Longo Toyota on the San Bernadino Freeway in the Los Angeles suburb of El Monte has been among the nation's leading dealerships since it moved to that location 13 years ago. What better way to celebrate being atop the Ward's Dealer Business 500 than spending $10 million over the next two years to revamp the entire facility.
“Hopefully in a year or so we'll re-launch a new Longo,” says Greg Penske, president of Longo Toyota, the flagship of the five-store Penske Automotive Group. “We're redoing our whole facility. We just redid our service department. We're redoing the showroom. We've got about 14 different phases of what we're doing.”
In 2000, Longo's revenues totaled $487.1 million, which put it at the summit of the Ward's 500 list. Expect that number to grow as the renovations continue.
“The key was we wanted to update it to where it should be today,” says Mr. Penske, son of the renowned businessman, dealership entrepreneur and auto racer Roger Penske. “We opened Longo here on January 4, 1988, and it lasted until 2001. Now I think we have to continue to build up. It's a credit to the people who helped design it.”
The Penske team's vision of the new Longo includes a service department in which the waiting lounge has a Starbucks coffee shop and an airport-like convenience shop. As in other dealerships, “guests,” as Mr. Penske refers to his customers, will have work areas with Internet access and interactive computer kiosks with games for guests of any age.
“We've got a new Longo pit-stop area with the team in racing uniforms, which was a great idea from one of our techs,” notes Mr. Penske who adds that oil changes are done in under 29 minutes or they're free.
These improvements should allow Longo Toyota to improve on its 2000 service department revenue of $14.6 million.
Longo already is improving on last year's 3,992 used-unit sales of $55.6 million with an addition of five acres, which gives the dealership the capacity to handle up to 500 used vehicles per month.
“We continue to see an upward curve of growth with the parts, service and body shop businesses, so that's what we're gearing up for,” says Mr. Penske.
“We continue to see an upward curve of growth with the parts, service and body shop businesses, so that's what we're gearing up for.”
He adds that in the future as manufacturers move closer to a build-to-order or locate-to-order system, dealers won't need as much space for on-hand inventory. So, he's using some of his lot space to expand the back shop.
Longo expects to improve on last year's $11.4 million in parts and accessories sales by revamping its retail parts center. It will be patterned after stores like Restoration Hardware and other retail outlets.
By tripling the square footage of his body shop, and implementing a new process that Toyota helped develop to get vehicles in and out faster, Mr. Penske says body shop revenue should improve over the $10.5 million the dealership reported for 2000.
Longo also will have a AAA insurance center on site. While this alone isn't likely to improve the store's 2000 F&I income of $14.2 million, it will provide convenience for customers, which could lead to more sales and more loans, service contracts and the like.
Longo Toyota's true forte is in new-vehicle sales. The dealership delivered a total of 18,172 new units in 2000 - 14,333 cars and 3,839 trucks. Even more amazing is that 73 Toyota dealerships are in the LA market.
After its renovation, Mr. Penske hints that the new Longo showroom may have a bit of a Disney Store feel. It'll also be technologically advanced. Each salesperson will have a Palm Pilot with which they can access pricing and specifications of not only Toyota vehicles but of the competition as well.
He says 8%-10% of business comes from the Internet, so it's important that the sales staff has access to the same information as customers.
Another initiative Longo uses to attract and keep customers is a business development center. Its staffers call customers starting more than a year before leases and loans are at the end of their terms.
Collectively, Longo personnel speak more than 30 languages, which attracts many citizens in multi-ethnic Los Angeles to the dealership.
Says Mr. Penske, “We've focused on some niche markets with the different demographic makeup of our base market in Los Angeles. Those people like to do business in their native tongue, so it was important that we cover it.
“We've got good product and good people and I think that's a big part of our success. We're always trying new ideas and new things. The best thing is the competition is getting tougher. Manufacturers are requiring dealers to have better facilities, requiring better training for employees. That's going to continue to make our job even tougher to hold this spot.
“Tom Rundai, my general manager, and the rest of the team here have done a great job,” he says. “I think we block and tackle very well. We look at ourselves kind of like a football team where everyday you go out and play. We do the fundamentals well.”
Emerging from father's shadow not difficult for Greg Penske
“You can either take advantage of that name and perform or you can go the other direction,” says Greg Penske, president of Longo Toyota, on the benefits and pitfalls of being the son of Roger Penske.
“I think there have been a lot of positives,” he says. “Learning under a guy like Roger, watching the morals and the ethics and the work ethic that he has. He's a great person to learn under. I hope the results of what I've been able to do speak for themselves.”
During his years as a Cornell University student, Mr. Penske worked at a Chevrolet store and a Cadillac-Oldsmobile point, both in Pennsylvania. He attended the general manager school at the former General Motors Institute and bought a Cadillac store in Bakersfield, CA, becoming the youngest GM dealer ever at age 22.
“I had a good team up there and was asked to move down to Longo in 1987,” recalls Mr. Penske. “I came down as general sales manager, opened the Lexus store and took over the Auto Group in 1993.
In the meantime, Mr. Penske served as president of Penske Motorsports, which operated several race tracks around the country. That company merged with International Speedway Corp. and he still oversees ISC's Western region.
