So you want a Kit Car Business
So you want a Kit Car Business
Just a short post to let everyone know I am still alive. If you are a new reader chances are you found this website because you want to start a Kit Car business, what to buy an existing business, are a fan of kit cars, or looking to buy a kit car.
I wanted to touch on the topic of kit car business that come up for sale from time to time. As you know there are many reasons why any business comes up for sale. I have certainly had the opportunity to purchase my fair share of molds, and existing kit car businesses. But just because the molds from “XYZ” Company from your younger years comes up for “Cheap” does not mean you should buy them!
I want to give you a few things to think about if you are considering purchasing a former kit car company, a set of molds from a former company, or even a kit car business that is currently operating. Any of this info could save you money an headaches.
- Tastes and styles change. Do not let your personal feelings for a certain car or car company get in the way of making a wise choice. Who does not like a Fiberfab Valkyrie, Aquila, Sterling, Manta, etc, right? Well the answer is a lot more than the people who do like them! Just because you like them does not mean there is a market for them. Don’t buy into the hype that they would make great electric cars, there is a big market for them, etc. It is usually not the case.
- Molds do have a “Shelf Life”. Just like with anything that sits out in the elements or in a hot/cold storage for 30-40 years, you can bet any molds you find under a tree wrapped in a tarp, or in a 100 degree storage unit are going to need some significant refurbishing before you produce a body. Again just because the seller says they are ready to pull a body from or their is a big market for them does not make it true.
- There is no such thing as “RARE” with kit cars. Don’t buy into the Hype! These are not production cars. they were in most cases very heavy, poorly constructed bunches of fiberglass. At least from the late 1960s-1980s. Sure there were some really good quality stuff as well but a lot of it was not. Just because the seller has never seen another one of the “Insert Kit Car Name Here” Does not mean there is not dozens, hundreds, or thousands out there. Take the CMC gazelle for example. CMC was turned these out by the 1000s but yet sellers still call them rare!
Existing Kit Car Business
So you just came across a currently operating kit car business and it is for sale. It is $10,$20,$50,$100k+ and you want it! What should you do? Here are a few tips on how I would approach it.
- Find out why the seller is getting out of the business. Some business come up for sale because the owner is retiring, life changes, etc and some get sold off because they are just not making any money.
- Find out how much money the company is currently making or losing. Any legitimate seller will be more than happy to have you sign a NDA (None Disclosure Agreement) and lay it all out on the table. Keep in mind you will also encounter sellers that have as much attachment (emotional and monetary ) as you do. BUT unfortunately that attachment does not make the company valuable. You want a clear picture of what it cost to develop the company (if available) and how much money it has made, or lost.
- IP(Intellectual Property) Value. Chances are if XYZ kit car company did not make any significant money as XYZ company is will not make any money as XYZ kit car company 2.0. Now this is just my opinion unless it is some radical design and a chassis that is designed from space aged materials I see little value. I would most likely rebrand and remarket but that is just me.
- Websites, Forums, email lists, etc. This is another one of those selling points that never made much sense to me. I understand that in this day and age a website is necessary. Forums used to be a very useful tool until everyone jumped ship for facebook, and emails lists are just tricky. But is there a monetary value to any of it? Priceofhistoys.com is with a registrar that charges $12 per year for the domain, the forum barely gets used, and of the 1000s of emails I have I rarely send out an email.Lets say the kit car company you are looking at has been in “Business” since 2005 and they have compiled a list of 3000 emails in that time. So what? How many of those people went on to purchase a kit, closed the email account, or moved on to another kit. What future marketing value is there? None if you ask me
Well I could go on all day about what I would look for. But I am going to end with this. There are some good opportunities to get into the kit car business. I do not think the business is dead but I do think it has stalled a bit. With a few exceptions I would stay away from the idea of reviving an old kit car company. By old I mean 1980s and earlier. Its been tried time and time again and it usually does not work. I have seen a few newer companies that have caught my eye recently 🙂