UAG dealership's track record is formidable INDIANAPOLIS - To grow branches on your tree or, as they say at consolidator headquarters, "spokes on your hub," is one of the toughest decisions for long-time single-point dealers.
For every established dealer who is successful and secure in one store seeing volume and profits multiply, there are others that have added stores as fast as they can.
"Brand extension," it's called in business schools.
Hang a well-recognized name on a chain of dealerships and spread the brand you have become across the market, the state - even the country.
One dealership in this prosperous Indiana capital that has thrived for three decades in a single location - until this year - is Dan Young Chevrolet-Honda-Isuzu.
An institution on the busy E. 96th street auto row in northeast Indianapolis, Mr. Young has typified the kind of operator who prefers to nurture the home orchard. That stay-at-home formula has worked remarkably well, as Young Chevrolet-Honda-Isuzu wound up 16th on the Ward's Dealer Business Top 500 for 1999 with a record $206.9 million in gross revenues.
As the highest-ranked member of the UnitedAuto Group on the 500, the Young dealership's track record is formidable. It is a dominant force in the central Indiana market, having boosted its total income 9.6% from 1998 in a 20th place finish on the 500.
But consolidators like to create platforms - and the management team of UAG Chairman and CEO Roger S. Penske found an opportunity to do so with the Dan Young name this past summer, right on 96th Street.
"They bought the Dellen Oldsmobile and Lincoln Mercury dealerships right near us and renamed them after my dad, Dan Young," says the company's vice president, Alan V. Young. "I guess after nearly 30 years at this one location, it was time to spread our wings.
"Roger Penske's name is on a lot of dealerships. He started out as a Chevrolet dealer himself (in South-field, MI), so he knows the value of a brand name. But it will take getting used to - `Dan Young Olds' and `Dan Young LincolnMercury.'"
The change became more attractive for the Youngs, including Alan's brother, William, when UAG sold off a Chevrolet store in Bloomington, IN, and reassigned its general manager, Jeff Boyd, to oversee the newly acquired points in Indianapolis. Mr. Boyd formerly worked at Young and, says Bill Young, "he knows our management style inside out."
That management style was crafted by Dan Young, 71, when he purchased an American Motors store in his native Indianapolis in 1962. It sharply divides variable from fixed operations, with Al, 51, in charge of vehicle sales and F&I, while Bill, 49, tends to service, parts and body shop.
"This year is merely holding steady in vehicle sales with 1999," Al tells Ward's Dealer Business, "which means emphasis on the fixed side. Our parts sales, which reach garages throughout Indiana, are up from the $18.1 million we earned last year and we're promoting service and body shop more. That's in line with UAG's strong belief in higher fixed absorption rates and customer satisfaction ratings."
In the parts area, says Bill, 60% of the volume reflects wholesale deliveries - a number that could increase if Olds and LM parts are added to the loads carried by Young's 13 delivery vehicles.
A key piece of the sales equation at Dan Young is Honda, which gave its first Indiana franchise to Young in the early 1970s. Honda shared the showroom space with Chevrolet until 1983, when it got a separate building.
In 1999, not unlike the trend that has swept many GM dealers dualled with Honda, the entry from Japan outsold Chevrolet in new cars at Young last year, 1,701 to 1,566.
"We more than offset the Chevy car dip with sales of 2,194 Chevrolet trucks, plus 214 Isuzu trucks," says Al Young, "But Chevy is still strong in the Midwest and particularly in Indiana, with all the GM plants here."