their reactions are natural. When it comes to your dealers, expect it to be a pain.

“Your vendors are going to want to be sure you are going to pay them,” Codding went on to say. “If you are going to ask for some payment terms, be sure you deliver on your promise.  They have been one of your ‘partners’ over the years.”


As a car buyer, the best course of action is to just visit the actual dealership. If you’re in the Cincinnati area, head over the McClusky today. You can be guaranteed that they won’t be shutting down their offices, and their fair financing terms means you could be driving off the lot in a car today!

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