AUTO ZONE
Dealerships Post Revenue Gain Despite Slowdown in Used Car Sales
By JENNIFER BELLANTONIO
Zero-percent loans and “cash-back” incentives have helped keep Orange County auto sales humming in the past year.
The 20 largest OC dealers on this year’s Business Journal list posted a 3% gain in revenue to $3.2 billion for the 12 months ended June 30. The overall U.S. auto industry reported a 2% decline in sales this year through August.
The list ranks dealers by sales, which includes cars, trucks, sport utility vehicles, as well as revenue from service and parts. The Business Journal made estimates for two dealers,No. 7 Ken Grody Ford in Buena Park and No. 13 Toyota of Garden Grove,which declined to disclose figures.
Revenue from the sale of new and used autos grew 3% to $2.6 billion, factoring out the estimates. The average price for an auto increased 4% to $29,854.
But OC dealers couldn’t completely shake signs of a tight economy.
Used car sales volume was down 3% to 27,129 versus a flat showing last year and a 7% gain in 2000. (Again, numbers for the dealer estimates were factored out.)
The number of new car sales was slightly stronger, posting a 1% rise to 58,319. Sales volume for OC dealerships was in line with last year’s 1% gain.
Although most OC dealers are optimistic about the rest of the year, the national economic picture still is cloudy.
In August, total U.S. vehicle sales were down 1% to 1.6 million. Sales for the big three automakers,General Motors Corp., Ford Motor Corp. and DaimlerChrysler AG,were off 6%.
German imports dominated the top of the list with the leading three dealerships selling Mercedes-Benz.
Fletcher Jones Motorcars in Newport Beach, which has taken the No. 1 spot for six consecutive years, posted a gain of 8% in sales to $480.6 million.
Fletcher Jones’ General Manager Garth Blumenthal said the jump was mainly driven by new car sales volume, which rose 8% to 5,357 for the period.
He said buyers were lured by the dealer’s selection.
“The fact that interest rates are low has also helped,” he said.
Like other dealers, Fletcher Jones saw an uptick in car buyers at the end of September, as people looked to avoid paying higher vehicle license fees, which kicked in Oct. 1. (Fletcher Jones ran ads to lure buyers.)
But Blumenthal said Fletcher Jones won’t need the extra kick in the near term.
“The luxury car business looks extremely good for the rest of the year,” he said.
Fletcher Jones made some operational improvements to help propel momentum, including putting sales staff through customer service training, Blumenthal said.
Mercedes-Benz of Laguna Niguel moved up to the No. 2 spot, bumping rival House of Imports in Buena Park to No. 3.
The Laguna Niguel dealer saw sales jump 5% to $275.5 million, fueled mainly by new car sales, which were up 7% to 3,301.
General Manager Pat Bolter said parts and service revenue also contributed to the gains.
“We had steady growth this year and we anticipate that growth to continue,” Bolter said.
The dealer is building 20 additional service stalls and expanding its plaza to sell used cars. Bolter said he expects those used car sales to be strong in the next few years.
No. 3 House of Imports reported a 9% drop in sales to $261.4 million. The dealer’s new and used car sales fell 18% to $206.7 million, with used car sales taking the biggest hit. They were off 51% to 1,199.
House of Imports is part of Fort Lauderdale, Fla.-based AutoNation Inc. Another AutoNation holding on the list is No. 6 Irvine Imports.
“It’s a challenging environment out there,” said Marc Cannon, vice president of communications for AutoNation. “The manufacturers have done a great job with incentives to keep the car market stimulated.” Cannon said the used car market seems to be improving.
Crevier BMW moved up three slots to No. 4, bumping Toyota of Orange to No. 5.
Crevier posted a 32% jump in sales to $215.2 million, driven by used and new car sales, which rose 42% and 29%, respectively. The dealer nearly doubled its sales staff to 35 workers to keep up with its sales growth.
No. 5 Toyota of Orange reported a 2% gain in sales to $194.2 million. The dealer is the biggest among Orange-based David Wilson Auto Group’s OC holdings. Wilson has three other dealerships on the list: No. 9 Tustin Lexus, No. 18 Toyota of Huntington Beach and No. 20 Ford of Orange.
In all, there were five dealers that reported double-digit gains, including Crevier BMV, Irvine Imports, Tustin Lexus, No. 15 Sterling BMW and No. 17 Allen Cadillac GMC. The latter two were newcomers to the list, as was No. 8 Family Automotive Group in San Juan Capistrano.
Five other dealers posted single-digit gains while eight reported losses.
No. 5 Toyota of Orange was again tops in number of used and new cars sold at 9,853,40 more than last year.
Three dealers dropped from the list: last year’s No. 18 Santa Margarita Ford, No. 19 Joe MacPherson Toyota, which was sold and renamed Tustin Toyota, and No. 20 South Coast Toyota, a David Wilson holding.
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