The end of the Road for Bill Cullen

TestTransmission

AFTER 55 years in the motor trade, Ireland’s best known car dealer, Bill Cullen, has been put off the road by his main lender.

Staff at Mr Cullen’s Glencullen Holdings, which operates dealerships in Swords and Liffey Valley in Dublin, were told yesterday that Ulster Bank had decided to appoint receivers Kavanagh Fennell to the company to secure its loans.

The bank is believed to be to owed about €12 million.

More here

whomitconcerns

wow....bank is owed 12m and he is owed 19.5m.....

Tropheus

Sad day for the staff that will lose their jobs.

Kopparberg Strawberry and Lime

apparently bill had something new coming to the market.

would that still be a go ahead ?

R.O.R

Kopparberg Strawberry and Lime wrote: »

apparently bill had something new coming to the market.

would that still be a go ahead ?

Doesn't sound like it now.

Much as I'm not a fan of Mr. Cullen, it's a shame to see another couple of garages close.

corktina

ksimpson wrote: »

Sad day for the staff that will lose their jobs.

i think the point of a Receiver is to try to keep things going.The staff wont definately lose their jobs, lets hope not

Red Crow

corktina wrote: »

ksimpson wrote: »

Sad day for the staff that will lose their jobs.

i think the point of a Receiver is to try to keep things going.The staff wont definately lose their jobs, lets hope not

You're thinking of an examiner. A receiver is there to maximize the value of the assets in order to sell them to repay the debts. The company is finished sadly.

NIMAN

So no Apprentice this year then?

unkel

Knew he lost 2 out of his last 4 Renault dealerships recently, but still wasn't expecting this, although passing by his Liffey Valley garage several times a week, there never seemed to be a lot of activity in the last few years

I still expected that the best chance of pulling through are the likes of Hyundai/Kia, VAG, FIAT, BMW and Ford

I reckoned Renault was strong enough in the market with reasonable prices (minus serious discounts), long warranties and the best value EVs (ok nobody still buys any of these)

Sorry for all the staff involved and sad that it is not a good signal at all for all those still hanging in there in the Irish motor industry

ThisRegard

unkel wrote: »

I reckoned Renault was strong enough in the market with reasonable prices (minus serious discounts), long warranties and the best value EVs (ok nobody still buys any of these)

The problem is not because of Renaults not selling though was it. Renault themselves were changing how their cars are sold in Ireland by selling them through their own dealerships and therefore removing the dealership from Bill Cullen so I don't think that's the issue.

HellFireClub

What he's been doing is going in under everyone on price for the last few years to get the business, the exact same thing was going on in Target Expess, the logistics company that ended up meeting the same fate recently. Sadly the price he was prepared to deal at was not business sustainable in the medium to long term, but he pushed low price selling to get the business and this is the consequence of it, it's just kicking the can down the road, he gets the sale but his creditors get squeezed because he isn't making enough money to stay on terms with them, meanwhile the doors stay open until someone eventually runs out of patience.

Fair play to him for bank rolling the operation himself to such an extent, might not be a prudent decision by Ulster bank, you never know but if he genuinely fancied turning it around .... If you employ 45 the annual wage bill would be over 1m so owing 12m to a bank isn't totally unmanageable, maybe he wasnt appearing to be giving the bank what they reckoned was needed. Only guessing.... As said, 45 no doubt very hard workers in a bad spot.

kona

Crap news

awec

This post has been deleted.

HellFireClub

I can tell ye one thing, you'd want to be selling a serious amount of cars at a healthy profit to be able to make repayments on a 12 million Euro loan.

I just did a quick back of the envelope calculation here, if you were to borrow 1 million Euro over 5 years at 5%, you'd have a monthly repayment of just under 19K a month on that loan. multiply that by 12, that's 228K A MONTH, just to service a loan. If you wanted to add in the 19 million Euro that was owed back to him, at 0% interest, just to get your loan back out of the company over 5 years using monthly repayments to yourself, you'd need to add 317K Euro a month to the 228K a month loan repayment, so that's around 545K Euro a month, that has to be generated in profit, just to keep on top of your loan repayments.

Looks like a basket case scenario if ever there was one, to my eyes.

Henry Ford III

Back to selling penny apples on Moore Street again?

Frynge

HellFireClub wrote: »

I can tell ye one thing, you'd want to be selling a serious amount of cars at a healthy profit to be able to make repayments on a 12 million Euro loan.

