Sales Rose 15% in ’99; Fletcher Jones Still No. 1
Boosted by a rising preference for new and pricier cars among enthusiastic consumers, the 15 largest Orange County auto dealerships broke the $2 billion aggregate sales mark for the first time last year, growing their total 15% from 1998, according to the Business Journal’s annual list.
The 1999 sales growth among the large OC lots was three times the national growth rate for auto dealers, and more than double the state average of 6.2%. It was the seventh consecutive year of increased sales for OC’s largest dealerships.
The number of new cars sold by the dealerships on the list was up 14% to 48,316 vehicles, and used-car unit sales grew 4% to 24,149 vehicles. The bigger increase in sales of pricier new cars boosted the average sales price nearly $1,000 from last year, to $24,569. Parts and service revenue pushed the total to $2.01 billion at the 15 dealerships.
The increasing buyer preference for new cars reflects “marketing incentives available for new vehicles, such as special finance rates and rebates that make a new car easier to buy than a used car,” said Butch Kady, general manager of No. 3 Villa Ford.
Also, “people here are buying more expensive stuff,” said Jim Hossack, vice president and senior consultant at Santa Ana-based Auto Pacific Inc.
Indeed, the average vehicle selling price at No. 1 Fletcher Jones Motorcars, a Mercedes dealer, rose more than $3,000, to $54,364; at No. 2 House of Imports, also a Mercedes dealer, the average price was up more than $2,600, to $45,912.
Among OC new-vehicle buyers, consumer confidence remains high this year despite rising interest rates and gas prices, Hossack added.
Topping the list for the third consecutive year, Newport Beach-based Fletcher Jones posted 1999 sales of $290.2 million, up 24% year-over-year. The Mercedes-Benz dealership, which also ranks No. 1 nationally for that brand, grew its new-car sales by 19% last year to 3,507 vehicles, with sales of used cars up 14% to 1,099 vehicles.
And Fletcher has finally won across-the-board bragging rights over House of Imports in Buena Park, selling more Mercedes cars overall and more new Mercedeses than OC’s prior No. 1 dealership in those categories.
Meanwhile, House of Imports,owned by AutoNation USA Inc., formerly Republic Industries Inc.,posted 1999 sales of $220.9 million. Plans this year are to invest $2 million to upgrade the store’s body shop facilities.
Big Gains
No. 3 this year and last, Toyota of Orange grew sales 7% to $173 million with a 12% gain in new-car sales to 5,719 vehicles more than offsetting a 5% drop in used-car sales to 4,084 vehicles. Nationally, Toyota dealerships averaged a 3.6% gain in new cars sold. The 28-year-old dealership is the top performer of seven dealerships for David Wilson Automotive Group.
No. 4 Ken Grody Ford in Buena Park reported sales up 4% to $141.9 million, new car sales were down 4% to 4,884 vehicles and used car sales were up 8% to 2,796 vehicles with overall unit sales down 9 pieces from the previous year.
Villa Ford ranked No. 5 again this year with total sales up 8% to $135.3 million compared with the national average gain among Ford dealerships of 2.9%. The company’s new-car sales were up 10%, but used-car sales were down 10% to 1,947 units. The company expects slower growth this year, but its Internet sales leads have grown to approximately 50 vehicles a month.
The 30-year-old Orange dealership is undergoing a $3 million renovation and consolidating its current four buildings into one new 35,000-square-foot facility that is expected to open early next year, Kady said. The new structure adds about 11,000 square feet.
The top three dealers in terms of volume of cars sold are Toyota of Orange with 9,803 units, Ken Grody Ford with 7,471 units and Villa Ford with 6,556 units.
Strong Debut
Ford of Orange made its debut on the list at No. 11 and was the biggest mover on the list. Sales grew 54% to $103.3 million and 5,046 cars sold. New-car sales were up 62% to 3,234 vehicles, used cars were up 47% to 1,812 sold and the lot’s average sale price grew from $18, 230 to $29,013. The store added 11 sales people for a total of 33. The sales boost was a result of the store’s February 1999 move from a 30,000-square-foot operation on 2 acres into a new $13 million store with 100,000 square feet on 8 acres at Main Street and Katella Avenue near the Arrowhead Pond of Anaheim.
David Wilson Automotive Group, which owns Ford of Orange and Toyota of Orange, now operates dealerships in California and Arizona with sales of $700 million and 784 employees including 460 in Orange County. Projected 2000 sales are $870 million, Wilson said.
Another newcomer is No. 15, Santa Margarita Ford in Rancho Santa Margarita with $77.9 million in sales, up 21% from 1998. The three-year-old dealership, owned by Jim Graham, plans to break ground next month on a $500,000 to $1 million renovation that includes building more parking spaces, display area and 4,500 square feet of new offices to accommodate its growing staff of 140.
“Many of our employees are sitting on each other’s laps,” Graham joked. The renovations are expected to be complete by the end of the year.
Dropping off the list is last year’s No. 11 Joe MacPherson Ford in Tustin and No. 13 Joe MacPherson Chevrolet in Irvine with 1999 sales of $47.8 million and $56.9 million respectively, compared to estimated 1998 sales of $91 million and $85 million. The two dealerships were sold to AutoNation Inc.
No. 13 Toyota of Garden Grove was the only dealership to show a drop in revenue. Sales were down 2% overall to $98.3 million and the number of cars sold dropped by 290 units, to 4,391. The dealership’s unit sales of new cars were up 3% to 2,662 vehicles, but used-car unit sales were down 17%, to 1,729 vehicles. Ray Daniels, general manager at Toyota of Garden Grove, said the dealership held more than 20 outside tent sales in 1998, but last year it cut back to just a handful.
But overall, the top 15 dealerships in the county performed considerably stronger than the estimated 6.2% growth for all of OC’s dealers in 1999, reported by Esmail Adibi, director of the Anderson Center for Economic Research at Chapman University.
The total 1999 countywide new car sales were about $4.8 billion for all motor vehicle sales and $3.4 billion for new car sales. For 2000, Adibi estimates that overall sales at countywide dealerships will continue to grow at a slower 3.5% pace.
The stores on the list range in 1999 sales from $78 million to $290 million, whereas the state’s average was about $35 million last year, according to the most recent data compiled by the National Automotive Dealers Association. Typically, about 60% of revenue is derived from new-car sales, 28% from used-car sales and 12% from parts and service.
