Don Luke attributes his Arizona dealership’s recent growth to used cars and his management team’s powers of persuasion.
“They convinced me once again to invest more money in flooring and more money in the used-car operation by stocking more,” says the president of Bill Luke Chrysler-Jeep-Dodge-Ram, No.30 with $210.7 million total revenue on the 2015 WardsAuto Dealer 500.
Like most investments, it wasn’t a sure bet. But it paid off
“You’re talking about gambling a couple million dollars that they’re right, and they certainly proved they were right,” Luke tells WardsAuto.
“When the market was down we bought $1.5 million to $2 million of used inventory over and above our original plan,” he says. “We were averaging 375 used cars per month in 2014 (for a total of 4,468).” A recent monthly target was 550 used units for the dealership.
Last year, the store sold 7,237 vehicles of which 4,468 were used units.
Luke’s volume used-car strategy is based on aggressive pricing. “There’s not a tremendous amount of gross profit per transaction,” he says. “You make a little on a lot and it turns into a lot of money.”
One of the dealership’s most effective marketing tools is Bill Luke Bass Day, which has been held for 17 years on Lake Pleasant, just north of Phoenix.
The free event typically attracts some 4,000 participants for fishing, camping, concerts, a carnival and a Ram truck ride and drive. Sponsors underwrite the estimated $85,000 cost, so there’s little impact on Luke’s budget.
A favorite of Luke’s is the Cornhole competition, where contestants try to throw a beanbag through a grapefruit-size hole 33 feet away.
It draws a relatively young crowd of people age 25 to 35. “That’s the sweetest demographic you’d ever want to see,” Luke says, noting the growing influence of Millennial car consumers. “You couldn’t get a better demographic to show your product to.”
If Luke could sit down across from FCA CEO Sergio Marchionne, he says he would ask him to slow production down a bit to raise quality a little.
“With the maximum production they’re doing – they’re building every single truck, car, and Jeep they can build – the tools are getting a little dull and we are moving too fast,” he says. “We’re seeing some little things we shouldn’t see. We had a truck come in and the paint wasn’t that good. It worries me. If we slowed down a little, we could raise our quality even more.”
Luke is bullish on the future and hopes to expand from his 17-acre (7 ha) location that often lacks adequate customer parking. The key is to keep U.S. sales rolling.
“If the market can stay around 16 million I think we have three good, solid years in the future,” he says. “If the industry goes to 17 million, we’ll have a drop-off because we will have filled the market with cars.”
Arizona was one of the hardest hit states during the recent recession. But Luke says “Arizona’s back on track.”