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Home Sections Archive by category Autos
Auto Dealers Adjust to an Unprecedented Mix of Stern Challenges
By George O'Brien August 18, 2021
Autos Special Coverage
Ben Sullivan says an ongoing inventory crisis has forced dealers to place late-model vehicles under the showroom lights.
Auto dealers are used to adjusting to changing economic conditions and fluctuations with the laws of supply and demand. But in recent months, they’ve had to contend with an almost unprecedented mix of challenges — from dwindling inventory to an historic shortage of used cars. There is no real consensus on just when ‘normal’ will return, but all indications are that it won’t arrive until at least the first quarter of 2022.
As they talked about the past 18 months and what they project for the next few quarters, area auto dealers sounded similar tones and eventually came back to the same word. They are all adjusting.
To be more specific, they’re adjusting to some conditions they’ve rarely, if ever, seen before, and all at once. Things like:
• Used cars populating the showrooms. Yes, there have at times been some higher-end used models or a 1930 Model A in the showroom for effect, but now, area dealerships are showcasing cars with ‘2019’ and ‘2018’ stickers on the windshield, out of necessity — because that’s all they have.
• Lots that are half, or more than half, empty. Inventories of new cars are at levels never seen before as factories, confronting an ongoing microchip shortage, struggle, unsuccessfully, to keep up with what has been steady or even better-than-steady demand because many consumers still have money to spend, and it’s burning a hole in their collective pockets. Meanwhile, used cars are also in short supply. Most dealers report total inventory (new and used cars) to be one-quarter to one-third of what would be considered normal, with many being able to count new-car inventory using just two hands — with a few fingers left.
• Factory ordering becoming the new way of doing business.
• A complicated used-car market that is finally starting to level off in some respects. Still, cars are hard to find, dealers are going to great lengths to find them, and they must be careful not to pay too much and risk watching the market change quickly and profoundly.
• Even some workforce issues. Indeed, dealerships are not immune to the challenges facing businesses in seemingly every sector when it comes to hiring and retaining workers.
Add it all up, and it’s been a year described, alternately and by different people, as ‘interesting,’ ‘challenging,’ and ‘frustrating.’
“We went from trying to jump-start the auto industry after COVID happened — we had these great incentives and offers for customers who maybe weren’t in the market to incentivize them to buy a car — to now not even having the inventory levels to support that. It’s been a wild ride.”
“It’s an interesting world out there, that’s for sure,” said Ben Sullivan, chief operating officer for Balise Motor Sales, noting that, over the past 18 months, dealers have had all sorts of challenges thrown at them, from the sudden standstill after COVID-19 hit to the current situation where they simply don’t have enough cars to sell.
Carla Cosenzi, president of the TommyCar Auto Group, which includes Northampton Volkswagen, Country Nissan, Country Huyndai, Volvo Cars Pioneer Valley, and Genesis of Northampton, agreed.
“We went from trying to jump-start the auto industry after COVID happened — we had these great incentives and offers for customers who maybe weren’t in the market to incentivize them to buy a car — to now not even having the inventory levels to support that,” she said. “It’s been a wild ride.”
Moving forward, the $64,000 questions concern how long this period of extreme adjustment will continue, and what things will look like when it does.
There is no real consensus on the answers, but most believe it will be well into 2022, and perhaps a year or more from now, before the dust fully settles and the lots at area dealerships start to look like they did back in early 2020, when the challenges were much different and there were … too many cars.
Mike Kuzdzal says his lot in Chicopee has historically boasted more than 400 total vehicles, new and used. Now, there are often fewer than 100 of each.
“I think we’re at the bottom of the curve when it comes to availability,” said Sullivan. “From now through the fourth quarter, it will start to improve, but it won’t be back up to what we would call normal historical levels until June of next year.”
Cosenzi agreed. “They’re saying that October is when we’re going to see the inventory slowly start to trickle back in,” she said, noting that ‘they’ means the manufacturers. “We’re not going to get back to the same levels by then, and the expectation is that, by mid-2022, we’ll be back to something approaching normal.”
Mike Kuzdzal, general manager of Metro Chrysler Dodge Jeep Ram in Chicopee, concurred.
“The manufacturers are optimistic month over month that they’ll hopefully be able to ramp up production, but they just can’t keep up with current demand,” he noted. “As they make these cars and put them in an in-transit mode to us, we’re selling them before they even hit the ground.
“My hope is that, by the end of quarter one next year or the beginning of quarter two, we can get back to what we used to be,” he went on. “But the manufacturers are going to have to go double or triple time to get us there.”
A Different Gear
Kuzdzal told BusinessWest his dealership is one of many in the area that have placed signs on the property saying ‘we buy used cars’ — or words to that effect.
And, by and large, these signs are working, he said, noting that, just before he spoke with us, he bought a car off the street.
Such transactions, once quite rare, have become somewhat commonplace, said Kuzdzal and others we spoke with, noting, first, that COVID has yielded conditions whereby many families can do with at least one fewer car in the driveway, and, second, that prices for such vehicles have never been higher — and no one knows how long they’ll stay this high.
“Because of the pandemic and people working from home, a second or third car is not required,” Kuzdzal explained. “They’re sharing one car and saying, ‘I’m going sell my car at an all-time high and save that monthly payment, the excise tax, and insurance — and if I do go back to work, I’ll get back in the market.’”
Transactions like one he described are more than welcome, because traditional sources of used cars — everything from new-car trade-ins to rental cars — have dried up in dramatic fashion. So dealers have had to get creative.
“We’ve been acquiring a lot of vehicles from our service customers and past customers,” said Cosenzi, adding that her dealerships are now also buying essentially any car that comes off lease, where before they would cherry-pick. “We came up with a really easy five-minute trade process that has helped us generate quite a bit of used vehicle inventory.”
Overall, those signs offering to buy used cars or print, TV, and radio ads stating that ‘no one will pay more for a used car than we will’ are just part of the changed landscape in auto sales.
Carla Cosenzi (with her kids, Nico and Talia) is among many dealers expecting a return to something approaching normal by next spring.
The dramatically lower volumes of inventory, used cars in the showroom, factory ordering, and essentially selling cars long before they reach the showroom, or even leave the factory, are other components of this altered state, one in which dealers say business is still solid in many respects, but altogether different.
Inventory is perhaps the biggest issue, and it has changed the landscape in all kinds of ways, the most noticeable being the lonesome lots at area car stores. The dealers aren’t used to it, and neither are local residents.
Indeed, Sullivan noted that more than a few people have asked if Balise has divested itself of the massive Chevrolet dealership on West Columbus Avenue. That Chevy store is quite visible from I-91, especially the ramp leading to the South End Bridge, which means people can see — or, in this case, not see — the rows of vans and trucks that have historically populated the south end of the property.
“Every single car that comes in is sold the day it lands there,” he said, adding that this phenomenon helps explain the bare pavement and put the inventory problem in perspective.
But not as well as some of the numbers offered by the dealers we spoke with.
“Where we normally run with 350 to 450 new cars and maybe 150 used cars, now we’re down to south of 100 of both, so we’re at a quarter of our running inventory,” Kuzdzal said.
Sullivan noted that the Balise family of dealerships includes more than a dozen makes, foreign and domestic, each one having inventory issues that have fluctuated over the past several months, with some doing better now than they were in the spring and others still struggling. He noted that, at the huge Honda store on Riverdale Street in West Springfield, there are normally 250 new cars on the lot. One day a few weeks ago, there were seven.
