Dealers on the lower tier of the Ward's Dealer Business 500 may make less money ( a range of $73 million to $91 million) than the bigger guys, but they approach the business in a many of the same ways.
Despite selling a lot of cars last year, dealers at the top of the Ward's 500 list and dealers near the bottom both turned their attention toward fixed operations - a factor that will help them weather any downturns.
Also, these dealers are savvy, they know how to sell cars and they love the competitiveness of it all.
Precision Toyota is making its first appearance on the Ward's list, ranking at 493rd with $73.5 million. The Tampa, FL store is the last of a group of dealerships owned by Frank Morsani. At one time he owned more than 20 dealerships but sold all but one through the years. He kept Precision Toyota for the grandkids, according to Bob Chango, the store's general manager.
Mr. Chango has been running the store for six years. It's been a strong run for Precision, one of the oldest Toyota stores in the country.
His first task was to get the new-car department in order. They completely remodeled the store and instilled in the personnel the right attitude. "Now we're beginning to see the fruits of those new-car initiatives," explains Mr. Chango. "Many of the customers are now coming back as repeat buyers or to get their cars serviced."
Two years ago, after the used-car chain, CarMax, opened a store down the street, Precision decided to get seriously into the used-car market. "We decided to put our gloves on," says Mr. Chango. Precision has been making it a good fight, selling 1,749 used cars last year.
Mr. Chango says he's waiting for the effects of the downturn, but his store hasn't felt it yet. In April of this year, Precision's service department had almost 50% more gross profits than at the same time in 2000. Over all, the store is $4.5 million ahead of last year's pace. It's safe to assume Precision Toyota will be significantly higher on next year's Ward's 500.
If you're a dealer in California, the downturn may be a different story, says John Hine, Jr. of John Hine Pontiac/Mazda/Dodge.
In 2000 the store's biggest gains were in the fixed operations, according to the second generation dealer, although the San Diego store did increase its new car sales by almost $5 million.
The parts business was the backbone for the fixed operations, bringing in $16 million in revenue in 2000, up from $12 million in 1999. "We were able to take advantage when some dealer-ships in the area decided to give up the parts business," Mr. Hine says.
Changes to the service department helped also. The dealership added a customer follow-up person whose job is to follow up with each customer. Direct mail has been implemented. Mr. Hine adds, "We've maintained consistency in our marketing approach."
Sales are down in 2001 though, mostly because of the energy problems in California. "We've been through it before," Mr. Hine says. "We were heavily impacted by the last energy crisis and we survived."
This year the dealership has seen its utility bills increase 450%. When the rolling black outs occur - sometimes up to two hours at a time - the service department is down. Despite the challenges, the service department has increased its profit 6% over the same period in 2000. Parts are up 15% and the body shop is up 12%.
The dealership is more than holding its own. This year, the store is ranked 419th, up from 491st a year ago. It's even more impressive considering that 72% of the San Diego market is owned by the imports.
"We've been around since 1957," Mr. Hine explains. "Longevity doesn't hurt - it gives us a leg up on the competition."
Sometimes success is just a matter of grit. Sinclair Buick-GMC makes its first appearance on the Ward's 500. Total revenue of $80.6 million was good enough for 430th on the list.
David Sinclair, the owner of the St. Louis, MO dealership, attributes some of the store's success to his competitiveness. "I'm like a junk yard dog. I hate losing a sale to someone else. I'll keep a customer in the store for hours to make the sale - even if we lose money on it."
Since Mr. Sinclair became owner 20 years ago, the number of employees has doubled to its current total of 90.
The dealership generated $51 million in new car sales last year, split evenly between truck and car sales. Used vehicles accounted for $14 million. The back end operations were also fairly impressive, with the service department creating $5.2 million in revenue.
"We're not the number one Buick store in St. Louis because of our looks," says Mr. Sinclair. "We're number one because we're ready to outlast everyone."
Tampa Hondaland, one of five dealerships owned by the Scott-McCray group, debuts at 498 on the Ward's 500.
The 20 year old Honda store sold 1100 more used vehicles than new last year. “That’s intentional,” says Larry Metheny, the CFO for the Scott-Mcray Group. “We felt as a company that concentrating on the used vehicle market was the way to go.”
That’s not to say the the dealership has neglected the new car market, though. The past few years, an increase in new car sales have helped drive new revenue growth in the parts and service departments. Combined, the two departments generated more than $7 million in revenue in 2000.
Tampa Hondaland benefits from a three-pronged strategy, according to Mr. Metheny.
One strategy is in technology. “We’d like to think we’re a major player in developing Internet strategies, especially in marketing,” Mr. Metheny explains.
Another strategy includes focusing on the alternative-fuel market. Honda’s new alternative fuel vehicle, the Insight, is very popular in Tampa. Says Mr. Metheny, “We’re selling all the Insights we can get our hands on.”
Perhaps the most important strategy is Tampa Hondaland’s investment in its people. “We’ve always focused on our people because they drive our success,” according to Mr. Metheny.
The 75 employees are rewarded with generous pension and profit sharing plans, as well as with several family oriented events the dealership hosts throughout the year.