New York City can be a rough market for used-car dealers. The competition is formidable; the costs of advertising and property are killers.
Nevertheless, Major Automotive Group, which is composed of eight franchised dealerships, hopes to overcome those Big Apple obstacles and double its used-vehicle sales by consolidating its operations and creating a used-vehicle brand, Major World.
So far the plan is working, says Bruce Bendell, president of the company. Major Automotive's newly consolidated used-car lot in Queens sold about 400 vehicles in February, up from about 315 units in December. In February the used-car lot was renamed Major World.
'Our next plateau will be 500 cars (per month) this spring,' Bendell said.
Bendell forecasts Major Automotive will sell 7,500 used vehicles in 1999, more than double what it sold in 1998.
Major World is just another step in Major Automotive's dealer consolidation strategy.
Bendell, a former independent used-car dealer, created Major Automotive in 1985 to acquire and turn around underperforming franchised dealerships in the New York area. Major Automotive is a subsidiary of another Bendell company, publicly traded Fidelity Holdings Inc.
'In New York, there are a lot of turn-around situations. ... This area has been overdealered for years,' Bendell said.
So far, Major Automotive has bought eight New York-area dealerships - which include Chevrolet, Dodge, Chrysler, Plymouth, Jeep, Nissan, Subaru and Kia new-car franchises - and slapped the Major name on them. The company also has branched out to New Jersey, where it has agreed to buy Compass Lincoln-Mercury and Compass Dodge in Essex County.
But buying eight new-car dealerships gave Major Automotive eight small used-car lots to operate. To Bendell, that made little sense.
Consequently, Major Automotive consolidated the used-car operations of its five dealerships in Queens to an existing used-car lot at its flagship Major Chevrolet store. In February it raised the Major World banner over the 600-vehicle used-car lot.
Additionally, Major Automotive opened Major World used-car lots at its Nissan-Kia and Nissan dealerships on Long Island and is planning to open a fourth at the Compass dealerships in New Jersey. Each will have an inventory of 100 vehicles.
Bendell said Major Automotive now is saving money by advertising its entire used-vehicle inventory under the Major World name. It also is attracting more customers by making it easier for them to find vehicles under a single name in fewer locations, he said.
The consolidation also allows sales managers at Major Automotive's franchised dealerships to focus on new vehicles. The staff at the main Major World store has taken the responsibilities of managing the company's used-car inventory and marketing strategy.
Major Automotive is not depending on a new name and ads alone. In March it launched a Web site, www.majorworld.com, where customers can browse the used-vehicle inventory. The company already has a Web site at www.majorauto.com, primarily for new vehicles.
At some point, Bendell hopes to have an online auction service on the Web site where customers can bid on used vehicles. He also expects the Major World inventory to be accessible through a phone service being developed by another Fidelity Holdings subsidiary.
Used-car brands and Web sites are nothing new to the used-car industry. But while chains such as AutoNation and CarMax have been making noise around the country, they have shunned New York.
Sheldon Sandler, an automotive analyst and managing director of Bel Air Partners LLC, in Princeton, N.J., says the New York market is too cost-prohibitive to be appealing. But he believes Bendell has the property and New York experience to successfully bring his version of the superstore to New York City. He also likes Bendell's Major World uniform marketing brand.
'I think it's clever,' Sandler said. 'Earth shattering? No.'