13 dealerships and 7,000 units (cars and trucks) sold by year end. This was possible despite a major strike by GM workers for 54 days which shut down production around the country. Had the dealerships been combined the previous year, they would have had $114.86 million in sales (based upon their be 100s sales), for a 60.2% increase. By press time the new company had bought or started another five franchises under its joint umbrella, bringing its current total to 18 dealerships in six states (Connecticut, Florida, Georgia, Maryland, Massachusetts and Tennessee) with projected 1999 sales of $312 million on almost 12,000 units. The March/Hodge goal is to own 30 stores (franchises) that will generate $1 billion in sales within five years. "That’s their goal, their dream. They want to be very successful and they’re doing just that," adds Peterson.
Because of its approach to competing in the shifting auto retail industry, using economies of scale, a consolidated management philosophy to define its structure, and strong sales and acquisition success, March/Hodge Holding Co. has been recognized as the be Auto Dealer of the Year.
COMPETING IN A CONSOLIDATING INDUSTRY
There’s a new way to do business in the automotive industry these days; it’s called consolidation. Not since the late 1980s has the auto industry enjoyed this level of sales success. The Big Three — GM, Ford and DaimlerChrysler — have had the longest sustained period of growth in their history, no doubt due to the increased popularity of sport utility vehicles, multi-car families and a robust economy. As manufacturers look to increase their profit margins and diversify their product mix at the lowest possible costs, they too have set their sights on acquisition and consolidation. The Big Three’s strategy: acquire their foreign counterparts and reduce expenses through consolidation of nonproduction operations.
At the same time, auto manufacturers are consolidating the number of dealer franchises, so that profit margins will improve at the wholesale and retail level. This has triggered a great deal of interest and attraction in owning superstore retail franchises — multiple car brands from different manufacturers sold in one location — — by large publicly traded companies. Companies like CarMax, which is owned by Circuit City, the appliance retailer, and AutoNation USA (formerly known as Republic Industries), are the new behemoths.
With thinner profit margins, increased competition from fewer owners with multiple stores and manufacturers wanting fewer dealers with larger territories — the landscape of the auto business is changing at warp speed. To survive and thrive, most dealers are looking for ways to get bigger by selling more brands, acquiring more dealerships (and dealerships specializing in a particular niche or brand), spreading locations or a combination thereof.
"The day of single line dealerships cannot continue to exist in this market," says March. "I remember looking at Ernie and saying ‘why can’t we do this?’ That’s the moment that the lightbulb went on," he explains. "The second half of the round was spent