Marcus Lemonis Vs Athans Motors
The Owner(s): Pete Athans
Hello everyone and welcome to this first episode in the second season of the profit. If you are new to the profit and want to know more about the first season you can click here to to view our reviews on it.
The episode starts with a few clips from season 1. It also mentions that the stakes will be much higher in this season with even more money from Marcus to be invested. Let’s hope they keep their promise.
Episode Main Review.
Pete made a lot of money in real estate and decided to open a car dealership which would enable him to turn his passion for cars into a moneymaking business.
Athans Motors became a state of the art car dealership company complete with customer lounges, car service, big-screen cinema section, video game arcade center and the list goes on…
According to Pete, the car dealership should please people who like to visit to relax and hang out having a cup of coffee while they choose cars.
All of these was created in 14 months and cost over 4 million dollars. Pete has spent all of his entire life savings on this business and can’t afford to lose it all.
Pete hired his cousin Tony (who has 18 years experience in the car business) to be general manager of the dealership, but continues to micro-manage the business and this is straining their relationship.
Tony feels he has no power to make the decisions that will help the business grow and is thinking of leaving the company altogether.
The business loses over $1.8 million a year and if things don’t change, Athans Motors will have to close its doors to the public and Pete will lose his entire life savings.
Marcus meets Pete and Pete’s immediately wants to know how the place looks to Marcus and offers to give him a tour.
Marcus finds out that Pete spent over $600,000, spent on non-necessary things like video games, big-screen TVs, professionally painted walls, luxury customer lounges… Things that don’t really help in selling cars or rather money that would have been spent on buying cars for re-sale.
If it had spent that money on used cars he would have bought 40 cars and with a margin of $2000 per car,he would’ve made $80,000 profit on that investment.
This is crazy and very irresponsible way to spend money and Marcus agrees.
Athans Motors has to sell 60 cars per month to break even with a margin of $2500 per car. This adds up to $1.5 million working capital needed just to have enough cars per months to sell and breakeven.
Problems/Issues In The Business Found By Marcus
- Just 20 cars available for sale in the dealership. Not enough cars to provide a choice for prospective clients.
- Lack of medium to low end cars for sale.
- Huge losses in revenue per year.
- Straining the relationship between cousins Tony and Pete.
- Pete needs to relinquish control to the right people in this business.
- $6.9 million of debt owed to himself and his family and friends.
- $100,000 per month loss just keep the business open.
Marcus offers Pete 3.5 million dollars to help clear the debt, bring in new cars for inventory and change Athans Motors into a new entity with a new brand that makes money.
In this deal, Marcus and Pete will be 50-50 partners with Marcus taking full control of the running of the company.
Marcus Lemonis intends to protect himself from failure by owning all of the inventory his investments will provide and if the need be, he can liquidize the cars and recoup his investment.
Also, the name of the company Athans Motors will have to be changed.
Pete fires back at Marcus a quick NO.
He’s not really happy with the fact that Marcus intends to control 100% of the business affairs and he believes that he still has a lot of input to help the business grow.
He stands up and goes for a walk to clear his head.
When he comes back and after listening to the deal once again, Pete decides that it’s the best thing he can do for his business and accepts the deal and they shake hands.
As always once the deal is accepted Marcus is in full control of the business for a period of time.
This is the period of time he needs to make the appropriate changes both physically and financially to the business. I also feel Marcus will like to join this business to his existing car cash business he invested in the 1st season of the profit.
Solutions Suggested/Implemented by Marcus To Improve The Business
- Stop losing money.
- Liquidate the high-end cars that don’t sell and use the money to get more inventory of those that are easier to sell.
- Liquidate everything that doesn’t contribute directly to selling cars like the TV screens the videogames etc.
- Take advantage of every square inch of floor space to generate revenue for the company by adding shops car products to sell.
- Change the marketing plan to increase the amount of traffic and clients the company gets.
- Have a wider array of price points and selections to cater for different customers.
- Give Tony the general manager more breathing space to enable him perform his duties in the business.
- Have a grand new opening event.
After The Deal…
Marcus helps Pete Get rid of the classic cars in the dealership to make space for the new cars they will be selling.
They visit the car auction centre and make a huge purchase of 28 used cars to fill the inventory. They spend over $386,000 buying used cars and Marcus seems to pay with something that looks like a black credit card. Wow…
Marcus gets the painters to come paint over the murals to give a fresh new clean look to the dealership. He also gets rid of the luxury high end items to recoup around $150,000 for the company.
The lounge has been renovated to an auto parts and accessories store and this will enable the company to generate income with that floor space.
Meanwhile, Tony finds out that he is being undermined still ,so decides to quit. He informs Pete and walks out.
This seems to be the straw that broke the camel’s back and Pete realizes that the fact that he Micro manages and doesn’t relinquish control to the right members of his team is not going to help his business at all.
In the next scene, Marcus Lemonis goes ahead and changes the name of the business from Athans Motors to Automatch USA.
This infuriates Pete because he believe that he has a good name in the community and that Marcus is being a dictator in his business.
Marcus explains to Pete that they need to relaunch the brand, this is going to put new enthusiasm into clients and the business will be resurrected.
Pete calms down and agrees.
Conclusion and Updates on the Business
The next scene shows a brand-new dealership. Automatch USA is brand-new, the changes can be seen and the team prepares for the grand opening.
On the day of the grand opening a snowstorm comes down in the area and it looks like things are going against Pete. This however doesn’t stop the party and a lot of people show up to the reopening.
They all love the place and many people can be seen shopping from the new accessory store proving the concept that floor space can be used to generate income.
Even Pete can’t hold off being emotional as he sees a new beginning for his business.
The cars start flying off the shelf as the team comes together to sell sell sell. Automatch USA generated over $100,000 in sales on the grand reopening day and things are looking great.
After a month in business, a massive improvement can be seen. It even relinquishes control of the business to his directors and team morale is at an all-time high.
Marcus Lemonis also brings in a new general manager John Gavin, this 30 year veteran in the car industry. John seems to be keen in making a lot of money for Automatch USA.
The total inventory has gone from 20 cars to to over 150.
Automatch USA is averaging about 90 sales per month and to be just a matter of time till when Automatch USA will start generating a huge amount of profit.
The next scene shows clips of future episodes and it looks like this season two is going to be full of drama and excitement.
I hope you enjoyed this episodes review and thanks for visiting theprofitfans.com
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>> Visit the next episode A. Stein Meat Products – The Profit Season 2 Episode 2
PS: In case you missed them, here are our reviews of the episodes in season 1. Enjoy
- Car Cash – The Profit CNBC Season 1 Episode 1
- Jacob Maarse – The Profit CNBC Season 1 Episode 2
- Planet Popcorn – The Profit CNBC Season 1 Episode 3
- Eco-Me – The Profit CNBC Season 1 Episode 4
- LA Dogworks – The Profit CNBC Season 1 Episode 5
- Mr. Green Tea – The Profit CNBC Season 1 Episode 6 Finale