After Katrina, online sales save La. stores in blighted area
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Six years ago, Hurricane Katrina left Troy Duhon's Toyota and Honda stores in New Orleans decimated by 8 feet of water.
And now the stores are surrounded by weed-choked lots and boarded-up buildings, including an abandoned hospital and grocery store.
So the two dealerships turned to Internet leads to keep customers coming in.
"If we were going to survive, we had to figure out how to do the Internet right, because nobody comes out here accidentally," said Duhon's Internet manager Gerry Call.
The population of the primary market in which the stores operate fell from 205,000 before Katrina to 80,000 today. Before Katrina, walk-in traffic accounted for 80 percent of the sales at Toyota of New Orleans and Premier Honda of New Orleans.
Today, the stores generate at least 65 percent of their business from Internet leads, though Call says the number would be higher if they could document how every customer arrived there.
More online business
Necessity has been the mother of innovations at the stores, Duhon said. Especially important are those that allow customers to shop for vehicles without coming to the neighborhood.
For example, Premier Honda and Toyota of New Orleans provide home delivery of vehicles. And Duhon will send out independent used-car dealers or wholesalers to homes to appraise trade-ins.
Duhon, 47, also offers store-backed lifetime warranties on powertrains of new vehicles for the original customer.
"A desperate man does desperate things," he says with a laugh.
To establish a strong Internet shopping presence, Call said the dealerships hired a new Web site vendor, Dealer.com; enhanced a chat service on its sites; and targeted New Orleans' passionate football fans. Duhon is a graduate of Louisiana State University and an avid supporter of the school's powerhouse football program.
The new Web sites are easy for customers to navigate, Call says. And the dealerships can follow up with customers easily, load inventory data and videos and create detailed user reports.
Six months ago, the stores switched chat vendors, hiring ActivEngage. The company, which offers live chat on a dealer's Web site to shoppers, has gotten about 70 percent of people who engage in chat to fill out a lead form, Call said. And the stores have been able to sell vehicles to about 15 percent of those leads, a higher rate than its previous vendor, he said.
Courting football fans
One of the best innovations has been a Call tactic of buying key words on Google and other search engines when fans search for information on the New Orleans Saints professional football team and the Louisiana State University college football team.
In football-crazed New Orleans, it's not unusual for the stores to be seen 1 million times a season on those search pages for only a few hundred dollars cost to the stores, Call said. The dealership only pays when a viewer clicks on the ad, at a rate of about $8 per click, he said.
By focusing the bulk of advertising today to digital vs. newspapers and other traditional media, the stores have cut per-store advertising budgets to about $100,000 annually, from about $250,000, he said.
All salespeople now are involved in Internet sales. Before the flood, the job was handled by a small group of Internet specialists.
Even with the improvements, Duhon's Toyota and Honda dealerships probably would have succumbed to the flood had it not been for his Nissan store, which stayed dry in the New Orleans suburb of Metarie during Hurricane Katrina.
Duhon's Premier Automotive Group also owns dealerships in California and opened a Chrysler-Jeep-Dodge store in New Orleans in the past year.
From parking lot to lake
The Nissan store was a staging area in the two weeks it took for the water to recede in the New Orleans neighborhood as well as the several months it took to completely tear down and rebuild the stores, Call said. Insurance paid for most of the losses, including hundreds of vehicles, he said.
The water was so high in the neighborhood, which is several feet below sea level, that a dealership manager trying to survey the damage by motorboat got hung up on a fence that serves as a barrier on the freeway that separates the Toyota and Honda stores.
Duhon said he lost about 1,200 new and used vehicles to Hurricane Katrina. With a deductible of $1,000 on each lost vehicle, he ended up spending about $1.2 million on the lost inventory.
It cost about $4 million to rebuild the Toyota and Honda stores, and the insurance company paid most of the tab, he said.
Duhon is realistic that business may never return to pre-Katrina levels. His Toyota store sells about 180 new and used vehicles a month, compared with 275 before Katrina; the Honda store sells 130 vehicles per month today, down from 150 before the flood.
Said Duhon: "We've had to go the extra yard to survive."
• INNOVATION: Turned to Internet when Hurricane Katrina damaged stores
You can reach David Barkholz at dbarkholz@crain.com. -- Follow David on 
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