Automotive News - September 8, 2008 - (Page 22) 22 • SEPTEMBER 8, 2008 THE DEALER SPEAKS Mercedes megadealer is bullish on luxury I n a bad sales year such as 2008, megadealer Fletcher Jones Jr. says the luxury market is the place to be. The automotive group that bears Jones’ name ranks No. 25 on this year’s Automotive News list of the 125 largest U.S. dealership groups. The Fletcher Jones Management Group owns 12 dealerships, both mass-market and luxury brand. But Jones says Mercedes-Benz vehicles account for nearly 90 percent of his company’s new-vehicle sales. While overall U.S. new-vehicle unit sales are down 11.2 percent so far this year from 2007, Jones says his sales are down about 7 percent. Jones, 50, spoke with Staff Reporter Alysha Webb at his flagship Mercedes dealership in suburban Los Angeles. Things don’t look good in the overall market. Are you worried? I grew up in a market where you would have two or three or maybe even four good years, and then one or two down years. I don’t see this as the apocalypse that some people do. It will make us better operators, because we need to get back to looking at some of the control issues that maybe you let get away from you. I think the luxury market will continue to outperform the overall market. California has been hit harder economically than the rest of the nation. How are you positioned to ride this out? We have a Fremont (Mercedes) dealership and the Newport Beach dealership. We are opening, in the next year and a half, Mercedes dealerships in Temecula and Ontario. We are also opening a Porsche dealership in Fremont. The market isn’t doing that well, and you’re adding dealerships in California? We’re planning for the next 10 years. We’re very bullish on the luxury market and Mercedes-Benz in particular. In the long term, it is the best franchise and the best place to be. If you can afford to be there, you want to be in the luxury business because it is better insulated in down times and it’s more fun. It’s nice to be in a business where you can afford to do special things for your clients. If I’m going to be in the luxury business, Mercedes-Benz is the best brand. Mercedes-Benz now has permission to sell its Bluetec diesel engines in all 50 states. Do you see a big demand for diesel-powered cars? Diesels are better. They last longer. They are more efficient. If you’re into boats and yachts, you wouldn’t have a gasoline-powered boat. Diesel is not going to take our numbers up 20 percent, but it will allow us to see clients that maybe we wouldn’t have seen before. I think it will change perceptions and get Mercedes on people’s lists where it might not have been before — people who are looking for a green alternative, maybe a hybrid. There are going to be hybrid Mercedes. There will be diesel hybrids over the next two to three years. Is Mercedes going to talk about fuel portant that Mercedes-Benz maintains that luxury position. It can’t be every person’s car, or it loses what it has. How are your certified pre-owned sales? We’re doing well. Sales have been steadily growing. (Certified owners) need to have their cars serviced and are in our family of owners. How is your leasing business? Southern California is a very strong lease market. It always has been, and not just for Fletcher Jones or for Mercedes-Benz. Here it is as high as 70 percent of the new-car business. Do you use Mercedes-Benz’s finance company? We’ve found the captives have been the better partners. They’re in it for the long haul, and they have a vested interest in our business for the long term. The majority of our business — retail and a lot of our corporate financing — is with MercedesBenz Financial, even for our nonMercedes stores. How much subprime lending are you doing? It’s not as big a part of the luxury business as it is for the domestics or high-volume imports. It’s a big part of our Toyota, Honda and Ford business. It’s not the same as the subprime housing business. They were making loans to people who shouldn’t be buying houses. The subprime autolending market has been around long enough — we started in the early ’80s with a Chevrolet dealership in Las Vegas. The lenders have many years of experience. They just have to have special requirements and lending procedures that are more stringent than regular financing. In the car business, we also know that the value of what we’re selling is going to go down, not up. Mercedes-Benz Financial is buying much deeper than they ever have. They may not call it subprime, but they are buying subprimelike paper. Is this a good time for dealership acquisitions? It has been a good time for us. I would think it would be a good time for other dealers, if they are in the mind to acquire new franchises or new locations. It’s always better to try to buy in a down market. What brands are right for acquisition? For Fletcher Jones, Mercedes, Lexus, BMW, Audi