“It’s a situation we certainly haven’t seen, and each manufacturer will hit that low point at a different time. When Honda was out, Toyota had cars; when Toyota was out, Honda had cars. Each month, it kind of moves around, but at this point, heading into the fourth quarter, things will start to get back to what we call a more normal state.”
“It’s a situation we certainly haven’t seen, and each manufacturer will hit that low point at a different time,” he explained. “When Honda was out, Toyota had cars; when Toyota was out, Honda had cars. Each month, it kind of moves around, but at this point, heading into the fourth quarter, things will start to get back to what we call a more normal state.”
Cosenzi, who concurred with that assessment, noted that the TommyCar stable was helped initially by the fact that it traditionally keeps large volumes of inventory on its lots to offer consumers a wide selection.
“Our dealerships are usually crammed with cars,” she noted. “And that really helped us when this happened; we had a larger supply available to us when the chip shortage hit. Some dealers that only carry a one- or two-month supply ended up in trouble, while we carried a three and a half or four-month supply.”
Shifting Expectations
Given the shortages of microchips and other parts they’re facing, Sullivan said manufacturers, for the most part, are now only churning out the most popular, and sellable, variations of given models, and customers are adapting to this altered state.
“We’re used to carrying hundreds and hundreds of vehicles at every dealership, and customers are used to looking at 30,000 buildable combinations of a Honda Accord,” he explained. “They’ll say, ‘I want a blue one with a beige interior and this sunroof; I want this, but I don’t want that.’ The way the manufacturers have adapted through this is they’re only building the most commonly sold and fastest-churning vehicles that they have — they’re only doing certain trim levels.
“You’d think that customers would be mad,” he went on. “But they actually seem relieved. They’re saying, ‘OK, that’s the way they’re going to come in; I’ll take that one.’ Customers have been unbelievably accommodating, saying, ‘I really wanted a red one, but I guess a black one is OK.’”
Kuzdzal concurred, and noted that, in most ways, it’s easier to sell the few cars that the dealers do have on their lots.
“The consumer is coming in with his or her defenses down,” he explained. “They know it’s a tough time to get cars, and if we have it, they should buy it. If they don’t, we’ll sell it to the next person, so that makes the negotiations much easier.
“It’s never been like this,” he went on. “It’s a very comparable time to when we had the gas issue, when we spiked over $5 a gallon. But it has not slowed business down like it did then; it’s a different time, and we have to react to what’s coming our way. Inventory is at an all-time low, used cars are at an all-time high as far as value is concerned, and people are taking advantage of that.”
In addition to using that word ‘adjusting,’ all those we spoke with inevitably came back to that other word you hear and read so often these days — normal.
Some spoke of what is obviously a new normal, while others speculated on when and even if things would return to what used to be the norm.
But Sullivan spoke for everyone, and put things in their proper perspective, when he said, “I can’t wait to return to the old normal.”
Just when that will happen is anyone’s guess, but it seems certain that it can’t be a short drive from here.
George O’Brien can be reached at [email protected]
Factory Ordering Has Become the New Norm in Auto Sales
Rob Pion says factory ordering has long been the norm with trucks and some SUVs, but the wait time for some vehicles is now six months to a year.
When asked how many new cars he had on his lot, Rob Pion, general manager of Bob Pion Buick GMC in Chicopee, quickly said “eight.”
And he did so with a subdued voice that conveyed the frustration that he and every other auto dealer in the 413 is feeling right now regarding a situation that is clearly out of their control, but also a reality that must be confronted.
And the depth of that reality become clear when Pion paused after adding up his new-car inventory in his head and acknowledged that his number is certainly higher than some of his fellow dealers in the area.
“I guess that’s not really too bad compared to some others,” he told BusinessWest, adding that this situation is not going to get appreciably better anytime soon, especially when it comes to the trucks and large SUVs that comprise his bread and butter. Consumers don’t have a lot to choose from, so unless they want to settle, and many of them don’t, they must order what they want and wait for it to come in.
“Before, you didn’t see that many factory orders — it would be the oddball unit. Now, we’re almost in a build-to-delivery stage, particularly with some of the domestics, like Ford; they’re really encouraging people to just put in their order — they know they’re making a car that the customer wants.”
Or, as the case may be with many truck models, and to borrow that famous line from the start of Casablanca, ‘wait, and wait, and wait.’
Indeed, these have become the days of factory-ordered vehicles — a trend that is a world removed from what dealers in this area are generally used to.
Yes, there have always been times when a customer would have to order and then wait for a model with a number of specific features, packages, or even a rare color. And when it comes to pickups, especially the larger models used for towing, factory ordering has long been a common practice.
But in these days when factories — dealing with shortages of not only microchips but a host of other parts — are well behind in production at a time when demand is high, factory ordering has become, well, the order of the day for many makes, especially pickups and SUVs, but also luxury models, which customers are generally more willing to wait for.
Peter Wirth says that, while Mercedes-Benz of Springfield has always handled a good number of factory-ordered vehicles, those numbers have never been higher than they are now.
“We’ve never had so many cars factory-ordered,” said Peter Wirth, co-owner of Mercedes-Benz of Springfield. “We have perhaps 50 cars at the moment that are already sold and just waiting to come in. Next month, for example, we have cars coming for inventory, and we have another 25 cars that are pre-sold.”
These factory-ordered cars are certainly helping dealers cope with inventory levels that are unprecedented, said Wirth, adding that, currently, perhaps 75% of total new-car sales are happening in this fashion.
“How many cars we have in our inventory is not a good measuring stick for us,” he went on. “It’s more a question of ‘what percentage of people who want to buy a car from us can we take care of?’ And the answer is still relatively high, as long as the customer is willing to work with us. And two things are helping us — the first is that the luxury-car buyer is generally more patient, and two, it’s been all over the media, so they’re generally used to it; they’ve heard from another brand they may have looked at, or maybe they heard it while they were trying to buy a kitchen appliance or building materials.”
Ben Sullivan, chief operating officer at Balise Motor Sales, agreed. He noted that factory ordering is becoming more prevalent, and the manufacturers are seeing some advantages to this profound change in the way things are being done — in this country, at least.
“Before, you didn’t see that many factory orders — it would be the oddball unit,” he told BusinessWest. “Now, we’re almost in a build-to-delivery stage, particularly with some of the domestics, like Ford; they’re really encouraging people to just put in their order — they know they’re making a car that the customer wants.”
Could this new way become a more permanent model for the future given what appear to be real advantages for the manufacturer and even the dealer? Sullivan acknowledged that this is a legitimate question, and that factory ordering is far more prevalent in other parts of the world, where huge showrooms and hundreds of cars on a lot are simply not practical. But he and others wondered out loud if Americans would tolerate such a process in anything but an emergency situation.
“The United States market has never operated that way,” he noted. “Ford has gone public and said they would like to move that way, so we’ll see. It will be a component of where things go, but I don’t know if it will ever completely replace what we’re used to here. Americans, once they’ve made a decision that they want to buy something, whether it’s a car or a TV … it’s a matter of immediacy.
“When you tell people you necessarily can’t get X, Y, or Z — or, if you can, you don’t know when — some people will wait, but others will say ‘I don’t need a truck right now,’” he explained. “Before, people would order vehicles, then they became trained to buy one off the lot — that Amazon-like mentality where, if I can’t have it in one day, I don’t want it, or I’ll move along.”
“I’ve had customers that have had vehicles on order for nine or 10 months for one reason or another. They haven’t been built, and they may never be built because of shortages of certain things.”
