He Just Bought A $170M Home
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GM! It's Friday, May 5th - Today we're uncovering the story behind an entrepreneur who just bought a $170M mansion in Palm Beach, as well as a unique Mark Cuban backed gaming company.
He Just Bought A $170M Home
Michael Cantanucci just paid $170M for a mansion in Palm Beach, setting the record for the highest-priced home sale on the upscale island.
So, how can Cantanucci afford to spend that much on a single house?
What’s the Business?
Cantanucci owns New Country Motor Car Group, one of the largest independent car dealerships in the country. They specialize in luxury cars and sell in 5 states along the East Coast at 26 different locations.
Despite the wild success of his luxury car dealership chain, Michael Cantanucci prefers a private lifestyle and rarely takes requests for comments from reporters.
So, let’s dive into the economics of luxury car dealerships and figure out how Cantanucci can afford crazy real estate deals like his $38M NYC condo and $170M Palm Beach mansion.
Why Luxury Car Dealerships are Cash Cows
The average dealership today, including real estate and assets, is valued at around $40 million. Mid-sized groups reach hundreds of millions, while large groups like Lithia generate a staggering $30 billion across 282 dealerships.
During COVID, car dealerships saw a significant increase in average earnings per public dealership - check it out here
Luxury car dealerships have higher overhead costs compared to standard ones, as they need to offer premium experiences with upscale facilities, expert sales staff, and added amenities.
Despite these costs, catering to luxury car consumers is well worth it, as it grants access to a profitable demographic.
Yes, luxury cars obviously sell for more than standard vehicles, but this is compounded by the fact that the luxury car buyers are much more likely to overspend for access to premium brands, features, and exclusivity. The average car markup is around 3-8%, while in-demand luxury vehicles like BMW and Porsche sell for 15-20% above wholesale price.
Financing and Leasing
While you may think that luxury car sales involve rich people with bags of cash buying cars outright, this is the case only 8.5% of the time.
In actuality, 31% of luxury car owners lease and 60.4% take out a loan with an average payment of $2,200 a month across an average term of 56 months.
Dealerships partner with banks and make money off car financing through what’s called a finance reserve– an extra 1-3% tacked onto the interest rate that goes straight to the dealership.
Service and Maintenance
The average car dealership makes 49.6% of their gross profits from their service and parts department, and the profits are even higher for luxury dealerships. Luxury car owners are willing to pay for more frequent high-quality service appointments. Plus, part replacements for high-end vehicles are hard to find and cost more, leading to higher net profits.
Michael Cantanucci was able to amass an enormous fortune by finding a lucrative business model and mastering it. Not every business needs to be a high-scale, venture-backed, billion-dollar company.
In turns out, one of the best paths to wealth could be mastering a local business and repeating it across 26+ locations.
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