“I can't watch every transaction,” says Mr. Penske of his multiple roles in his father's enterprise. “I can't be every place all the time. That relates back to the great people that we have working for our team, company-wide. Our most important asset is people and we've got to continue to build them.”
— Tim Keenan
Customer service drives the best of the best
By Tim Keenan
The overriding similarity among the top 10 dealerships in the Ward's Dealer Business 500 is their commitment to customer service.
No. 1, Longo Toyota of El Monte, CA, refers to its customers as “guests” and is re-doing its entire dealership with an eye on making it more guest-friendly.
No. 3 Galpin Ford in metro Los Angeles, re-examined its service department to improve CSI in that area.
No. 4 Fletcher Jones Motorcars in Newport Beach, CA, will expand its service department during the next 12 months in an attempt to satisfy more customers.
Jerome Duncan Ford of Sterling Heights, MI, leapt from No. 23 last year to the 10th position based on a renewed commitment to customer service.
“We've done a big job with two-year leasing and a phenomenal job on customer service,” says Paul Shamo, general sales manager at Jerome Duncan Ford, which is owned by Gail Duncan. “That word of mouth gets around, especial around the three nearby Ford plants.
“It's a combination of doing a lot of the right things,” Mr. Shamo continues. “It's hard work.” But the hard work paid off as Duncan Ford brought in $274 million on total unit sales of 11,668. The store became one of the first in the country to achieve Blue Oval certification.
“Customer loyalty is the most important thing,” he adds. “Our lease renewal percentage is in the mid 70s, which is way above average.”
Longo Toyota gained the top spot in the 2001 Ward's 500 with its guest-friendly attitude and catering to the various ethnic groups of Los Angeles. Longo's $487.1 million total revenues are based on a single Toyota franchise. Longo topped the multi-franchise Ricart dealership in Columbus, OH, last year's No. 1, this year's No. 2. Ford is Ricart's lead franchise.
Ricart Ford, owned by Rhett and Fred Ricart with total sales of $441.4 million on total unit sales of 25,308. New-car figures are based on the sales of Ford, Hyundai, Kia, Mazda, Mitsubishi and Nissan.
H.F. “Bert” Boeckmann II, owner of Galpin Ford of North Hills, CA — No. 3 on this year's list — realized that his service department was getting too big to effectively service his customers the way they were accustomed to being treated.
“As you get larger, you really have to focus on customer service,” says Mr. Boeckmann. “You also have to be creative. We made some adjustments from an experience standpoint.”
Among the adjustments was dividing the service department into smaller units. Customers deal with only one person when they drop the car off and pick it up.
Fletcher Jones Motorcars (Mercedes-Benz) moved up from fifth to fourth on the list, due in no small part to the $21.3 million its service department brings in.
It's open six days a week from 5 a.m.-10 p.m. General Manager Garth Blumenthal says the service department will expand to one and possibly two locations off site in the next 12 months. Mr. Blumenthal says this expansion also will make room for more retail space at the dealership.
“We're continuing to make some changes elsewhere in the dealership,” Mr. Blumenthal adds. “We weren't putting much effort into people who were calling from 60 to 100 miles away. Now we are and it's having a positive impact on our sales.”
The Fletcher Jones staff also is paying more attention to business coming from the Internet. E-mail response time is down to five minutes.
Except for January, each of the last six months has set records for the dealership.
No. 2 Ricart now focusing more on Korean entry-level car sales
After two consecutive number one rankings on the Ward's Dealer 500, Ricart Ford finds itself at number two this year.
“The Midwest has slowed down considerably since the fourth quarter of last year — especially with Ford sales,” explains Fred Ricart, owner of the Columbus, OH multi-franchise dealership.
The Firestone issue was the culprit, he says. Consequently his new truck sales were off by more than 1,000 units compared to 1999. “We tried a variety of marketing programs, but none were effective,” he says.
To compensate, he's focusing more on selling imports — specifically entry-level Korean vehicles. It's a course of action he never would have predicted five years ago.
He explains, “I see a shift. The younger market is less brand-conscious and they're more value-focused. They're less loyal to the dealer and to the brand.”
Mr. Ricart surmises the generous warranties offered by the Korean brands is a big reason for the shift. The dealership has been able to market those brands effectively with Kia & Hyundai models.
He adds, “We're just giving the people what they want.”
Penske Corp. built on success of Dominic Longo
Longo Toyota was a thriving business even before the Penske Corp. acquired it in 1985.
It was founded my Dominic Longo in 1967 and that year became the number one Toyota dealership in the country. The original location was on Garvey Ave. in El Monte. It moved to a five-acre site in 1972, but that still wasn't big enough.
When the Penske group bought the business from Mr. Longo's family after his death in 1985, it had 11 storage lots around the city, which made managing the business and the process of buying a vehicle difficult.
So, late in 1986, Longo Toyota bought a 21-acre shopping center on the San Bernadino Freeway and built the current Longo there.
In two years, following a $10 million facility-wide renovation, Longo Toyota will be poised for continued success well into the 21st century.
— Tim Keenan