Moving forward, Sullivan said, dealers will ultimately have to be ready, willing, and able to serve customers in both ways — those who want to factory order a car and those who want to come to a lot, pick out a car, and drive it home a few days or even a few hours later.
“The way that we look at it as retailers is that we have to be adaptable enough to handle the people that want a car absolutely today, and those who want to put in an order and get it exactly how they want it and wait 12 weeks. For us, we have to be able to do both.”
Wirth concurred, noting that the current trends represent a minor shift from the way things were for his brand. Indeed, he said maybe two-thirds of those looking to buy a car wouldn’t drive home with something already on the lot. Instead, they would want something close, and the dealership would try to find it through its “pipleline” — a sister store in New Jersey or other dealerships in the Northeast.
Now, with inventories low everywhere, finding the car in the desired color and with all the preferred options and packages is becoming far more difficult. So the preferred route is now factory-ordering one and waiting for it.
Generally, the wait is a few months, but for some trucks, it can be half a year or more, said Pion, demonstrating that, even with factory ordering, there are limitations and challenges — for the dealer and the consumer.
“I’ve had customers that have had vehicles on order for nine or 10 months for one reason or another,” he told BusinessWest. “They haven’t been built, and they may never be built because of shortages of certain things.
“The problem you run into when you get to trucks is they get so granular,” he went on. “It could be as simple as ‘I want this wheel,’ and they just don’t have that wheel available. A simple option here or there makes a vehicle unbuildable.”
In this climate, some consumers are settling for somewhat less than everything they want, while others are not. “Some say, ‘it doesn’t matter if it takes a year or a year and a half for the truck to come in; I want what I want,’” Pion explained, adding that, in such cases, a new model year may arrive before the order is filled, and a 2021 model becomes a 2022.
—George O’Brien
Auto Dealers Finish Strong and Look Ahead to 2021
By Contributor February 17, 2021
Revving Up
By Mark Morris
In the early days of the pandemic, people huddled in their homes while streets were abandoned by nearly all traffic. Area auto dealers, understandably, braced for a slow year.
Instead, sales for many dealers hit record highs in 2020.
It was that kind of year for Jack Sarat, dealer principal for Sarat Ford, who said the pandemic definitely kept sales down in March. “After that, business rebounded, starting with a strong finish in April, and then every month following kept getting better.”
Auto-manufacturing facilities and many of their subcontractors around the world experienced shutdowns early in the pandemic. Steve Lewis, owner and president of Steve Lewis Subaru, said the delays kept inventories low at many dealerships and were also a factor in sluggish sales early in the spring.
“Once the factories were up and running again, around May or June, our inventory started to build back up, and it continues to build,” Lewis said. “Believe it or not, 2020 was our best year ever.”
“After [March], business rebounded, starting with a strong finish in April, and then every month following kept getting better.”
Even with inventory delays, Lewis continued to take pre-sell orders, so when new cars began rolling into the lot, nearly 65% of them were already sold.
Gary Rome, president of Gary Rome Auto Group, said the Korean factories where Hyundai and Kia are made were fortunate, with only brief shutdowns due to COVID-19 concerns.
“Hyundai and Kia never took their foot off the gas when the pandemic hit,” Rome said, which set the table for a strong year. “Our sales increased nearly 20% in 2020; it was one of the best years we’ve ever had.”
Every year, Presidents’ Day represents the first big sales push for local dealerships. Sarat pointed out that Presidents’ Day as a sales event tends to be more of a Northeast phenomenon.
Jack Sarat (left) and Jeff Sarat are among many area dealers reporting strong sales down the stretch in 2020 and into 2021.
“In Virginia, if you ask about the Presidents’ Day sale for cars, they don’t even know what you’re talking about,” he said, adding that ‘Presidents’ Month’ might be a more accurate name because the manufacturers heavily promote sales incentives throughout February.
With an already strong January in the books, Lewis approaches this Presidents’ Day understanding each year is a different experience.
“Last Presidents’ Day, we had a great weekend. Some years sales are magnificent, other years we are slow,” he said, adding that he defines the weekend as running from the Thursday before the holiday through Presidents’ Day Monday.
Good weather is the key to strong President’s Day sales, Rome said. Encouraging car sales on Presidents’ Day has often been a way for people to start thinking about spring and new beginnings.
Steve Lewis
“Once the factories were up and running again, around May or June, our inventory started to build back up, and it continues to build. Believe it or not, 2020 was our best year ever.”
This year, they may be especially clamoring for spring; on top of the normal winter doldrums, everyone has endured nearly a year of pandemic disruption and isolation. In that environment, auto dealers expect plenty of pent-up demand.
Rolling Along
Each of the dealers who spoke with BusinessWest shared his thoughts on why people continue to buy cars during the pandemic.
Those who did not suffer a job loss due to COVID-19 were able, in many cases, to increase their savings. After months of staying inside people, Lewis said, people started doing the math and realized that, with used-car values remaining high, they could trade up to a newer vehicle without spending lots of money.
“They capitalized on it, we capitalized on it, and everybody’s happy,” he added.
Sarat talked about customers who canceled vacations that involved air travel but still wanted to get away. “Several customers told me they were buying vehicles just so they could drive to their vacation,” he said.
While zero-percent interest rates across the industry have helped reluctant buyers, Rome said a job-assurance program gave Hyundai customers more comfort about making a purchase. “Through this program, if you buy a car and lose your job, Hyundai will make your payments for up to six months.”
He also believes battling COVID fatigue played a role in many vehicle-purchasing decisions. “People started realizing that life is short, and this might be a good time to do something nice for themselves.”
The pandemic has produced an interesting economic situation in which many homeowners made big investments in their homes, resulting in an extremely successful year for construction and landscape contractors. Sarat reaped the benefit of the contractors’ good fortune in his commercial-truck business. Contractors tend to replace their vehicles in December to obtain a tax credit against their income for the year, so it’s not unusual to see more sales activity then. Thus, the boom in home improvements in 2020 contributed to record sales in December for Sarat.
SEE: List of Auto Dealers
“We sold twice as many Super Duty trucks than a normal December,” he said. “Contractors were replacing vehicles and, in some cases, adding to their fleet.” Super Duty trucks are a popular choice among contractors because they can be adapted to a variety of trade professions.
While online shopping and purchasing a vehicle are not new, the pandemic brought out more people interested in using this no-touch approach to buying. Before the pandemic, Lewis noted, nearly 45% of his business was generated from the internet, where customers would do their research online, then come in for a test drive before buying the car. Since the pandemic, that’s increased to 70%.
“What’s different now is that people are taking delivery of vehicles they’ve never seen or have driven,” he said, adding that customers who do this are relying on the brand’s reputation.
Website upgrades since the pandemic allow Rome’s customers to complete their entire vehicle purchase online. From figuring out the value of a trade-in to applying for credit, the entire purchase or lease can be generated online and finished off with an electronic signature. “We will even bring the car to your home to test drive if you want,” he added.
Before internet research, the average customer would visit three or four dealers before purchasing a vehicle. Sarat cited industry statistics showing that customers now visit, on average, only 1.3 dealers before making a purchase. “Because they’ve done the research online, they’ve usually made a decision on what they want to buy before they even come in.”
For several years, buying trends have shifted away from passenger cars and toward SUVs and crossover vehicles.
“SUVs make up 68% of our sales, compared to sedans,” Rome said. “It used to be the inverse.”
He credits the shift to SUVs handling more like a car than earlier models, which were built on truck frames. He also noted that, as buyers age, they prefer a higher vehicle to make it easier to enter and exit.
