Automotive News - January 14, 2008 - (Page 8) 8 • JANUARY 14, 2008 advertising WANT RESULTS? NEED RESULTS? Dealers Prove Our Advertising Gets STOP BY BOOTH #3445W AT NADA (3RD FLOOR, WEST HALL) Newspaper-only ads work for Caddy store Mary Connelly mconnelly@crain.com Fit to print Share of franchised dealerships’ ad spending that went to newspapers 1996: 52.2% Source: NADA Over the past decade, auto dealers have cut in half the share of their advertising budgets that goes to newspapers. But the nation’s biggest-volume Cadillac dealership relies solely on newspaper ads to reach its wealthy clientele. Gold Coast Cadillac-Hummer in the central New Jersey town of Oakhurst has pursued a newspaperonly ad plan for at least five years, says dealership executive officer Jack Reynolds. He concedes that in the age of the Internet, such a strategy is contrarian. “For the market we serve, the newspaper works for us,” Reynolds told Automotive News. “We are happy 2006: 27.3% with it. That doesn’t mean it is effective for everybody.” One paper dominates Reynolds declined to disclose Gold Coast’s annual ad spending. In 2007, he says, the dealership sold roughly 2,200 new Cadillacs and 1,000 new Hummers. The dealership, owned by Serra Automotive Inc., serves a traditional community of upscale profes- sionals, Reynolds says. Its market is dominated by one daily newspaper, the Asbury Park Press. The dealership runs a full-page or half-page display ad every day in the classified section of the Press, Reynolds says. It also advertises in several other newspapers. By contrast, Reynolds says, TV advertising “is not cost-productive for us, and it doesn’t target our audience well.” Richard Orloff, research manager of the Asbury Park Press, says the newspaper’s Sunday edition reaches 56 percent of adults in New Jersey’s Ocean and Monmouth counties. Its penetration rate on other days is 41 percent, he says. Reynolds says: “It is hard in other markets to find one paper that dominates the area so much.” Downward trend Across the nation, spending by franchised dealerships on newspaper ads fell 48 percent from 1996 to 2006, according to the National Automobile Dealers Association. During that period, NADA says, dealerships shifted spending to online advertising, direct mail, and radio and TV commercials. Ad spending figures are not available for 2007. But Paul Taylor, NADA’s chief economist, says, “The anecdotal evidence suggests there is no reason to suspect that the trends of the last several years have changed.” c Smart USA rolls RESULTS! out 68 sales sites • KEYES AUTO GROUP • IRA MOTOR GROUP • TOM WOOD AUTOMOTIVE • CHECKERED FLAG • AUTONATION • DIEHL MOTOR COMPANY • CORAL SPRINGS AUTOMALL • RUSTY ECK FORD • AUTOLAND • HENDRICK CARY AUTOMALL • PATRICK AUTO GROUP • HUBLER AUTOMOTIVE • PLEASANTON AUTOMALL • DEPAULA CHEVROLET • WALLACE NISSAN OF KINGSPORT • SUPERIOR CHEVROLET First ForTwos arrive this week Diana T. Kurylko dkurylko@crain.com See our Web site for a full list of Smart dealers. autonews.com GET A COMPLETE MARKETING PROGRAM! Guerrilla TV Marketing Radio Print Hispanic Direct Mail Website Optimization Web Design Internet In-Store Smart USA is opening 68 sales outlets in 31 states this month to sell the ForTwo, a tiny, two-seat car built in Europe. Smart USA, a distribution subsidiary of Penske Automotive Group, plans to open six additional sales locations by year end. The name of each store will include Smart Center and its home community. Penske executives declined to say how many ForTwos they expect to deliver in 2008. Last month, Daimler AG CEO Dieter Zetsche said more than 30,000 U.S. customers had placed orders for the car. That number exceeds Smart’s planned firstyear production for the United States, Zetsche said. Smart is a manufacturing subsidiary of Daimler. 