Orange County’s position at the heart of California’s car culture might be enough all by itself to draw the interest of some auto dealers.
Imperio Auto Group sees several recent developments also working in its favor as it stakes a claim here.
The company—a unit of Grupo Autofin Mexico, a Mexico City-based conglomerate with $1.2 billion in annual revenue—made its foray into Southern California last summer when it acquired Nissan of San Juan Capistrano and Kia of San Juan Capistrano from Canton, Mich.-based Victory Auto Group.
It bought another two OC dealerships in October from Noarus Auto Group in Los Angeles—Nissan of Garden Grove and Nissan of Irvine.
One immediate trend Imperio is counting on to give a boost to its operations here: an influx of drivers benefiting from a new law that took effect Jan 1.
Assembly Bill 60 enables otherwise law-abiding immigrants who are in the U.S. illegally to apply for driver licenses.
It holds the potential to affect some 300,000 OC residents—about 9% of the population—according to a report by the University of California-Irvine Community and Labor Project with the University of California-Los Angles Labor Center.
About 2.6 million people are here illegally statewide, and about 1.4 million of them are expected to apply for driver’s licenses. The average income for California households headed by an immigrant here illegally is $48,996, according to the Center for Immigration Studies in Washington, D.C.
Nontraditional Financing
Imperio has a long tradition of offering financing in ways that will likely work for Mexican immigrants in the U.S.
Grupo Autofin Executive Director Juan Antonio Hernandez Paramo said he plans to offer them a chance to use their assets in their native county as a guarantee for purchases here in OC.
“There will be new drivers, and we are willing to offer them financing,” he said. “In some cases, they do not have credit bureau history, and we need to offer them something different. We may ask them for a collateral guarantee in Mexico, and then provide them with very cheap and very easy financing to purchase a new car or a used car from our dealers.”
Grupo Autofin is in the process of establishing CrediMex in Garden Grove as its U.S. financing arm, set to start offering auto loans “no later than the end of the first quarter,” according to Rabindranath Godfrey, the company’s country manager for the U.S.
Investment, Debt
Grupo Autofin is investing “more than $8 million” in the effort and plans to “take on some debt, as well, from … American financial institutions,” Hernandez Paramo said. “We are going to succeed in performing a business in which we are very successful in Mexico. Here, we have different kind of practices and challenges that we need to fix.”
Those include updating the image of the dealerships his company just bought and building “a very strong team that works on behalf of our customers’ needs and preferences,” he said.
Imperio spent about $20 million for each of its four dealerships here, securing operations and inventory while the land and facilities remain with the previous owners. It now runs three out of eight Nissan stores in the county, where it saw a “very large market opportunity for [the brand based on] its current performance,” Hernandez Paramo said.
Toyota has 11 dealerships here, Ford has 11, and Honda—Nissan’s close competitor on the national front—has 10 stores. Nissan had about 6% of the local auto market, with about 9,700 new vehicles sold to OC shoppers last year. It garnered about a 7.5% share for all of Southern California and 7.8% nationally, with 1.38 million total vehicles sold last year.
“Compared to the nationwide penetration, Orange County is below that number, so we figured out that there is a huge opportunity for [Nissan],” Hernandez Paramo said. “In Mexico, we are No. 1 as a brand with more than 26% of market share, and I really want to commit ourselves as a team [to increase] the market share that we have here.”
Hernandez Paramo’s father, Juan Antonio Hernandez Venegas, founded Grupo Autofin Mexico in 1978. The company owns 45 dealerships south of the border, including eight Nissan franchises. It also manufactures its own brand of buses and motorcycles, operates gas stations, and offers auto and real estate financing and rental car services.
Brand Loyalty
The company is counting on brand loyalty from Mexico to carry over and help spur sales here.
“One in four cars sold in Mexico today is a Nissan. Why not do the same here in Southern California?” Leon Dorssers, Nissan North America Inc.’s vice president of dealer network development, said during a grand opening ceremony at Imperio Nissan in Irvine last month. “The basics are the same—we have (a) similar product lineup in Mexico as we have in the U.S. We have the manufacturing operations in the U.S., and we have manufacturing operations in Mexico. We have a group organization for North America out of Nashville, Tennessee, which is taking care of both markets, so we can do (the) same over here. Our plan for (the) U.S. is to reach 10% of market share.”
Sam Klein, executive manager at the Irvine dealership, is on board with the new objectives.
“They have a way of doing business that they feel is not being done in the United States, with the level of service, the level of transparency, and giving the customer a great experience,” Klein said. “I totally get their vision.”