“We won’t be back to normal for a while, but everything I read in automotive reports suggests new-car sales in 2021 are going to be very strong . I think it’s going to be an exciting year.”
Nearly every model in Lewis’ showroom is an SUV or crossover vehicle. “The crossover is really a replacement for the old station wagon,” he said. “It’s designed to open up the hatchback, put the back seats down, and throw in your junk.”
Ford is another of the many manufacturers moving away from traditional sedans and toward crossovers and SUVs. In addition, Sarat sells one of the most popular vehicles in the U.S., the Ford F-150 pickup truck, calling it his “bread and butter.”
Ford recently released a hybrid version of the popular pickup truck, and the new Ford Mustang Mach E is an all-electric vehicle. And Sarat has made a move toward all-electric vehicles among commercial cargo vans as well. Jeff Sarat, general sales manager, said these vans can run up to 300 miles a day and then plug in for recharging overnight.
“For business owners, it significantly reduces the cost of ownership,” he said, noting that an electric motor eliminates traditional maintenance and substantially reduces the vehicle’s carbon footprint. “We’ve got a lot of good things coming down the road, and our electric vehicles are going to be on people’s shopping list when they look for their next car.”
While hybrid and electric vehicle sales represent about 5% of Rome’s sales, he expects that number to rise to 10% soon.
“The manufacturers have jumped into this market with both feet. Within two years, we expect to offer a dozen hybrid or electric vehicles,” he said, adding that hybrid vehicles can improve mileage up to 140 miles per gallon, while some all-electric vehicles can go 386 miles on a full charge.
“In some ways, it’s like owning an iPhone, where you want to get a new one every three years to stay up on the latest technology,” he added.
Another shift this year has taken place in the used-car market. The economic shutdown last spring affected new-car production, and dealers found they had more empty spaces on their lots. “When fewer new vehicles are coming in, it also creates a lack of used inventory because people are not trading in their cars,” Sarat said.
For this reason, all the dealers we spoke with said used-car prices stayed high last year and will continue to remain strong in 2021.
Rome acknowledged the strength of the used-car market, but said his business runs somewhat counter to the normal trend.
“In our world, we sell about two new cars to every used car,” he explained. “If you can buy a new car with a 10-year, 100,000-mile warranty for about the same price as a used car, why would you buy the used car?”
No Slowing Down
With his business finishing 2020 with a 19% sales increase, Rome predicts an 18% increase on top of last year’s success for 2021.
With his dealership in Hadley, Lewis noted that he is located two miles from five colleges and universities. When students and faculty all abandoned campus early in the pandemic, it cut deep into his business. He is hopeful these sales will return as everyone comes back to campus.
“Despite all that, we had our best year ever, and we’re hoping 2021 is as good as 2020,” he said.
Jack Sarat anticipates at least some supply disruptions due to COVID in 2021, but remains optimistic for a good year ahead as well.
“We won’t be back to normal for a while, but everything I read in automotive reports suggests new-car sales in 2021 are going to be very strong,” he said. “I think it’s going to be an exciting year.”
For Dealers, a Sense of Normalcy, or a New Normal, Is Settling In
By George O'Brien December 22, 2020
Rob Pion was walking outside at his family’s Buick/GMC dealership on Memorial Avenue in Chicopee, and used the view to put things in perspective for this industry as a trying, but not altogether terrible, year comes to an end.
“That’s basically the new-car inventory,” he said, pointing to a long single line of cars along the front of the property, noting that he was exaggerating, but only slightly.
Indeed, inventory remains an issue for almost all dealers in this region as manufacturers struggle to catch up after weeks, if not months, of shutdown at the factories. And matters are worse for GM dealers, said Pion, the third-generation principal of this venture, because of the lengthy strike at that corporation in 2019.
But aside from supplies of new cars — and things are getting slightly better on that front as well, as we’ll hear — the picture is brightening somewhat for auto dealers, and a sense of normal is returning, at least in some respects.
Or a new normal, if you will.
Indeed, Pion said the pandemic has effectively served to speed up the pace of change within the auto industry when it comes to doing things remotely and moving away from those traditional visits to the dealership to look at models, kick the tires, and even drop off the car for service.
Rob Pion says inventory remains an issue at his dealership, and it will likely remain that way into the new year.
“There are experts out there saying that we moved forward 10 years in three months when it comes to internet purchasing, out-of-state deliveries, and people doing 98% of the deal over the phone or the internet,” he told BusinessWest. “And that sounds about right.”
Carla Cosenzi, president of TommyCar Auto Group, which operates four dealerships (Volkswagen, Nissan, Hyundai, and Volvo), agreed. She said the pandemic has certainly made online buying, as well as vehicle pickup and dropoff for needed service, more popular, and these trends will have staying power, especially as the number of COVID-19 cases rises again.
And while it was a somewhat tumultuous year, especially when it came to inventories of both new and used cars (and the prices of the latter), it wasn’t really a bad year for many dealerships — and certainly not as bad as things as things looked in March and April, when some dealerships actually closed and all others were seeing business come to something approaching a standstill.
“We’re actually on track for what our plan was 2020, even with what happened in March, April, and May,” said Peter Wirth, co-owner with his wife, Michelle, of Mercedes-Benz of Springfield, quickly noting a few caveats to that assessment. “Some things moved around a little — more used cars and fewer used cars based on supplies — but overall, as I said, we’re on track for where we wanted to be as a dealership.”
Cosenzi concurred. “Given the circumstances and what happened, we feel really good about how we finished in 2020,” she said. “When you look back to how everyone was feeling in March, we feel really appreciative of how we finished the year.”
‘Normal’ also applies, to some extent, to end-of-year, holiday-season sales, said those we spoke with, adding quickly that smaller inventories will certainly limit how many cars, trucks, and SUVs will be sold, including to businesses looking for tax incentives — although demand is certainly there.
But those end-of-year sales, such as Mercedes’ annual Winter Event, are happening, and they are bringing customers to the ‘dealership,’ literally or figuratively.
“It’s like a cherished piece of normalcy,” said Wirth. “People see that the Winter Event is happening, that the deals are out there. I feel like both our customers and our team are enjoying the fact that there’s a normal, busy holiday-selling season — so far, at least.”
He made that statement toward the middle of December, and that tone reflects a degree of uncertainty that still prevails in this industry and most all others as well.
Peter and Michelle Wirth say their Mercedes-Benz dealership managed to hit most of the set goals for 2020 despite the pandemic.
Indeed, while it’s easy to reflect on 2020, projecting what will happen in 2021 is much more difficult, said those we spoke with. Generally, there is optimism — or guarded optimism, which is the popular phrase at this time of year, and this time in history especially — but still some concern.
Overall, those we spoke with said trends and sentiments that took hold in 2020 — from less reliance on public transportation and services like Uber and Lyft (fueled by pandemic fears) to people gaining more comfort from (while also putting more resources into) their vehicles — should continue in 2021, and that bodes well for the year ahead.
But, as this year clearly showed, things can change — and in the time it takes for one of these new models to go from 0 to 60.
Changing Gears
Looking back on 2020, the dealers we spoke with said it was a trying year in many respects, and, overall, a time of adjustment — for both those selling cars and buying them — because of the pandemic.
Many of those adjustments involved the purchase or leasing process, with much of it, as noted, moving online. But the pandemic also forced most car manufacturers to shut down for weeks or months, eventually leading to those half-full (if that) lots at the dealership that became one of the enduring, and very visible, symbols of the pandemic.