I just did a quick back of the envelope calculation here, if you were to borrow 1 million Euro over 5 years at 5%, you'd have a monthly repayment of just under 19K a month on that loan. multiply that by 12, that's 228K A MONTH, just to service a loan. If you wanted to add in the 19 million Euro that was owed back to him, at 0% interest, just to get your loan back out of the company over 5 years using monthly repayments to yourself, you'd need to add 317K Euro a month to the 228K a month loan repayment, so that's around 545K Euro a month, that has to be generated in profit, just to keep on top of your loan repayments.

Looks like a basket case scenario if ever there was one, to my eyes.

Not questioning your calculations but surly loans for that kind of business would be more in the long term range, say 10 to 15years.

handlemaster

Will he take his own advise and work for free. If everyone else without work could do it so can he.

..... They hardly wanted it back in 5 years

HellFireClub

RoverJames wrote: »

..... They hardly wanted it back in 5 years

They'd want it back tomorrow in one big lump if they reckoned you couldn't pay it!

If the same scenario was over 10 years, the figures would be 126K a month for the 12 mil loan and the 19 mil owed back to himself at 0% just to get it back out would be 158K a month, so add those two together, that would be 284K a month, that would have to be generated every month in profit just to service those two liabilities.

An equally hopeless situation I think, given that the enterprise was down to 2 dealerships. Even with 4 outlets, would 4 dealerships be able to generate 71K a month in profit EACH, on top of what needs to be made to keep the lights on, for example, rent, wages, insurance, light & heat, etc, just to stay on top of these two liabilities?

Deise Vu

Frynge wrote: »

Not questioning your calculations but surly loans for that kind of business would be more in the long term range, say 10 to 15years.

A lot of his loans are likely to be for premises etc but a large chunk of it would be 'stocking' loans which are paid when vehicles are sold. In effect the bank is taking the place of the car supplier. In that scenario, €12M is probably manageable as long as you are making a decent margin over cost price. According to some earlier posters that might not have been the case.

I am always sorry to hear of people's livlihoods going south but I won't be sorry to hear the last of Bill's business philosophy which appears to be that sleep is a waste of time, you should work for nothing and be glad of it (as he appears to have been doing) and you should always tell yourself you are fantastic. That's the kind of dangerous lunacy that bad managers/ owners love spouting as they head off for a working round of golf / meal / drinks after they delegate all responsibility to the most the incompetent 'yes' man in their organisation.

.... Where did you pull 71k from? Edit, I see you said each. What would a service dept in a busy main dealer turn over per month? Ignoring sales of cars, just service dept....

Dartz

I bought a car from there last July....

It was a nice car. The car now has a sad.

sumo12

Common denominator in a lot of closures recently, especially garages, seems to be Ulster Bank. Coincidence, or are Ulster wielding the axe? I see on the news they have shut down Olhausen sausages this morning too.

Source

sumo12

RoverJames wrote: »

What would a service dept in a busy main dealer turn over per month? Ignoring sales of cars, just service dept....

Turn over or profit? 2 wildly different things in the motor trade. Huge discounting going on by main dealers to get punters in while still being stiffed by massive overheads. Turnover may be high, profit however, is low.

Turnover, I'm aware turnover and profit are wildly different, cheers for the junior cert foundation level grind though.

sumo12

You only asked about turnover, which means nothing in paying back loans!! Ask the right question, you'll get the right answer

sumo12

sumo12 wrote: »

You only asked about turnover, which means nothing in paying back loans!! Ask the right question, you'll get the right answer

I'll ask the questions I reckon I want answers to
I have a feeling you have no idea anyway, but please do furnish the thread with typical "profit" figures for a service dept in an average enough main dealer if you can.

There is a lot more profit from the service dept relative to turnover than from new car sales.

Turnover means nothing in paying back loans???? Are you for real?

HellFireClub

RoverJames wrote: »

.... Where did you pull 71k from? Edit, I see you said each. What would a service dept in a busy main dealer turn over per month? Ignoring sales of cars, just service dept....

Well if you had a mechanic in a bay, and you were charging out labour on him at 70 Euro an hour, and he was 70% efficient/loaded (as in you are selling 70% of the hours that he is available per day), on the basis of an 8 hour day, you'd be invoicing out 392 Euro a day per mechanic, just for labour, EX VAT. Then you'd have your profit on parts, which is a whole other minefield at the moment.

If he is on 12 Euro an hour, he is earning 96 Euro a day. So you can say that if a service dept can make 2 assumptions (1) keep a guy loaded in terms of work, for 70% of the month, and (2) get 70 Euro labour an hour for the month, then they can make 296 Euro per day * 20 working days of the month = 5,960 Euro a month off this mechanic.

