Dealers More Optimistic Than Their Customers

Dealers are feeling better about their prospects than their customers are feeling about theirs.

Greg Goebel, president of Greg Goebel Training and Consulting, said confidence remains high among the dealers he consults with.

"I haven't talked to many that are concerned over the economy taking down the industry like it did in 2008," Goebel said. "Most all the dealers that I have talked with are having great years and had great years in 2010."

The strong dealers continue to perform well, but not all dealers are that well off.
Ron Brown, president of Larry's Auto Sales in Fresno, Calif., speaks with many who are having a hard time. His store has been in business since the last major downturn 30 years ago and they'll weather this one.

"We're fine, we own everything," Brown said. "We're not struggling, but other people are struggling."

State and local governments are some of the biggest employers in California, as they are everywhere. In Brown's state, though, they've been struggling especially hard.

Vallejo, a city north of San Francisco, recently went bankrupt and Brown expects more to follow.

He finds the store taking smaller down payments. But even though people have less money, they have greater expectations.

"For $1,000, they want a $3,000 car," Brown said.

Other dealers are more confused than concerned, said Brent Carmichael, a consultant with NCM Associates Inc.

"The dealers I work with are scratching their heads," Carmichael said.

Some of the dealers in his Twenty Groups had their best summer ever while others had their worst. No pattern proved obvious, such as geography or local employers.

Carmichael expects the usual August slowdown to hit all dealers as they compete with back to school sales and state fairs for their customers' dollars.
He said all dealers can do in that situation is work on turning the ups that come to the store into sales.

Jerry McDonald, owner of Big Tex Auto Mart in Dallas, said he's having hardly any potential sales walk in the door these days.

"Walk-up traffic is nearly at a standstill," McDonald said.

He's doing fine thanks to repeat and referral business at his buy-here, pay-here store.

McDonald also sells classic cars and that market is hurt more by consumer confidence. He said consumers are putting their money into gold or paying off debt rather than purchasing the dream car of their teen years.

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Town, Dealers Team up for Test Track

dealers who were also interested in the track. The next step was finding the land.

That became available when Burlington Northern Santa Fe Railroad sold its 60-acre auto storage facility to a consortium that included the city and local car dealers.

A focus group then collectively worked to determine which features and amenities should be included in the design. A design team took the ideas and incorporated them, along with addressing safety and maintenance issues.
A project this size came with a large price tag.

The land was close to 2 million, engineering was around 150,000 and construction was just more than 1.5 million - all of which the city covered.

A group of 12 dealerships signed on to use the track and split the annual 50,000 operating costs. Ten currently belong to the group.

All of it is definitely worth it, especially to dealers like Danny Wolf of Dan Wolf Automotive Group.

Wolf's Lexus and Toyota stores are the main users of the test track, accounting for roughly 65 percent of each month's use. Wolf serves as president of the Naperville Test Track Association, as well.

"I have been in the automobile business for nearly 25 years now," he said. "This is the first I've heard of something like this where the city and the dealers formed a partnership to build and maintain such a facility."

The track's popularity among customers can't be denied.

"It gives us a unique opportunity and environment to demonstrate our vehicles and their features," said Joel Weinberger, dealer principal at the Continental Motors Group.

"It enables us to provide an extra Wow' experience during the test drive phase that cannot be duplicated by our same-brand competitors in the Chicago market."

Weinberger uses the track and he serves on the executive committee of the track association.

The track benefits the city, too.

"It reduces congestion on our roads and provides a safe driving environment for potential car buyers," said Hallgren.

"It is a great economic development tool that supports our local car dealerships."

The track is used for community events along with test drives. A local politician used it recently for a green car show, which highlighted the Naperville Green Fuels Depot project.

Weinberger said cities that follow in Naperville's footsteps need to be sure to utilize a track if they invest in one.

"It can be a valuable asset and differentiator to help attract business to the area, but only if supported by the dealer body through consistent usage and making sure the test track experience is an integral part of the sales process," he said.

Wolf said he can't see selling without the track.

"It works out well for us on so many levels," he said. "I think we would be somewhat lost if it was taken away from us at this point."

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Dealers Take Down Payments, Fail to Deliver Cars

 

Two former used-car dealers in Hartford, Conn., were arrested and accused of stealing a total of 250,000 from 72 customers.

Rafael Ortiz Sr., 42, and his son, Rafael Ortiz Jr., 21, were arrested on Oct. 25 by the Hartford Police Dept. on larceny and racketeering charges following an investigation into several incidences at City Motors between Dec. 2010 and March 2011.

According to the Connecticut Department of Motor Vehicles, employees at City Motors had been accepting down payments from customers without ever delivering a vehicle, and also selling the same vehicle to multiple customers

The Hartford DMV revoked City Motors' license in March for failing to meet state legal requirements.

They began an investigation into City Motors, in cooperation with Hartford police, in April after several complaints that the lot had been emptied with several customers expecting cars they had purchased.

According to police, many customers paid Ortiz and his son in cash or by check, but were repeatedly told the car was not ready.

Some customers had brought cars in for repairs, and never got them back.
The dealership promised disgruntled customers a refund in the first week of April, but the lot was cleared out by then.

After warrants were issued for Ortiz and his son, they fled to San Juan, Puerto Rico.

Members of the Hartford Police Major Crimes Division and Hartford Police Intelligence Division brought both suspects back to Connecticut.

"They left no stone unturned in seeking out these fraudulent perpetrators and ensuring their extradition back to Connecticut for prosecution," said Daryl K. Roberts Hartford's police chief of the successful hunt for Ortiz and his son. "A job well done by all."

Upon their return to Connecticut, both men were charged and later arraigned Superior Court in Hartford. Bail has been set at 350,000 for Ortiz, and 200,000 for his son.

Pedro Segarra, Hartford's mayor, offered comments to ensure the victims that this matter would be resolved.

"(Ortiz and his son) will now be held accountable for their actions, which, I hope will help bring some sense of closure and justice to their victims, 72 innocent consumers," he said.

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