The New Frontier

Auto dealers are rethinking the way they do business and finding new solutions to old challenges

each dealership every month, 20 to 25 of the sales come through Hubbard’s Internet departments. These departments get leads from several search engines, including Inquiries made on the General Motors or DaimlerChrysler national Websites by customers within certain Charlotte-area ZIP codes are automatically forwarded to the Internet departments of Hubbard’s Chevrolet stores or to the five-star Dodge dealership. Hubbard employs three Internet salespeople.

Hubbard sees business development centers as the new frontier, and he’s already a few years into implementing this alternative to expensive advertising. A business development center is a department within a dealership that is dedicated to the sole purpose of finding potential customers who are willing to visit the dealership and consider buying its products.

Informing Hubbard’s actions is a widely held industry belief that potential customers who have already experienced some type of interaction with a dealership are the best prospects for pitching future sales. Systematically and regularly updating prior contacts about products and incentives, business development centers target specific customers with a rifle’s precision instead of advertising’s generalized shotgun scatter. Prospecting among a dealership’s current customer base can involve an automated system alerting the center of approaching birthdays, ends of leases, and due dates for service. Vaden-Williams says that new prospects might be found, for instance, by searchin
g birth announcements in newspapers and inviting growing families to consider larger vehicles.

Although automotive manufacturers are encouraging all dealers to open business development centers, not every black dealer has done so, Vaden-Williams says. She notes that besides Hubbard, March/Hodge Holding Co. L.L.C. in Hartford, Connecticut (No. 2 on the BE AUTO DEALER 100 list with $555.5 million in sales), The Harrell Cos. in Atlanta (No. 5 on the BE AUTO DEALER 100 list with $286.5 million in sales) and Nathan Conyers operate sophisticated business development centers.

In 2003, sales were flat, but profits rose for the two Ford dealerships of Wayne Martin and his wife, Millie. In Cocoa, Florida, Paradise Ford (No. 50 on the BE AUTO DEALER 100 list with $59.3 million in sales) improved profits by $400,000 despite a $17 million revenue drop after losing its Budget Rent A Car national account’s low-margin parts sales. The couple’s Vision Lincoln-Mercury store in Alamogordo, New Mexico, performed well. It sold about the same, but they kept an eye on expenses.

“I’m not so sure [the economic environment] wasn’t favorable last year,” says Wayne Martin. “I know other dealers said it wasn’t, but I had the best year I’ve ever had in either one of my places last year.”

The Martins reduced the number of personnel, which cut payroll and employment expenses. They changed insurance carriers and reduced inventories in both new and used vehicles to reduce inventory floor plan costs. They also limited training and spent less on advertising and promotion. In 2003, Vision Ford-Lincoln-Mercury saved a total of $221,000 in comparison with 2002. The Martins sold their share to a former partner in a poorly performing Washington state store. In May 2003 the Martins’ son, Michael, and

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