BUFFALO, N.Y. -- Going into the store consolidations, Steve Baldo figured he finally could become the sole Lincoln Mercury dealer on the north side of Buffalo.
He once had buyout talks with Culligan Lincoln-Mercury, another stand-alone store seven miles away. The time finally might be right.
But in a tough economic climate, he made a business decision to concentrate on his other dealerships. He became a buyout recipient rather than a buyer.
Culligan took a buyout, too.
So Buffalo went from three stand-alone Lincoln Mercury stores in 2006 to one stand-alone and one franchise dualed with a Ford dealership.
Dualed stores in metro areas were once anathema to Ford Motor Co. executives. But Buffalo is one of many major markets in which Ford-Lincoln-Mercury stores are becoming commonplace -- and this has significant implications for Lincoln Mercury dealerships nationwide.
Stand-alone dealers fear competing with dualed stores that can spread overhead costs over higher sales volumes. Ford acknowledges that the number of dualed stores is increasing at the expense of stand-alone stores. In the wake of that transformation, the future of stand-alones seems uncertain.
But in Buffalo, the remaining stand-alone dealer isn't worried about his dualed competitor.
Frank Downing, in the south part of Buffalo, is that sole stand-alone Lincoln Mercury dealer. His only competitor: West Herr Ford-Lincoln-Mercury of Amherst in the north.
West Herr, the area's biggest dealership group, already had been selling a lot of Lincolns and Mercurys into Buffalo from a location outside the market. After consolidation was approved, West Herr closed the remote Lincoln Mercury business and added the franchise to its northern Buffalo Ford location.
To accomplish this, West Herr, along with Ford, bought out Culligan and Baldo. Baldo still operates Ford and General Motors Co. franchises in the market.
Downing, president of Towne Auto Group and Buffalo's No. 1 Lincoln Mercury dealer, figures he's prepared to compete against a dualed store. In 2007, he opened a new Lincoln Mercury store on the same site as Towne's Ford, Mazda and Hyundai stores. Some costs already are shared.
Downing built a Quick Lane service center attached to the Lincoln Mercury store. It serves Ford, too, but revenue goes to the Lincoln Mercury financial statements.
From 2006 to 2008, Towne Lincoln-Mercury's profits spiked 150 percent. Sales went from 340 new vehicles in 2006 to 600 in 2008. With the industry sales slide hurting the luxury business, Downing expects 2009 sales of 450 new vehicles.
Should business worsen, Downing now knows Ford probably will let him combine Ford and Lincoln Mercury, too. When that was proposed several years ago, the automaker said no.
Says Downing: "That's our disaster plan now."