Bernie Moreno and his team figured out a way to unload new Saabs.
Despite Saab Automobile's bankruptcy filing Dec. 19 in Sweden, Saab of North Olmsted sold 55 new Saabs last week.
That's right, 55 new Saabs were sold between Christmas and New Year's Day! Moreno had 122 cars on Dec. 20 valued at about $5 million.
How did he do it? He chopped prices, offered buyers peace of mind and spent a bundle on advertising.
Moreno is president of the Collection Auto Group, an assortment of dealerships in the Cleveland area that handles brands such as Acura, Infiniti, Mercedes-Benz and Saab.
I spoke to Moreno today. Here's his plan:
First, sticker prices have been chopped from 25 to 45 percent.
Moreno loses money on each sale, he said, but hopes for a settlement with Saab Cars North America to recoup some or all of the losses.
The new cars are sold "as is," meaning there is no warranty because Saab filed for liquidation. Buyers at his dealership are offered an extended service contract from Fidelity Warranty Services Inc.
"For new buyers, we are offering them the opportunity to purchase a service contract that basically mirrors what would have been the Saab warranty, but for five years and 60,000 miles. The cost to the customer is $1,995," he said. The customer pays a $100 deductible.
Saab's former warranty was four years/50,000 miles.
$100,000 was spent on TV and print advertising that began Dec. 26.
"We wanted to be absolutely transparent as possible and not make it a hokey sale. It really is exactly what it is advertised as, which is a liquidation," he said.
Of the 55 cars sold last week, nine were sold to a rental car company.
As for the 46 retail buyers, Moreno said "the crazy part is only about half of the customers opted to buy" the extended service contract.
Moreno admitted he was surprised that many customers opted to buy a new car labeled "as is" without a warranty.
"They are relatively good cars," he said. But, "that's not our advice. We will solicit those customers in the next couple of weeks again, to say, 'are you really, really, really sure this is what you want to do?' "
Of the remaining 67 cars in inventory, Moreno said 12 will be used as loaners: "We will be servicing Saabs for a long, long time."
Moreno believes the remaining Saabs will sell quickly. He doesn't plan any additional advertising.
"If we sold 55 in one week, I am relatively confident that we can sell the second 55 in the next two weeks. Then we are basically cleaned up."