Pumping The Brakes

B.E. auto dealers used cost cutting and customer service to avoid being wrecked by a tough economy

the lot too long. They lose their value,” says Matthews. “I try not to overstock, [keeping the cars] 45 to 60 days [instead of] 90 days. If you manage it well, you can still maintain the bottom line.” Matthews also runs specials to build the fixed operations (service and parts) when sales are off. “If people are not buying cars, they’re going to need service,” says Matthews, whose three Florida dealerships are Daytona Lincoln Mercury in Daytona Beach; Prestige Ford in Mt. Dora; and Advantage Ford in Stuart.

With sales down 12%, Matthews reduced inventory. “We tried to bring inventory levels down to represent the volume that we were selling,” he says. “That reduces holding costs, which is an expense, and interest that’s charged on the floor plan.” Matthews also let attrition reduce his commission-based staff. “If someone left, we looked hard at whether we should replace them.” He has cut 5% — 10% of a staff of more than 200 in three dealerships. His strategy now is to “add inventory and people only where it’s justified.”

Panhandle Automotive’s growth in sales was due in large part to the acquisition in December of a new store, Albany Ford, in Albany, Georgia. “Last year was probably the slowest I’ve had at my flagship store in 10 years,” says company CEO Leon Daggs Jr. “We were about 40% to 50% off our normal volume.”

Other major factors, says Daggs, were the economy and the increased influence of import vehicles. “The imports have been taking a much bigger bite out of our business,” he admits, adding that the import market share has steadily increased while domestic market share has steadily declined. Additionally, Daggs admits that his company was faced with several internal problems (such as long-time, experienced managers retiring) that left him focusing on “rebuilding,” particularly in his Crestview st
ore.

Used car sales were down 10% — 15% for Corley’s Automotive Group (No. 27 on the BE AUTO DEALER 100 list with $83.8 million in sales), with five different, family-run franchises in and around Albuquerque, New Mexico. But Ford’s Pre-Owned Certified Cars program helped at Corley Ford-Lincoln-Mercury in Grants, New Mexico, by certifying used vehicles with up to a 75,000-mile warranty, depending on year and make. “It has truly helped my market and my [small, rural] area,” says Ed Corley Sr., president. Corley also focuses on employee training. “The customer is our most valuable asset,” he says.

His son, Kaul, general manager at the Dodge-Chrysler-Jeep store in Gallup, New Mexico — and one of eight siblings — says some group training comes from the manufacturers. The dealership also supplies both one-on-one training and closed door meetings with 10 or 12 people, where workers are critiqued on abilities and weaknesses.

New car sales were down 6.9% for 2002, but Eddie Corley Jr., general manager of Lincoln-Mercury-Volvo in Albuquerque, New Mexico, says things have already turned around thanks to a focus on the sales process, especially consistency. “Every customer receives the same experience when they come into the dealership,” he says. At the end

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