Thus, instead of going to the lot and picking out what they wanted, as they had become accustomed to doing for years, many more customers had to factory-order their vehicle and wait, usually several weeks, for it to arrive. This meant extending leases in some cases, said Wirth, adding that the factory-ordering process took longer, in general. Overall, he noted, customers and his dealership adjusted, and there wasn’t a significant loss of business.
“Given the circumstances and what happened, we feel really good about how we finished in 2020. When you look back to how everyone was feeling in March, we feel really appreciative of how we finished the year.”
That’s because demand was consistently high, for a number of reasons, starting with some pandemic-fueled reliance on the family cars — yes, even as people were driving less, and considerably less in some cases — and a greater desire to take care of that car or trade up, something made more feasible and attractive by everything from incentives from the manufacturers to stimulus checks from the federal government, to the fact that people weren’t spending money on vacations or many other things.
Indeed, Michelle Wirth said 2020 was a year of greater appreciation for the car, and a time when many chose to focus on, and put money in, their homes, their cars, or both.
“There was a point in time during all this when your vehicle was probably the only recommended mode of transportation available to you,” she explained. “And if you chose, for whatever reason, not to have a car for a long time, suddenly, you felt you needed one.
“And if you had one, and it wasn’t as safe or new or nice as you might like, you did something about that,” she went on. “It was the same with home improvement — people were looking around and saying, ‘I didn’t spend much time here before. Now I do; I need to do something.’ The same with their car.”
Cosenzi agreed. “We saw many people reallocating their household budget,” she said. “We saw the majority of the people who shop our brands put their money in their houses and their vehicles, and also feel more like they had to rely on their vehicles, now more than ever.”
Elaborating, she said — and others did as well — that this sentiment applies to both service (taking better care of the car currently in the driveway) and buying or leasing something new or newer, more reliable, and in some cases lighter on the monthly budget.
Indeed, some manufacturers have been offering unprecedented incentives — Cosenzi noted that at least one brand is offering no interest for 84 months — and many of those still employed and with stimulus checks in hand soon eyed new or used cars as rock-solid investments.
“People were saying, ‘I can upgrade my car and get a lower interest rate; I can have a newer car that’s under warranty; I can pay less in interest in the long run and maybe lower my payment,’” she explained. “There are a lot of people who weren’t working or nervous about not working, that were taking advantage of the stimulus and really took that to make decisions about how to allocate their income.”
The problem is that supplies haven’t been able to keep up with demand — for most of this year and on most lots, anyway.
Which brings us all the way to back to Rob Pion pointing at that single line of new cars at his dealership. He said inventories have been consistently low and are due to remain that way. And when vehicles do arrive on the lot, they’re either already spoken for or not on the lot for long, especially when it comes to trucks, the pride of the GM line.
“We’re preselling vehicles at an unprecedented rate — the vehicles are sold before they hit my lot,” he explained. “Typically, people just want to come in and see them: ‘give me a call when it gets here.’ Now, they’re ‘here’s my deposit, call me when I can pick it up.’
“I don’t have any pickup truck inventory,” he went on. “So any businesses looking to make those year-end purchases for tax writeoffs … that’s just not happening this year because there’s little or no availability for them when it comes to that type of vehicle.”
Still, overall, dealers are reporting that the parking lots are more full than they have been.
Peter Wirth said supplies have been steadily improving at Mercedes-Benz, and in the meantime, between the stock at the Chicopee location and a sister dealership in New York, most customers have been able to find what they’re looking for or factory-order it.
Cosenzi, meanwhile, said inventory levels have “balanced out” at her dealerships, and there are now adequate supplies for what she hopes will be a solid end-of-year run.
As for what has been a crazy year for the used-car market, where at times vehicles were difficult if not impossible to find and prices skyrocketed, some normalcy is returning to that realm as well.
“As quickly as it went up, the market is perhaps just as quickly coming back down,” said Pion, adding that, overall, it’s been ultra-challenging for dealers to not only get used cars but cope with the fluctuations in that market — from when the bottom dropped out back in the spring to when prices soared during the summer, to the state of relative uncertainty that exists now.
Peter Wirth agreed that it’s been a bumpy road when it comes to used cars — for a time, he had one employee who did nothing else but try to find vehicles to buy — but said some stability has returned.
“We have roughly 75 used cars in stock,” he noted. “It took us a while to catch up on inventory, just because sales were really good on pre-owned cars all year, so while we kept buying more cars, we sold them right away. It’s taken us until now to find more cars so we replenish supplies. And it’s not just about buying cars — you want be selective and find the right cars.”
Looking ahead … well, while people can do that, it’s difficult given how many unknowns dominate the conversation, regarding everything from pandemic spikes to vaccines to new- and used-car inventories.
“The vaccine is a positive, people not wanting to depend on public transportation or ride-sharing is a positive, and the incentives and low interest rates are positives,” Cosenzi said. “But we can’t be in denial that there is still a virus out there and people are being more cautious than ever before.”
But while question marks remain for the year ahead, the consensus is that 2020 was, overall, not as bad as it could have been, and that a sense of normal — if perhaps a new normal — has returned.
Why Electric and Hybrid Vehicles Are Gaining Traction
By Joseph Bednar February 18, 2020
Shifting Lanes
For years, people have been aware — at least vaguely — of the benefits of electric cars, especially energy conservation and savings on gasoline. But according to at least one survey, a general lack of awareness still surrounds these vehicles, especially when it comes to their often-surprising road performance. Yet, electrics and hybrids are gaining momentum, as evidenced by the number and variety of models being introduced to the marketplace — a group that might soon include larger SUVs and trucks.
Brian Ortega sees the connection between electric cars and energy conservation in general.
“They’re popular for a multitude of reasons,” said the product specialist at Balise Hyundai in Springfield. “One, a lot of people are making the transition to having solar panels in their home or making other changes to be a little more eco friendly. People are becoming more aware of climate change, and they want to switch to electric cars.”
But here’s what many drivers of gas-powered vehicles don’t know — people drive electric cars for the performance, too.
“With full electric, there’s a lot more torque,” Ortega said. “When you hit the pedal, there’s no gears, nothing but electricity hitting the car, so your takeoff and speed on the vehicle and ability to get out of snow is a lot better on an electric car.”
Since the days when the Toyota Prius was the only option on the electric market, he told BusinessWest, manufacturers have gradually improved the performance and pickup of electric vehicles, as well as hybrids, which tap into both electricity and gasoline (more on that later). And with Hyundai, Nissan, and a host of other names starting to roll a wider variety of electric and hybrid cars out of factories, they’ve been gradually improving ride quality as well.
“A lot of people have the stigma that it’ll only perform so well, but when they come from a traditional sedan and see that it performs at the same level or better, they are always caught off guard by that,” said Ortega.
Carla Cosenzi, president of TommyCar Auto Group, which sells a number of electric and hybrid vehicles, agreed.
“I think people are shocked when they get in the car and realize the pickup they have,” she said. “When consumers look at electric vehicles, they usually don’t expect them to be as responsive as they are or have the torque they have.”
Whatever the reason, she went on, “we see electrification becoming more popular among manufacturers. It seems everyone’s research and design are focused on electrification now, and they’re definitely becoming more popular with consumers, for a number of reasons. For one thing, I think consumers are now more environmentally conscious than in the past, so if vehicles offer zero emissions, that’s better for the environment and more efficient than internal-combustion engines. The other piece is that these cars are more affordable than in the past.”
Ford has taken note of shifting attitudes on electrics and hybrids and pivoted accordingly, said Jeff Sarat, president of Sarat Ford Lincoln in Agawam.