probably. In the right market, Toyota and Honda would still work for us. The Honda dealership we have in Hawaii came from the acquisition of a Mercedes-Benz dealership group. The Toyota dealership in Las Vegas, we’ve had since 1984, and we’re very bullish on Toyota. If a Toyota dealership came up in the right market, we would look at that very strongly as a stand-alone. Are you happy that Chrysler is no longer a part of Daimler? I’m very happy that Chrysler is gone. I don’t think the marriage ever worked well. c TIM RUE Your flagship dealership offers everything from free manicures and shoeshines to a free airport shuttle. Why? We want to be not just the best car dealership anybody has ever been to, but the best experience. We want it to be the Fletcher Jones experience. We want you to think about coming to Fletcher Jones just because it is a cool place to hang out. FLETCHER JONES JR. efficiency as a marketing message? We will talk about fuel efficiency, but our core message is going to be the same. The reality is, we’re not going to have a car that gets 45 miles to the gallon. If you’re buying MercedesBenz, you’re not looking for that. What are your best-selling models? Our volume cars are the C, E and ML. (The Newport Beach dealership) sold around 6,500 new Mercedes brand cars in 2007. Ernst Lieb, the CEO of MercedesBenz USA, has said there is no market for the Mercedes B-class small car in the United States. What do you think? I’m glad Ernst said that, because I’m of the same opinion. I’m not in favor of the B class coming to the U.S. With the euro around 1.50 to the dollar, there are two issues. I don’t know, from the Mercedes-Benz side, how they can make any money off the car. To price it where they’d need to, they’d have to be losing money. And two, how are they going to get it to the price to compete with Honda or Toyota? People are willing to pay some premium for a Mercedes-Benz in any segment, but that’s a very price-sensitive segment. I don’t see that as their market. In this country, I think it is very im-
Table of Contents Feed for the Digital Edition of Automotive News - September 8, 2008 Chrysler Financial hikes dealer floorplan fees Back in business? Detroit's best bets for cash: Feds, UAW Document fee suits swamp Missouri dealers Honda's family squabble Used truck prices rebound Ford mulls Lincoln compact Toyota delays RAV4 plan Proposed flex-fuel mandate roils industry Chrysler sues consultant over sourcing Cobalt transaction prices are up $775 since April Nissan looks to Mexico for engineering aid To retain truck buyers, Nissan offers more stuff Press: Chrysler is pushing forward on electric cars Leasing falls to 4-year low GM: Currency shift stalled Astra Dealers say they can sell the Republican ticket Industry loans clash with GOP climate Grand Cherokee will get axles from new plant Makers must resist urge to backslide as gas price dips Times are tough outside the U.S., too Chevrolet does tout its small cars Let natural gas power the fuel cell A crash course in collaboration Dodge wouldn't rush the RamBox Plastics are losing cost advantage Suppliers expect to benefit from tougher CO2 rules 'People just want Ford to go' For now, Honda will skip electric vehicles Toyota, Subaru enter race to market electric vehicles China exports squeezed Study: 15% of wrecked autos got washed titles Mercedes megadealer is bullish on luxury Sheehy: 'We are not in business for nostalgia' Automakers use driving schools as marketing tools Dodge smoothes Ram's rough edges â a little Honda touts leasing while others fall back Alysha Webb Study: Nonprime car loans get longer Dealer CPA group picks leader BMW, Edmunds team up on loan site for consumers Va. Honda dealership loses protest bid Judge throws out deceptive-ads lawsuit against Toyota in Arkansas Mo. dealership's protest gets go-ahead Pa. court throws out suit against Ford, dealership Dealers Ross' interiors company pushes into China, India More than a game Nissan's Tavares: Green conference keynoter Quality group seeks to set consulting standards Personnel Dana to shift HQ by Sept. '09 Tenneco to supply Volvo XC60 BMW gets Siemens conveyors IAC to cut 280 jobs in Sweden Polytec to acquire Peguform Metaldyne to sell Italy operation Federal-Mogul to build India plant Beck, Delphi make pact TRW to supply Chinese sedan Auto profits rise in Russia Black Book expands data Hayes Lemmerz cuts losses Ford: Buyouts are a tough sell GM's party plans include production Volt An ice-cold August for auto sales Big drop in Aug. output Lights, camera . . . Volt? In case the roads get too quiet . . . The Insight rides again Lagonda brand will be back Milwaukee road trip: No old pals, but 1 new lesson Choice of Odell seen as Ford vote of confidence in Volvo Dana sort of wins an award Automotive News - September 8, 2008 Automotive News - September 8, 2008 - (Page