So if you have a service dept with 4 mechanics, who are 70% loaded (and they won't be, you'll be down at 10% and 20% some days at the moment), and you can get 70 Euro an hour (and you won't because people are now moving to independent garages because they are cheaper by up to 50% on labour alone before we even start discussing the price of parts, also warranty work is hugely discounted on the labour end), then in theory, you can make 23,680 Euro a month off 4 mechanics on labour.

But you need to take two non-productive salaries out of that, a service manager and a service advisor, you also need to take out employers PRSI at 10.75%, and you have the cost of running the workshop, rent, light & heat, insurance, etc, so you can knock that down to 5-10K profit a month if everything is being run right and the workshop is busy and is not getting it's ball's broken on price every day.

Most service departments in this country are losing money, they can't get the loadings right because they are not at the races on price, and people are now getting wise to the huge difference in price between main dealers and a good independent.

nice1franko

Poor oul Dr Bill. I don't think he ever really had remarkable business acumen he was just in the right place at the right time with Renault and managed to ride it longer than he probably should have. He was always a good salesman though.

Bad news. Hope he bounces back.

handlemaster

nice1franko wrote: »

Poor oul Dr Bill. I don't think he ever really had remarkable business acumen he was just in the right place at the right time with Renault and managed to ride it longer than he probably should have. He was always a good salesman though.

Bad news. Hope he bounces back.

Maybe he'll branch out and sell oranges.

sumo12

If I turn over 25,000 a month and my costs / overheads are 24,500, how much can I pay off my loans? Now there's a junior cert question for you

I work in a main dealer service dept so yes I do have an "idea" but thanks for the insult anyway.

I think you are probably a troll, so there's not much point in me answering your posts any more.... Have a good day!

opinion guy

whomitconcerns wrote: »

wow....bank is owed 12m and he is owed 19.5m.....

You make it sounds like somebody else owed him 19.5m - that's money he is owed by his own business if I'm reading the article correctly

HellFireClub

sumo12 wrote: »

If I turn over 25,000 a month and my costs / overheads are 24,500, how much can I pay off my loans? Now there's a junior cert question for you

I work in a main dealer service dept so yes I do have an "idea" but thanks for the insult anyway.

I think you are probably a troll, so there's not much point in me answering your posts any more.... Have a good day!

This is the problem, the dealers who invested a few mil in the glass showroom specification that was laid down as mandatory by the distributor, they are now fúcked. The figures were all based on Celtic Tiger (1) Margins and (2) sales volumes... Both have now being demolished, margins are ridiculous and as for volumes, I think they are back down to 1994 levels or something...

sumo12

HellFireClub wrote: »

Well if you had a mechanic in a bay, and you were charging out labour on him at 70 Euro an hour, and he was 70% efficient/loaded (as in you are selling 70% of the hours that he is available per day), on the basis of an 8 hour day, you'd be invoicing out 392 Euro a day per mechanic, just for labour, EX VAT. Then you'd have your profit on parts, which is a whole other minefield at the moment.

If he is on 12 Euro an hour, he is earning 96 Euro a day. So you can say that if a service dept can make 2 assumptions (1) keep a guy loaded in terms of work, for 70% of the month, and (2) get 70 Euro labour an hour for the month, then they can make 296 Euro per day * 20 working days of the month = 5,960 Euro a month off this mechanic.

So if you have a service dept with 4 mechanics, who are 70% loaded (and they won't be, you'll be down at 10% and 20% some days at the moment), and you can get 70 Euro an hour (and you won't because people are now moving to independent garages because they are cheaper by up to 50% on labour alone before we even start discussing the price of parts, also warranty work is hugely discounted on the labour end), then in theory, you can make 23,680 Euro a month off 4 mechanics on labour.

But you need to take two non-productive salaries out of that, a service manager and a service advisor, you also need to take out employers PRSI at 10.75%, and you have the cost of running the workshop, rent, light & heat, insurance, etc, so you can knock that down to 5-10K profit a month if everything is being run right and the workshop is busy and is not getting it's ball's broken on price every day.

Most service departments in this country are losing money, they can't get the loadings right because they are not at the races on price, and people are now getting wise to the huge difference in price between main dealers and a good independent.

Sounds about right mate. 70% loading would be nice....

ThisRegard

I've been to the service department there a few times and it's the biggest one I've ever dealt with. Service and Parts are seperate and there's two people working behind the service reception. The service building is pretty big and there's a lot more than 3 mechanics in there. They've also one or two doing the valeting as well as a crash repair department.

