Sign of the times
Here's another sign of the times: Bert Boeckmann, owner of the world's largest Ford dealership, recently opened a Honda store in Mission Hills, Calif.
After more than 50 years of selling cars and trucks at Galpin Ford in suburban Los Angeles, it is Boeckmann's first venture with a Japanese brand except for Mazda, which is controlled by Ford.
Over the decades, Boeckmann has had many opportunities to buy a Honda or Toyota dealership. "I certainly turned down a lot of them," he said. "I guess as you look today, you might say I should have taken one or two of them."
Through July, Galpin Ford's retail sales declined 9.3 percent, and profits slid 20 percent. Ford's decline "has been very painful," Boeckmann said. "It's tough right now when it comes to profitability."
The decline of the Big 3 in California parallels their nationwide slip. For the first six months, their combined share of U.S. retail registrations dropped to 47.4 percent, a slide of 4.4 percentage points in just one year.
But California is worth watching not only because it's a big market but also because it's a trendsetter. And California motorists continue to favor import brands.
Small cars rule
Through June, subcompact cars and compact pickups gained the most market share in California, according to data released last week by the California Motor Car Dealers Association. Thus, new small cars such as the Toyota Yaris, Honda Fit, Nissan Versa -- and, yes, the Dodge Caliber -- are poised to profit from the shift.
By contrast, full-sized pickups, mid-sized SUVs and minivans have tanked. That's bad news for the Detroit 3, which rely heavily on trucks. Only three domestic nameplates -- the Ford F series, Chevrolet Tahoe and Chevy Silverado -- cracked California's list of the 10 best-selling vehicles.
"The onslaught of product (from the imports) is overwhelming," said Earl Hesterberg, president of Group 1 Automotive Inc., a dealership group headquartered in Houston. "The volume is going to the small cars (while) the baby boomers are buying BMW, Mercedes and Lexus." Group 1 owns 12 stores in California. Only one is a domestic: a Chrysler-Dodge-Jeep store in San Diego. Hesterberg says domestic Detroit 3 brands still are strong in other Sun Belt states but have fallen off the radar screen in California.
It's not just product that has allowed the import brands to prevail. The strength of the import dealer ad associations eclipses the Detroit 3's marketing efforts, Hesterberg says.
The ad associations receive 1 to 2 percent of the proceeds of each vehicle sold by the dealers. "This allows the dealers to do more advertising," Hesterberg says. "The Toyota ad association is a big force in itself. The ad associations are a secret weapon."
GM's weaker year-to-year sales results were due partly to the employee-pricing it introduced a year ago. This summer, the automaker has avoided similar incentives.
And GM will rebound a bit this fall when it rolls out redesigned full-sized pickups, the Chevrolet Silverado and GMC Sierra. Business is off a bit while consumers wait for the new trucks, says Susan Docherty, GM's western sales manager.
Although GM's big pickups are strong sellers, Docherty admits California's shift from trucks to cars is not a fad. "We recognize we need a better balance in cars and trucks" in California, she says. "People are looking at things like fuel prices and interest rates."
As for Boeckmann, his new Honda store is six miles from his flagship Galpin Ford store in North Hills. A message board near his Galpin Ford site promoted the Honda store's opening in its first couple of weeks.
And it has been a great start, he said. After targeting monthly sales of 135 new cars and trucks, the Honda store is on pace to sell 250.
Boeckmann already has asked for a meeting with Honda to seek a bigger vehicle allocation. "We're going to run a little bit short of cars in August."
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