Introducti) Automotive News - September 8, 2008 - Detroit's best bets for cash: Feds, UAW (Page 1) Automotive News - September 8, 2008 - Detroit's best bets for cash: Feds, UAW (Page 2) Automotive News - September 8, 2008 - Toyota delays RAV4 plan (Page 3) Automotive News - September 8, 2008 - Cobalt transaction prices are up $775 since April (Page 4) Automotive News - September 8, 2008 - Cobalt transaction prices are up $775 since April (Page 5) Automotive News - September 8, 2008 - GM: Currency shift stalled Astra (Page 6) Automotive News - September 8, 2008 - GM: Currency shift stalled Astra (Page 7) Automotive News - September 8, 2008 - Grand Cherokee will get axles from new plant (Page 8) Automotive News - September 8, 2008 - Grand Cherokee will get axles from new plant (Page 9) Automotive News - September 8, 2008 - Grand Cherokee will get axles from new plant (Page 10) Automotive News - September 8, 2008 - Grand Cherokee will get axles from new plant (Page 11) Automotive News - September 8, 2008 - Let natural gas power the fuel cell (Page 12) Automotive News - September 8, 2008 - Let natural gas power the fuel cell (Page 13) Automotive News - September 8, 2008 - Plastics are losing cost advantage (Page 14) Automotive News - September 8, 2008 - Plastics are losing cost advantage (Page 15) Automotive News - September 8, 2008 - Suppliers expect to benefit from tougher CO2 rules (Page 16) Automotive News - September 8, 2008 - 'People just want Ford to go' (Page 16A) Automotive News - September 8, 2008 - Toyota, Subaru enter race to market electric vehicles (Page 16B) Automotive News - September 8, 2008 - Toyota, Subaru enter race to market electric vehicles (Page 16C) Automotive News - September 8, 2008 - Toyota, Subaru enter race to market electric vehicles (Page 16D) Automotive News - September 8, 2008 - For now, Honda will skip electric vehicles (Page 17) Automotive News - September 8, 2008 - For now, Honda will skip electric vehicles (Page 18) Automotive News - September 8, 2008 - For now, Honda will skip electric vehicles (Page 19) Automotive News - September 8, 2008 - Study: 15% of wrecked autos got washed titles (Page 20) Automotive News - September 8, 2008 - Study: 15% of wrecked autos got washed titles (Page 21) Automotive News - September 8, 2008 - Mercedes megadealer is bullish on luxury (Page 22) Automotive News - September 8, 2008 - Mercedes megadealer is bullish on luxury (Page 23) Automotive News - September 8, 2008 - Sheehy: 'We are not in business for nostalgia' (Page 24) Automotive News - September 8, 2008 - Sheehy: 'We are not in business for nostalgia' (Page 25) Automotive News - September 8, 2008 - Sheehy: 'We are not in business for nostalgia' (Page 26) Automotive News - September 8, 2008 - Sheehy: 'We are not in business for nostalgia' (Page 27) Automotive News - September 8, 2008 - Automakers use driving schools as marketing tools (Page 28) Automotive News - September 8, 2008 - Dodge smoothes Ram's rough edges â a little (Page 29) Automotive News - September 8, 2008 - BMW, Edmunds team up on loan site for consumers (Page 30) Automotive News - September 8, 2008 - BMW, Edmunds team up on loan site for consumers (Page 31) Automotive News - September 8, 2008 - Judge throws out deceptive-ads lawsuit against Toyota in Arkansas (Page 32) Automotive News - September 8, 2008 - Pa. court throws out suit against Ford, dealership (Page 33) Automotive News - September 8, 2008 - Dealers (Page 34) Automotive News - September 8, 2008 - More than a game (Page 35) Automotive News - September 8, 2008 - Personnel (Page 36) Automotive News - September 8, 2008 - TRW to supply Chinese sedan (Page 37) Automotive News - September 8, 2008 - TRW to supply Chinese sedan (Page 38) Automotive News - September 8, 2008 - Auto profits rise in Russia (Page 39) Automotive News - September 8, 2008 - Auto profits rise in Russia (Page 40) Automotive News - September 8, 2008 - Auto profits rise in Russia (Page 41) Automotive News - September 8, 2008 - Auto profits rise in Russia (Page 42) Automotive News - September 8, 2008 - Auto profits rise in Russia (Page 43) Automotive News - September 8, 2008 - Auto profits rise in Russia (Page 44) Automotive News - September 8, 2008 - GM's party plans include production Volt (Page 45) Automotive News - September 8, 2008 - GM's party plans include production Volt (Page 46) Automotive News - September 8, 2008 - An ice-cold August for auto sales (Page 47) Automotive News - September 8, 2008 - An ice-cold August for auto sales (Page 48) Automotive News - September 8, 2008 - Big drop in Aug. output (Page 49) Automotive News - September 8, 2008 - Dana sort of wins an award (Page 50) Automotive News - September 8, 2008 - Dana sort of wins an award (Page 51) Automotive News - September 8, 2008 - Dana sort of wins an award (Page 52)
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