The guys I've dealt with are good and their prices are very reasonable in terms of main dealer servicing. They have the decency to not blindly follow everything the service manual tells them to do, for example, I can't remember if it was an air or cabin filter which was due for a change but when they took it out, saw that it was fine so put it back in again and decucted the cost from the standard service charge for that particular service interval. Don't think there's too many places that would do that.

sumo12

sumo12 wrote: »

If I turn over 25,000 a month and my costs / overheads are 24,500, how much can I pay off my loans? Now there's a junior cert question for you

I work in a main dealer service dept so yes I do have an "idea" but thanks for the insult anyway.

I think you are probably a troll, so there's not much point in me answering your posts any more.... Have a good day!

You think I'm a troll yet you're the freshly signed up rubbish poster

We all know that there's quite a profit margin in service depts, your €25k, €24.5K example above is moron figures.

If you're so smart lash up a realistic turnover / profit figure from a service dept which you should be able to do unless you are a troll yourself (or a monkey oblivious to that side of the business).

HellFireClub

opinion guy wrote: »

You make it sounds like somebody else owed him 19.5m - that's money he is owed by his own business if I'm reading the article correctly

If he personally lends his company 19 mil, do you not think he is entitled to get it back out again, as a guy investing in his own company?

I know loads of guys, some good friends of mine, who are plugging holes in their small businesses by lending the company money, as nobody else will lend them money to keep the doors open. Some of these companies are close to failure, I think there is a story to be told about people who are running small business operations at the moment, they really are the hero's of our economy I think and many will be having their arses handed back to them on a platter before all this is over.

The losses at Bill Cullen, I personally think, are so great that if he has personally guaranteed any of the loans, he could be up shít creak altogether. Maybe he didn't give personal guarantees, I don't know, he's a wise man if he didn't. I imagine he personally owns some of the properties, like Airside & Liffey Valley, so if that's the case, these are out of reach of the receiver, once of course he hasn't personally guaranteed the 12 mil loan.

sumo12

RoverJames wrote: »

You think I'm a troll yet you're the freshly signed up rubbish poster

We all know that there's quite a profit margin in service depts, your €25k, €24.5K example above is moron figures.

If you're so smart lash up a realistic turnover / profit figure from a service dept which you should be able to do unless you are a troll yourself (or a monkey oblivious to that side of the business).

Mods, do I seriously have to put up with this abuse?

seamus

Dr. Bill has his fingers in a few other pies, he'll be fine. Probably has five or ten million squirrelled away somewhere.
No doubt he'll do a Ben Dunne on it and start branching out.

I imagine Ulster Bank are turning the screws in general because they're not subject to the bank guarantee and so can tell politicians to go fnck themselves. The other main banks would have a lot of political pressure to avoid closing down businesses and less pressure to maintain financial targets since losses are being propped up by the state anyway.

HellFireClub

keithob wrote: »

sounds like another company that was borrowed up to its eyes and the banks turned the screw.....

very sad all the job losses..

credit were its due to bill self made man and employed a lot of people over the years..

Personally I think he should have spent more time focusing on his core business and stayed away from The Apprentice. Sadly, the motor industry seems to be the natural home of people with big massive ego's who get involved in all sorts of nonsense & bullshít that can distract from their core business operations. All those he fired, I imagine now are having the last laugh at him.

pom pom snaz peeler

Cullen is a pratt and wont be short a few quid but i do feel sorry for the staff.

ThisRegard

seamus wrote: »

Dr. Bill has his fingers in a few other pies, he'll be fine. .

I don't think he's in good financial state with his hotel, Muckross Park, either. Last year it had accumulated around €10 million in losses and was using loans to keep going, some of which were from himself.

The loans he gave to the hotel would probably be in the pot mentioned of the money owed to him

handlemaster

HellFireClub wrote: »

Personally I think he should have spent more time focusing on his core business and stayed away from The Apprentice. Sadly, the motor industry seems to be the natural home of people with big massive ego's who get involved in all sorts of nonsense & bullshít that can distract from their core business operations. All those he fired, I imagine now are having the last laugh at him.

was that not how he made his money. Did he not sell the distribution rights for Renault in Ireland back to Renault and just kept the garages. I don't think the hotel in kerry has been going good for the last few years either.

Drummerboy08

RoverJames wrote: »

You think I'm a troll yet you're the freshly signed up rubbish poster

We all know that there's quite a profit margin in service depts, your €25k, €24.5K example above is moron figures.

If you're so smart lash up a realistic turnover / profit figure from a service dept which you should be able to do unless you are a troll yourself (or a monkey oblivious to that side of the business).

To be fair, the figures thrown around are not a million miles away for the average service department in a one franchise dealer.

I'm not sure why you seem to think there is a large profit margin coming from the service department.

