Silicon Valley commuters help plug-in sales soar
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Ford store's location is strategic asset

Silicon Valley commuters help plug-in sales soar

Dealer Tim Paulus: "People are enjoying the looks, the quality and the fuel economy" of the Ford Fusion Energi plug-in hybrid.
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Location, location, location. If you want to know why The Ford Store Morgan Hill sold more Fusion Energi and C-Max Energi plug-in hybrids than any other Ford dealership in the country through November, just look out the store's window.

Outside is the East Dunne Avenue entrance ramp that takes visitors from the bedroom community of Morgan Hill onto the busy U.S. 101 freeway, California's congested north-south artery. From that entrance, residents who work for technology companies start their morning commute northward to Silicon Valley. It's a 25-mile drive to San Jose; 33 miles to Cupertino, home of Apple; and 43 miles to Palo Alto.

Tim Paulus, the owner of the store, has been able to use his location as a strategic asset to lure longtime import buyers to Ford's electrified vehicle offerings and other compact vehicles. The result has been a transformation of the dealership from the showroom all the way to the used-car lot.

The northbound lanes of the 101 are typically choked with traffic every morning. But customers who bought a Fusion Energi, C-Max Energi or Focus Electric are permitted to drive in the far-left high-occupancy-vehicle lane of the 101 even if they're driving alone. That lane starts just one exit north of Paulus' dealership.

That plug-in socket on the left front fender of a vehicle means a customer can breeze past the stationary freeway traffic on the way to busy Silicon Valley tech hubs. The HOV lane is not open to regular gasoline-electric hybrids such as the Fusion Hybrid or C-Max Hybrid with a single occupant. "By driving an Energi product, they get to be in the HOV lane. It cuts down their travel time dramatically," says Paulus, 61.

"In the morning, the right three lanes of freeway are just sitting there; they're not moving," he says, while the HOV lane is moving swiftly. "Customers report it has saved them 45 minutes on their morning commute and 45 minutes on the evening commute."

That's one reason why falling gasoline prices made no appreciable dent in Paulus' sales of Ford plug-ins through November. September was a particularly big month. Of the 61 Fusions the dealership sold, 38 were Energis. The Fusion Energi accounted for 69 percent of The Ford Store Morgan Hill's Fusion sales in November. By comparison, Ford sold just 5,298 Fusion Energis nationally through November, or about 2 percent of U.S. Fusion volume.

The Ford Store Morgan Hill is the nation's top seller of Fusion Energi and C-Max Energi vehicles this year through November.

The Fusion Energi SE starts at $39,495, including shipping. Customers who buy the Fusion Energi get a $4,500 federal tax deduction and a $1,500 tax rebate from California.

"In my store total Fusion sales are up 135 percent over a year ago" as of the end of November, Paulus says. "It's being driven now specifically by these Energi sales. It's the plug-in version. It's a great-looking car. People are enjoying the looks, the quality and the fuel economy."

Through November, Paulus sold 170 Fusion Energis and 123 C-Max Energis, making him the nation's top seller of both Energi vehicles, according to Ford.

But there's more to Paulus' success than location.

Being a Ford dealer in import-loving California, Paulus knew that just because Ford started selling some new hybrid and plug-in models didn't mean customers would start beating down his door. So he decided to take action.

When the Ford C-Max Hybrid debuted late last year, Paulus purchased a Toyota Prius V hybrid. Customers who came into the dealership were encouraged to drive the Prius first as part of a "Dare to Compare" promotion.

"We started doing some radio advertising telling them the C-Max was here and that our vehicle was better looking and had better fuel economy," Paulus says. "We challenged people to take a drive. We'd put them in the Toyota first" and then let them "drive ours."

Drivers were encouraged to compare the Prius and C-Max with a simple acceleration test -- on the extremely short East Dunne Ave-nue entrance ramp onto the 101. The test drive was similar to the theme Ford used when it introduced the C-Max last year. Ford ran playful ads comparing the performance of the C-Max and Prius. The program worked so well that Paulus says he'll probably buy more Toyotas next year: a Prius Plug-in and a Camry Hybrid, for example.

In August, Ford announced it was restating the fuel economy on the C-Max Hybrid downward from 47 mpg combined to 43 mpg after customers complained they were not getting the advertised 47 mpg combined mileage and Ford admitted the C-Max had not been tested by the EPA. EPA rules permitted Ford to use the Fusion Hybrid numbers for the C-Max since the two had the same powertrain.

Paulus is a longtime one-price dealer. He calls his system "bottom-line pricing."

"We've been doing that ever since we've been in business in 2005," he says.

Morgan Hill salespeople do not haggle on price, nor does the store have a separate Internet department. "Our entire store is an Internet department," Paulus says.

The Ford Store Morgan Hill
Location: Morgan Hill, Calif. (25 miles south of San Jose)
Owner: Tim Paulus
2012 new-car sales: 1,915
2012 used-car sales: 994

After a sale is complete, the store goes through a 45-minute delivery process. There's a dedicated technology teacher in-house to help customers learn the ropes with the MyFord Touch infotainment system. After customers get time with the system, the teacher follows up with them. That includes visiting their homes if necessary for an extra session.

Like other Ford dealers in the state, Paulus is overjoyed now that he can offer the kind of vehicles that can compete with the imports that have long dominated California.

Ford's hybrid and electric models, plus its other mid-sized, compact and subcompact models have helped transform Morgan Hill's used-car lot. "We used to be just predominantly domestic," Paulus says. "Now you take a picture on Saturday, and you're surrounded by Camrys, Priuses" and other imports.

"Currently our used inventory is 30 percent import, but in that this is such a strong import market they turn quicker. Our trade ratio for the month of November was 44 percent import and has been trending that way since the introduction of Ford's new super segment car models. Several years ago our trading mix was heavily skewed toward domestics, with most months being 80 to 85 percent domestic to 15 to 20 percent import."

By super segment, Paulus is referring to the term Ford uses for its lineup of mid-sized, compact and subcompact cars that are heavily cross-shopped by customers. They include the Fusion, Escape, Focus, Fiesta and C-Max. Together, those vehicles have helped Ford make inroads in the Asian imports' market share in California and other coastal areas.

"Customers used to view Ford as trucks and Mustangs. It's amazing to me how they've turned. I wasn't sure they'd give us a chance on these cars. We're very relevant with this product. We're getting all demographics and ethnicities."

You can reach Bradford Wernle at bwernle@crain.com.


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