Brian Ortega says charging stations for electric cars are more ubiquitous than they think — and Hyundai has an app to help locate them while driving.
“It’s interesting — for a while, Ford and Lincoln dropped all of their hybrid vehicles, but recently they brought back numerous versions of hybrids, both plug-in and traditional hybrids. Lincoln has a plug-in version of the Aviator coming out called the Grand Touring model. That’s something like a high-end luxury vehicle, and with the plug-in version, believe it or not, it gets more horsepower and torque than a regular twin-turbo V6 that comes standard in that vehicle.”
In addition, Ford will soon launch the all-electric Mustang Mach-E, which Sarat said is a whole new entry point into electric vehicles — perhaps a hipper one.
“I think this vehicle — and I’ve seen it, I’ve sat in it — is really going to take the electric world by storm, and going to battle the likes of Tesla because it looks better than the Tesla, has better range, and it’s also probably a fraction of the cost, which is nice.
“I think, forever, the common thought about electrics and hybrids was that these aren’t exciting cars,” he added. “The Mustang Mach-E and Aviator Grand Touring, those are exciting vehicles with plenty of range. That’s what we’re seeing in the newer vehicles.”
Engines of Change
To explain the difference between electric and hybrid vehicles, Ortega pointed out two that Hyundai sells: the Ioniq, a sedan, and the Kona EV, a small SUV.
The EV is strictly electric, while Ioniq has a plug-in hybrid and an electric hybrid,” he said. “With full electric vehicles, there’s only the charge, no gas. Hybrid is a mixture of an electric battery, electric drivetrain, and an actual gasoline engine. With the typical hybrid, you fill it up with gas, and it uses regenerative braking, so that, every time you step on the brake, it actually charges the hybrid battery, and gives you a little extra range in driveability.
Carla Cosenzi
“I think people are shocked when they get in the car and realize the pickup they have. When consumers look at electric vehicles, they usually don’t expect them to be as responsive as they are or have the torque they have.”
The plug-in hybrid allows you to go a farther distance between the charge that’s on the car and the gasoline you put into it. So, with a plug-in hybrid, if you get 52 miles to the gallon on gasoline, you get 30 additional miles of range from electricity.”
Ford has long been a player in this market with its Escape hybrid, a small SUV. “We sold thousands of those,” Sarat said. “And we still have the Fusion Energi with the plug-in hybrid; we sell a lot of those.”
The tipping point for many people, he believes, will be the emergence of electric and hybrid trucks and larger SUVs. He said the hybrid Escape was discontinued for a time when the difference between its gas mileage and that of a gas-powered model was small — say, 33 miles per gallon versus 28. Now that hybrid SUVs get well over 40 miles per gallon, though, the difference is more likely to attract buyers, and Ford hopes that’s the case as it develops a hybrid Explorer.
“That will fit seven people and get 40 miles per gallon,” he said. “Everyone wants that.”
Cosenzi said some electric cars in her stores have sold well for years.
SEE: List of Western Mass. Auto Dealers
“The Nissan Leaf won a number of awards and was one of the top-selling electric vehicles for the past couple of years — and was one of the first electric vehicles on the market,” she told BusinessWest. “I think people are really excited about the range. They get over 200 miles per charge, so that’s really appealing. Other things put a customer at ease, too — you can save money on maintenance and gas, and the manufacturer supports the battery life of the vehicle; Leaf has an eight-year, 100,000-mile battery warranty.”
She also cited Hyundai’s Ioniq and Kona as popular sellers, as well as the Sonata hybrid. Volkswagen offers an electric Golf and is developing other electric models. And Volvo has the T8 hybrid and announced an electric XE40 SUV that will go on sale this year. And TommyCar just acquired a Genesis franchise, which will introduce an electric car this year.
In short, Consenzi said, electric and hybrid models are starting to proliferate, and that speaks to manufacturers’ confidence in their sales potential.
“I think, even when we talk about the next two or three years, you’ll see huge growth. From everything we hear from manufacturers, all the research and design is going into electrification.”
Long-term forecasts of electric and hybrid vehicles have fluctuated by year, but the national growth rate since 2013 still averages about 25% per year.
Several factors explain why growth isn’t even higher, according to a recent survey by research firm Altman Vilandrie & Co. of 2,500 American drivers. When asked what’s stopping them from buying such vehicles, 85% of respondents pointed to a perceived lack of charging stations, followed by cost (83%), and concerns over the range (74%). And 60% said they were simply unaware of electric cars.
Worries about range and charging-station location seem to go hand in hand, and manufacturers have noticed. Ortega said Hyundai has an app that connects with a car’s data screen — even if navigation isn’t installed — and points out all the charging stations in the area.
“Typically, you’ll always have one within two miles of where you are,” he noted. “Of course, on the highway, that’s where it becomes more spread out, but they tend to be readily available.”
Cosenzi added that today’s charging stations are much more efficient than they used to be. “People waited a long time for their car to be charged, but now it’s as quick as under 45 minutes for a full charge.”
As for cost, she noted that government rebates for electric vehicles are often aggressive, such as a $7,500 federal rebate and state rebates that vary by manufacturer, but tend to average around $2,500. “That’s quite an advantage for going electric, plus savings on gas mileage.”
Ortega agreed, noting that, after about $9,000 in rebates, drivers can lease an Ioniq for under $200 a month, no money down.
“It makes all the sense. It’s the cheapest lease you can get,” he said, adding that, “in the future, that’s going to be the route people go. You’ll have that performance as well as the savings. They’ll become more popular.”
The fuel savings, after all, remains a huge factor, Sarat said.
“My truck has a 35-gallon gas tank in it. I hate filling that up; it costs 75, 80 bucks. Nobody likes doing that,” he told BusinessWest. “Pretty soon we’ll have hybrid pickup trucks. To me, that’s exciting because I hate filling this gas tank. I like to be home at night, plug it in, and be done with it, and be able to go to work the next day or go skiing on the weekend.”
And maybe go a little easier on the environment, too.
Joseph Bednar can be reached at [email protected]
Autos Road Game
The GMC Sierra Puts Assumptions About Pickups to Bed
By George O'Brien February 18, 2020
Road Game
Editor’s Note: This is the third installment of a new series for BusinessWest — car reviews of a sort. These are first-person looks, and some commentary, about some of the vehicles — and issues — that are, let’s say, in the news.
The GMC Sierra 2500 is one of many models that have become popular with people who not only use such a vehicle to work, but those who just want to drive a truck.
Remember that scene from American Graffiti?
OK, that doesn’t narrow it down, does it? There are lots of good scenes to remember, and lots of good lines, too. (I recall my first semester at UMass in 1975 when I was only 17 (drinking age was 18 back then); I must have told the bouncers at the Blue Wall a dozen times that I lost my ID in a flood. And none of them were creative enough to reply, like the old wino in that famous package-store scene, “I lost my wife, too; her name wasn’t ID, though.”)
I’m talking about the scene where the nerdy character (I forget his name) played by Charles Martin Smith, the one who lost his ID, is driving down the main drag in the handsome ride borrowed from Ron Howard’s character (I forget that name, too.) Anyway, two guys out cruising the strip come upon this vehicle and say, “that can’t possibly be you in that gorgeous car, can it?” — or words to that effect.
I thought of that line as I was out reviewing/test driving the 2020 GMC Sierra 2500 HD. People all along Route 57 were probably thinking, “that can’t possibly be you in that huge, gorgeous pickup, can it?” The suit and tie certainly didn’t help, but beyond that, this was a classic mismatch.