HellFireClub

seamus wrote: »

Dr. Bill has his fingers in a few other pies, he'll be fine. Probably has five or ten million squirrelled away somewhere.
No doubt he'll do a Ben Dunne on it and start branching out.

I imagine Ulster Bank are turning the screws in general because they're not subject to the bank guarantee and so can tell politicians to go fnck themselves. The other main banks would have a lot of political pressure to avoid closing down businesses and less pressure to maintain financial targets since losses are being propped up by the state anyway.

Well you'd have to wonder, are the other business interests leveraged up to the hilt in terms of borrowings, the hotel industry, that he has an interest in down in Killarney in Muckross House, is also taking an absolute pounding. Same problem there across the industry, loadings are not sustainable, margins are down, then you have NAMA hotels competing against you, being artificially kept open when they are actually insolvent.

I don't know enough about his business portfolio to know where he is exposed, the writing has been on the wall though in terms of his interests in the motor industry for quite some time.

HellFireClub

RoverJames wrote: »

You think I'm a troll yet you're the freshly signed up rubbish poster

We all know that there's quite a profit margin in service depts, your €25k, €24.5K example above is moron figures.

If you're so smart lash up a realistic turnover / profit figure from a service dept which you should be able to do unless you are a troll yourself (or a monkey oblivious to that side of the business).

I've clients who are main dealerships, and they are letting customers supply their own parts and just charging them labour, just to get work in the door! They are clearly not running with this when they are fully loaded and can take in work on their own terms. Main dealer service departments are not busy, they have lads on 3 day weeks a lot of them, it isn't the profitable operation at the moment that you have it down for.

Drummerboy08

Drummerboy08 wrote: »

To be fair, the figures thrown around are not a million miles away for the average service department in a one franchise dealer.

I'm not sure why you seem to think there is a large profit margin coming from the service department.

€500 profit before paying any loans on €25k turnover from a service dept in not a million miles away....

seamus

HellFireClub wrote: »

Well you'd have to wonder, are the other business interests leveraged up to the hilt in terms of borrowings, the hotel industry, that he has an interest in down in Killarney in Muckross House, is also taking an absolute pounding. Same problem there across the industry, loadings are not sustainable, margins are down, then you have NAMA hotels competing against you, being artificially kept open when they are actually insolvent.

I don't know enough about his business portfolio to know where he is exposed, the writing has been on the wall though in terms of his interests in the motor industry for quite some time.

I don't know enough about it either, but I would assume since he is listed as a large creditor for this business, then he has the good sense not to throw all his money into these businesses and hold back enough to look after himself.
He's not on the hook for any of the debts and may even seen some money come back to him when they're sold off.

At this stage anyway he's old enough to retire and live off what is no doubt a healthy pension. I wouldn't be shedding any tears for old Bill, he's not going to see any change in his circumstances.

HellFireClub

seamus wrote: »

I don't know enough about it either, but I would assume since he is listed as a large creditor for this business, then he has the good sense not to throw all his money into these businesses and hold back enough to look after himself.
He's not on the hook for any of the debts and may even seen some money come back to him when they're sold off.

At this stage anyway he's old enough to retire and live off what is no doubt a healthy pension. I wouldn't be shedding any tears for old Bill, he's not going to see any change in his circumstances.

Well, on the otherhand, one thing I keep hearing from people in the trade is that nobody thought that things were EVER going to get as bad as they now have. Many lads, not just in motor but in other industries in the domestic/service economy, invested in the belief that what they were up against was a recession that would now be over or at least that the worst of it would be over. I think nobody would ever invest money in their own business if they thought they would never get it back, sure who would do that???

What we are seeing is really the utter destruction, by way of policy, of the domestic economy of Ireland. I know people are going to come back at me and say that nobody forced big dealerships & the personalities behind big dealerships, to buy sites at Celtic Tiger land prices and to borrow from banks that were willing to lend, to throw up million Euro glass showrooms, etc, yes that needs to be flushed out, but the race to the bottom, in terms of cash now being that tight, that people are shunning the legitimate economy in favour of the black market, no more so than where car servicing and maintenance is involved, this is what I think is criminal and is costing us thousands of jobs every month.

Dymo

I always remember this youtube clip about him talking about 'Molly-Coddled' Irish Youth and he was acting lord and commander, brandishing all the youth as lazy. Just really turned me off him then, even though I always thought he was a bit of a loud mouth who had a bit of luck and then became a major know it all and gave him the authority to educate everyone else.

Can you imagine of been in the sales meetings in his garages when sales weren't good in the last couple of months. I'm sure it would be like the Apprentice and him blaming everyone else. I hope all the hardworkers who had to endure him are looked after.

https://www.youtube.com/watch?v=EmJNL1BmukU