3 trim levels Smart USA President David Schembri said the first ForTwos will arrive in showrooms this week. The cars have three trim levels at fixed prices ranging from $12,235 to $17,595, including shipping. California has the most Smart franchises — 10 initially and two more to launch later this year. There are eight Smart outlets in Florida, six in New York and five in Texas. Schembri said Smart USA picked its dealers from nearly 500 applicants. Locations were chosen based on anticipated demand, he said. Last March, Penske Automotive launched an online reservation system to assess consumer interest in the ForTwo. “It allowed us to take a close look at where our demand would come from and to focus on that area,” Schembri told Automotive News. Of the 68 initial Smart outlets, 22 are exclusive dealerships. Those stores average 3,000 square feet — enough to accommodate an annual sales volume of 500 cars, Schembri said. Of those 22 stores, 12 are owned by neither the Penske Automotive dealership group nor Mercedes-Benz dealers. An additional 14 Smart outlets have stand-alone showrooms but will share parts and service areas with Mercedes-Benz dealerships. And 32 have showroom space within Mercedes-Benz dealerships but have separate entrances and partitions that set them apart. Schembri declined to say how much Smart dealers have spent to build their stores. Last year, Penske executives estimated that showroom space shared with a Mercedes-Benz dealership would require an average dealer investment of $300,000. Nearly 500 U.S. dealers applied for a Smart franchise; the ForTwo is shown. Smart set Smart USA chose its first dealers based on Expected consumer demand in market Dealership plans Customer satisfaction ratings at current dealerships Reputation in market Enthusiasm for Smart brand cludes an exclusive dealership. Megadealer Rick Case has opened a 5,000-square-foot exclusive dealership, Smart Center Weston, in south Florida. Case says he spent $2 million on the dealership, not counting the cost of the land he already owned. ‘Cute and fun’ Case says he has orders for 400 ForTwos and expects to sell 500 Smart cars a year. He says he expects a return on sales similar to those at his Honda and Mitsubishi dealerships in Florida. Penske Automotive dictated the size, standards and design of the boutiquelike Smart dealership, Case says. The store has a five-car showroom and six service bays. Case says the dealership “is filled with pictures and colorful furniture. It is cute and fun.” c Schembri said he is confident that Smart dealers’ average annual return on sales will be at least as high as the industrywide average of about 2 percent cited by the National Automobile Dealers Association. Penske Automotive owns nine of the 74 U.S. Smart franchises. Smart USA’s headquarters in the Detroit suburb of Bloomfield Hills, Mich., in- CALL, EMAIL, OR STOP BY OUR BOOTH TO RECIEVE A ONE ON ONE VIP PRESENTATION GM invests in a cellulosic ethanol startup Leslie J. Allen lallen@crain.com 1-888-878-ZADV zauto@zadv.com www.zadv.com or visit WARRENVILLE, Ill. — General Motors is investing in an Illinois startup that’s aiming to make ethanol from wood chips and other waste products. The fuel, called cellulosic ethanol, is the Holy Grail of biofuels. The amount of GM’s investment was undisclosed. GM was expected to announce a partnership with Coskata Inc. on Sunday, Jan. 13, at the Detroit auto show. Coskata, formed in 2006 in this city 25 miles west of Chicago, aims to produce ethanol us- ing nonfood stocks for less than $1 a gallon. GM CEO Rick Wagoner hinted at GM’s investment last week while addressing the International Consumer Electronics Show in Las Vegas. Wagoner said using ethanol in all flex-fuel vehicles produced or planned by GM, Ford Motor Co. and Chrysler LLC would cut America’s gasoline use by 22 billion gallons a year. That is equal to about 15.5 percent of U.S. annual gasoline consumption. One step toward achieving this goal, he said, is to “invest heavily, very heavily, in the development of advanced cellulosic ethanol.” GM produces more than 1 million vehicles a year that are capable of running on gasoline or E85, which is 85 percent ethanol and 15 percent gasoline. Critics of corn-based ethanol say using feed corn to make ethanol drives up food prices, effectively taking food from poor nations to fuel American vehicles. “We are for biofuels — all biofuels,” said Mary Beth Stanek, GM’s director of environment and energy policy and commercialization. “We think all ethanol is good, but we can get the detractors aboard” with the use of nonfood materials that otherwise might have ended up in landfills. c http://www.zadv.com http://www.autonews.com http://www.zadv.com
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