Perhaps never in the history of motorized vehicles has a driver seemed less suited to what he or she was driving. (Wait, there was Mike Dukakis in that tank back in 1988. If you missed it, Google it; the ad pretty much destroyed his presidential campaign.)
OK, I’m exaggerating about this mismatch thing, but not really. I can spell drywall, but that’s about it. Electric work? I’m like Michael Keaton’s character in Mr. Mom; when asked if he plans to use 220 volts in an addition onto his house, he replies, “220, 221, whatever it takes.”
“… it brings the best of two worlds — the truck world and luxury-car world — together, which is why it is appealing to people who need their truck to work, and people who don’t.”
I look more like Charles Martin Smith than Charles Martin Smith does. So what am I doing in a Sierra 2500? Reviewing it, that’s what, and maybe also dashing some cold water on the notion that pickup trucks are for … well, the kinds of people who have historically driven pickup trucks, especially as they become more well-appointed and look and feel more like cars — in this case, luxury cars.
Indeed, this 2500 has leather, heated seats, a heated steering wheel, ventilated front seats, Apple Carplay and Android Auto, a power sunroof, wireless charging, a Bose premium sound system, and a lot of other things you would expect to find in a luxury car. But it also has a Duramax 6.6-liter turbo-diesel engine, a six-foot bed, a GMC ‘Multipro Tailgate’ (more on that later), and the ability to tow between 14,500 and 18,500 tons of whatever you want to tow, depending on configuration.
In other words, it brings the best of two worlds — the truck world and luxury-car world — together, which is why it is appealing to people who need their truck to work, and people who don’t, said Shaun Cummings, commercial manager at Balise Chevrolet Buick GMC.
“We’re seeing everyone from the family man or woman to the contractor to the lawyer getting into trucks today,” he said, noting that this is especially true with the 1500 model. “And that’s because they’re not just trucks anymore; they have air conditioning, wireless charging, sunroofs, heated seats, and they continue to add things.”
Even business editors are giving them a look — in this case a detailed look that helps bring the broadening market for this model, and seemingly all pickup trucks, into perspective.
Hailing a Cab
While out driving this pacific blue metallic Sierra (cool color), I was thinking not only of Charles Martin Smith and his character, but Sister Mary Caritas, SP (Sisters of Providence), one of my favorite people in the world.
At 96, she’s not only still driving, but getting from here to there in a mid-sized SUV, as I learned in a recent conversation. Paraphrasing her comments, she said she’s been looking up at people her whole life — the only way anyone would dream of using the word ‘small’ in connection with the sister is in regard to how vertically challenged she is — and it was great to be looking down on someone, literally, for a change.
You can do that in this Sierra, believe me. You’re riding above pretty much everything on the road that has just four wheels — well above. (To those not well-versed in trucks, just getting in one can be a challenge for many, especially those of Sister Caritas’ height; I managed without a step, but most would need one.)
The author rides high for his test drive in the Sierra 2500.
Getting used to the height is just one of the assignments; there’s also the language of trucks, which is somewhat different from that of cars, especially if all you’ve known is cars.
For example, HD doesn’t mean high-definition; it means heavy-duty. And then, there’s phrases like crew cab, as opposed to regular cab or double cab, standard bed vs. long bed, and even Duramax, the engine produced by DMAX, a joint venture between General Motors and Isuzu in Moraine, Ohio.
There are a lot more people who know this language now, said Cummings, adding that many factors contribute to the increasing popularity of pickups in Western Mass. — and across the country, for that matter.
These include improved gas mileage (the 2500 gets 13 mpg, but the smaller 1500, the bread and butter for GMC, does even better), all those luxury-car-like amenities mentioned earlier, and decent lease rates, which are making trucks with higher sticker prices (the 2500 I test-drove listed for $73,250) more affordable.
“We’ve been doing a lot of leasing on these trucks lately,” he explained. “It’s made it more affordable for a lot of people.”
As for the Sierra 2500, this is a full-size, HD pickup, said Cummings, adding that it has undergone a complete a redesign for 2020, with a number of what he called “first-in-the-industry features.”
This list includes that aforementioned Multipro Tailgate, which has six different positions.
“It comes down so it makes a work station for you if you’re on the job site,” he explained, “or if you need a step to get in the bed. It also acts as load support, so if you’re putting a long piece of plywood in there, this will help. It’s a pretty cool innovation, and it’s exclusive to GMC.”
The model test-driven has the 6.6-liter Duramax diesel, but there is also a 6.6-liter V8 gas engine. There are also a number of trims, from the SLE (base price $54,395) up to the top-of-the line Denali (MSRP from $75,045). Regardless of the engine or trim, the 2500 has a basic mission life.
“It’s built to haul,” said Cummings. “It’s built to tow, it’s built to plow — it’s work truck; that’s what it’s made for.”
That said, while the 2500 is popular with those who need a ‘work truck,’ it’s also gaining the attention of those who have something large to tow, like a boat or a trailer or a few snowmobiles. Or who have a lot stuff to take to the dump (a large constituency). Or who need a truck for runs to Home Depot (although you can have almost anything delivered these days). Or people who just want to drive a pickup.
And there are lot of reasons why one would, as that trip down and back on Route 57 revealed.
In a commercial for the Chevy Silverado, the Sierra’s close cousin, now making the rounds during sports broadcasts, those doing the test drive are picked up in a helicopter and taken to what looks like a lumber camp, where they then tow several tons of logs up a hill on a dirt road. We were going to do that, but we didn’t have a helicopter, or any logs to tow, or a dirt road with a hill.
So we settled for the South End Bridge and Route 57 instead. The ride was smooth and even — although you are in a pickup, after all, and you do feel those bumps in the road — and there’s certainly plenty of power and acceleration. (I looked down at one point and realized I was doing almost 80, as in miles per hour, not kilometers, and it certainly didn’t feel like it.)
The cabin is huge and well-appointed; again, all the creature comforts are here. If you weren’t three or four feet off the ground and in a cab about four feet wide, you wouldn’t know you were in a truck. Which was the point of this exercise, or one of them.
Fueling Interest
Mike Dukakis sure looked out of place in that tank — he was the butt of jokes for months, and he’s probably still hearing about it. And maybe I did, too, in the Sierra 2500. But probably not. Times, and pickups, are changing.
Massachusetts isn’t destined to become Texas, Wyoming, or even Arkansas soon when it comes to the number of pickup trucks on the roads, but the numbers are climbing.
And the 2500 is one of the reasons why.
Year-end Sales Are a Gift for Car Makers, Dealers, and Consumers
By George O'Brien November 26, 2019
Peter and Michelle Wirth, co-owners of Mercedes-Benz of Springfield, stand in a showroom that is expected to see a heavy volume of shoppers looking to take advantage of end-of-year sales.
The names of the programs have become ingrained in consumers’ consciousness — December to Remember, Winter Sales Event, Wish List Sales Event, and many others — and the TV commercials are seemingly endless. But the year-end auto-sales initiatives have several goals, and have become a present for dealers and consumers alike.
The commercials started appearing during the football games and the Jeopardy! Tournament of Champions, among other places, a few weeks ago.
You’ve seen them … the ones where mom or dad, or perhaps their college-age daughter, looks out the window on a snowy Christmas morning to find a new car in the driveway with a big red bow on the roof or the hood.
The commercials, and there are a lot of them now with a host of themes, are part of what has become a very important — and generally very joyous — time for car makers, car dealers, and, yes, consumers: the holiday, end-of-year sales.
