Automotive News - February 4, 2008 - (Page 76) 76 • FEBRUARY 4, 2008 INSIGHT Florida dealer believes tiny car is a Smart bet Diana T. Kurylko dkurylko@crain.com F lorida megadealer Rick Case doesn’t buy stores from other dealers. He prefers open points, especially when a franchise is first offered. That strategy worked twice for Case in the late 1980s, when he acquired Acura and Hyundai franchises. And twice, he concedes, he picked losers: Need Salespeople, Tech’s, Managers & Other Employees? The Auto Industry’s #1 Recruiting, Training & Marketing Company Salespeople~BDC~Detailer~Porter~Technician Body Tech~Service Advisor~Service Manager Parts Counter~Parts Manager~Sales Manager Finance Manager~Office Staff~GSM~GM 800-421-4550 www.clickhereforadvice.com Brian C. Hall, President & CEO gmdealergroupadvertising.com 800-992 2723 Lancia in the 1970s and Daewoo in the past decade. Now Case is gambling that the tiny, European-built Smart ForTwo will be a hit. He has spent $2 million — not counting real estate costs — to build one of the first stand-alone Smart dealerships in the United States. Case opened Smart Center Weston in south Florida last month. He said his 5,000-square-foot “boutiquelike store” meets the size and design rules dictated by Penske Automotive Group, Smart’s exclusive distributor in North America. Case bid for a Smart franchise instead of signing up with one of the Chinese distributors that promise huge U.S. sales of cheap vehicles in a few years. He said he doesn’t consider Smart a risky venture. “We will be able to make as much on this car as on every other car that we sell, including Honda and Mitsubishi,” said Case, whose dealership group ranks No. 24 on the Automotive News list of the 125 largest U.S. groups. “I am not interested in the Chinese,” Case told Automotive News. “With all the problems with toys and other things, people have gotten a bad taste for Chinese products.” The chosen few Smart USA says it used these criteria to select its charter dealers. Enthusiasm for the Smart brand High customer satisfaction at current dealerships Local reputation Plans for Smart dealership Source: Smart USA Best of the best Penske Automotive says it had its choice of the best dealers in the country when it awarded the charter Smart franchises. The company whittled a list of thousands of applicants to about 500 serious contenders. Last month, Smart USA opened 68 dealerships in 41 states. By year end, the company plans to have 74 U.S. locations. This is the second time Daimler AG, Smart’s parent company, has worked to launch the brand in the United States. Initially, only Mercedes-Benz dealers were to have sold Smart, and Mercedes-Benz USA would have been the distributor. That plan died in 2006, when Daimler axed plans for a compact SUV that would have been called the Smart ForMore. Daimler restructured the brand, leaving Smart with only one model, the two-seat ForTwo car. Daimler then chose Penske Automotive as an independent distributor to set up Smart’s U.S. dealership network. Each dealership’s name includes “Smart Center” and the name of its home city. Profiled Dealer of the Month Inventory controls The Wolfington Group can be described as streamlined, organized and professional. By all means our sale was a success. Wolfington group’s explanation of the sale was dead on with gross potential, units and customer up count per day. Their staff was courteous from management to lot personnel; a customer even requested the lot manager to sell her a car! The sale met our expectations. We would recommend this company to anyone. We had a very profitable month while others in our market struggled. Milt Fosmire, Sales Manager Rochester Lincoln Mercury · Toyota · Dodge 603·332·5131 The Wolfington Group can be reached toll free 1-800-958-0595 *Current Wolfington Group market areas excluded. Penske executives won’t say how many cars they expect to deliver to U.S. dealerships this year. Late last year, Daimler CEO Dieter Zetsche said U.S. consumers had placed more than 30,000 orders for the ForTwo, exceeding planned first-year production for the United States. To gauge interest in the ForTwo, last year Smart launched a Web site that allowed potential buyers to reserve a car for $99. Penske Automotive asked customers who made the first 1,000 reservations to place detailed orders. The system gave Smart an early indication of what models and features buyers wanted. The reservation system now is permanent: Even when a customer goes to a Smart dealership to place an order, he or she must do so on a store computer instead of relying on a salesperson to process the order. Smart dealerships provide product information, arrange test drives, keep display models on hand and deliver and service cars. But Smart controls inventory and orders via the Web site www.smartusa.com. Dealerships will end up with inventory only if customers do not take delivery of an ordered vehicle. Penske Automotive says doing business that way eliminates haggling over price. It also keeps days’ supply low and reduces the need for discounts on aging inventory, LIFESTYLE MAGAZINE GROUP James McDonnell, center, takes delivery of his new Smart from dealer Rick Case and wife, Rita, at Smart Center Weston in southern Florida. Penske executives say. pretax profit of roughly 1.7 percent of sales that NADA calculates the average U.S. dealer made last year. Penske Automotive plans to cut 2 percentage points from the dealer margin if a Smart dealership sells a vehicle outside its geographic market. The company would not disclose the margin. Limited network California has the most Smart dealerships — 10 now and two more scheduled to open this year. There are eight Smart dealerships in Florida, six in New York and five in Texas. Smart USA President David Schembri says the company appointed dealers based on anticipated demand, determined by the online reservation system. Of the initial 74 Smart dealerships, 22 are exclusive stores with their own parts and service operations. The average exclusive dealership has about 3,000 square feet, Schembri says, adequate space for anticipated annual sales of 500 cars. Smart franchises may share showroom space in a Mercedes-Benz dealership, but such stores must have a separate entrance for Smart customers. Schembri declines to disclose how much Smart dealers typically have spent on their facilities. Penske executives have estimated that a separate Smart showroom with a wall and entrance would cost about $300,000. Schembri says he is confident that Smart dealers will have an annual return on sales at least as high as the Young, hip, urban The 8-foot-8-inch Smart ForTwo has been called a breadbox, a glorified golf cart and a pizza box on wheels. Without formal advertising, the car has generated nationwide headlines and enthusiast Web sites. The ForTwo has three trim levels, at prices ranging from $12,235 to $17,595 including shipping. Schembri says target buyers are young, hip, urban consumers, as well as customers who want a low-priced and efficient commuter car. Dealer Case said a used-car lot next to his new Smart store will specialize in vehicles that get at least 30 mpg. He’ll offer them to buyers who can’t get a new Smart car immediately. Case said he’s eager to watch Smart grow in the United States. “I don’t see much risk at all, based on the way Smart is marketed,” he said. “It is a unique concept.” c http://www.clickhereforadvice.com http://www.clickhereforadvice.com http://gmdealergroupadvertising.com http://www.smartusa.com
For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.