
Kenilworth rewarded as the top Suzuki dealership in SA
Suzuki Kenilworth in Cape Town claimed top honours for the second year running at the annual Suzuki Dealer Conference and Awards.
- Dealer News
- 27 June 2025
Whether you are an owner or your dealership is owned by a corporate, it always has a value. In broad terms, this value is made up of two parts. The first is the net asset value of the dealership and the second is the goodwill of the dealership. It is on this basis that most motor dealerships are bought or sold.
Let’s first deal with the Net Asset Value (NAV), also known as Equity. This number is simply your gross assets in the business, minus the liabilities of the business. The majority of a dealership’s assets will be in the form of stock, and most of the liabilities will probably be floor plan and shareholders loans. (I know many of the corporates have treasury functions and allocate loans to their dealerships.)
The goodwill of a dealership is essentially the earnings multiple that will be applied to the profit after tax, and this will be added to the net asset value. It is essentially the risk factor that a purchaser is prepared to accept. Let’s look at an example:
Assets (real value and not book value) - R50 000 000.
Liabilities - R45 000 000.
NAV - R 5 000 000.
Annual Profit After Tax - R1 000 000.
Earnings Multiple – 3.5.
Goodwill - R3 500 000.
Total Dealership Value - R8 500 000.
The earnings multiple is influenced by the following factors:
There may well be other factors as well, but the above-mentioned are the main factors in my opinion. Cash flow generation is also important, and most investors would look at this by using an EBITDA (earnings before interest, tax, depreciation and amortisation). A multiple will also be applied to this number and it may be used to “sanity check” the earnings multiple.
In closing, this is intended to give a simple and broad explanation of the dealership valuation method that is often applied.
Suzuki Kenilworth in Cape Town claimed top honours for the second year running at the annual Suzuki Dealer Conference and Awards.
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