These campaigns all have names now — there’s the Toyota-thon, the Lexus December to Remember, the Mercedes-Benz Winter Event, the Lincoln Wish List Sales Event, and many others. And while it was once mostly a luxury-brand initiative, it’s now generally across the board.
“You have all this inventory being built based on how many vehicles the industry analysts believe are going to be purchased that year. Well, if they forecasted ’19 to be up, and it’s flat, right away you have probably more inventory than you need; this is going to be a great holiday for consumers.”
As for those commercials, while farfetched to some, they are, well, spot on in some respects.
Indeed, a growing number of consumers will ask for that red bow, and, yes, they do like to have it on the car as it sits parked in the driveway or garage on the holiday morning, said Ben Sullivan, chief operating officer for Balise Motor Sales.
“It happens more than most people might think,” he told BusinessWest, adding that, while some dealers will make timely and perhaps dramatic deliveries — even on Christmas Eve — most buyers will get the car (and the bow) a few days before and stash them somewhere.
And there should be more cars with ribbons on them in driveways this year, figuratively if not literally, said Robinson and others we spoke with, because this year’s holiday season is shaping up to be a big one for consumers.
That’s because, overall, auto sales in 2019 have been flat, which is still good considering how strong they’ve been for the past few years. But they were projected to be a few percentage points higher than last year.
Roughly 3% to be more precise, Sullivan went on, adding that 3% of 17 million (the approximate number of cars sold in each of the past few years) is a big number.
“You have all this inventory being built based on how many vehicles the industry analysts believe are going to be purchased that year,” he explained. “Well, if they forecasted ’19 to be up, and it’s flat, right away you have probably more inventory than you need; this is going to be a great holiday for consumers.”
But that’s only one of the reasons why this could end up being an extraordinary holiday sales period, said those we talked with, adding that, in addition to the traditional tax breaks for commercial vehicles — especially the first-year bonus depreciation deduction — a number of other factors are quite favorable.
Ben Sullivan says the holidays sales event help clear lots of cars in advance of the new model-year arrivals, while also helping manufacturers meet their goals for a given year.
These include gas prices — a little higher than earlier in the year, but still relatively low — as well as interest rates (low but projected to climb in 2020) and consumer confidence, which is still rather high as recession fears have eased in recent weeks.
But even in what would be considered more typical years, the holiday-season sale has become an effective vehicle for clearing lots of cars before the new models roll in, and also for introducing a brand to people who might otherwise overlook it.
That’s the case with Mercedes, which has been working hard in recent years to convince car buyers that its models (or some of them, anyway) are within their reach.
Peter Wirth, co-owner of Mercedes-Benz of Springfield, said the dealership, which draws from a large geographic area that includes Southern Vermont, Southern New Hampshire, Eastern New York, and Northern Connecticut, has been active in trying to introduce itself to consumers seeking a lower price range. And the year-end event has been one of many drawing cards.
Joe Clark, general manager of Steve Lewis Subaru in Hadley, said that car maker’s holiday sales event has a different name and different twist. The former is Share the Love, which partially explains the latter, which involves contributions to charities, which adds another ‘win’ to what was already a win-win-win scenario.
Subaru donates $250 for each car sold to a charity of the buyer’s choice, said Clark, adding that there are national and local options, and Steve Lewis matches with $50.
“In 2019, it took until July before all the ’18s had been sold off. In the meantime, all the manufacturers are making ’19s, and here we are coming into the end of the year; you want to start as clean as you can with the next model year.”
“Over the past few years, we’ve been able to raise more than $50,000,” he said, adding that, while Subaru doesn’t offer the same kinds of incentives as other makers — he says it doesn’t need to because the cars are priced appropriately — the charitable donations act as an incentive to bring consumers to the showrooms at the end of the year.
For this issue and its focus on transportation, BusinessWest talked with area dealers about these year-end sales and how they’ve become a different type of holiday tradition.
Opportunities Present Themselves
Tracing the history of the holiday sales push, Sullivan, who works for a company with more than a dozen brands in its portfolio, said that, traditionally, November and December were not big months for dealers, emphasizing the past tense.
Weather played a part in this, he said, as well as the fact that people are, by and large, focusing their time, attention, and spending dollars on the holidays and not a new car.
To spark some life into end-of-year sales activity, manufacturers, as a group, began to offer some of their best incentives at that time of the year, with the goal of hitting sales targets set roughly 12 months earlier.
Now, the deals, the incentives, and, yes, those red ribbons have become a tradition, and savvy buyers set their watches by it.
So much so that October has become a somewhat lackluster month for many dealers.
It wasn’t for Mercedes, which stages an annual certified pre-owned sale that month, said Wirth, adding that the Springfield dealership had a great October and was challenged to keep a good inventory of used cars on the lot.
But that’s another story.
This one is about the holiday sales events, which have, overall, done what they were designed to do — clear inventory and help manufacturers and dealers hit their numbers.
Joe Clark says Subaru’s ‘Share the Love’ year-end event provides consumers with still another reason to shop that brand at the end of the year.
And this year, the sales will be needed to do both, said Sullivan, noting, again, that sales have been flat and there are a lot of 2019s still on the lots that manufacturers would prefer to see gone by year’s end or at least early next year.
“In 2019, it took until July before all the ’18s had been sold off,” he went on, adding that some 2019 models, like the Toyota Tacoma, are still being built. “In the meantime, all the manufacturers are making ’19s, and here we are coming into the end of the year; you want to start as clean as you can with the next model year.
“So this year, in particular, will be interesting because it took so long to get the ’18s sold off, and now we have ’19s that we have to sell off,” he continued. “I expect that the manufacturers are going to do even more in this holiday season than they would typically in order to alleviate that stock level.”
Wirth said Mercedes has two major seasonal pushes — its summer sales program, designed to help dealers clear out inventory before the new model year arrives, and the year-end initiative, which helps meet annual sales goals.
The latter, the Winter Sales Event, is among the oldest in the business, Wirth noted, adding that Mercedes throws not only large amounts of marketing dollars at the program, but some attractive incentives as well.
“And we latch onto these programs on a dealership level because it’s not just marketing,” he told BusinessWest. “The deals are actually really good; if you’re in the market for a new car, November and December is a really good time to buy.”
Elaborating, he said that, while the incentives might not change on some of the models — and Mercedes has quite a few of them — for those months, the deals will become better for models where there is significant inventory and an opportunity to make a dent in it.
And unlike the deals presented by many manufacturers, those at Mercedes involve the latest models, in this case 2020s, as opposed to the 2019s on most lots.
Wirth told BusinessWest there isn’t a deep body of work when it comes to this dealership and the year-end sales events; after all, it opened just a few weeks before the holidays in 2017. But already some trends have emerged.
One involves commercial vehicles, and, yes, Mercedes sells a good number of them. Its vans, the mid-sized Metris and full-size Sprinter, can compete with other makes on price, and they have the Mercedes star on the grill, said Wirth, adding that some of the SUVs also qualify for what’s known as the Chapter 179 tax deduction.
“The accountants talk to their clients and say, ‘hey, you need to do something,’” he noted, adding that, while he can’t remember whether November or December was the top month for van sales last year, the other came in just behind.
Another trend involves the last few months of the year becoming some of the busiest of the year, something that has pretty much always been the case for luxury imports. In fact, the week between Christmas and New Year’s might be the busiest of the entire year, although the week before the holiday is also quite busy, said Wirth, adding that the perception that the very best time of year to buy a car is toward the end of December may well have something to do with this.
But he said the dealership strives to make it a good experience regardless of the month or the date.
Overall, the year-end tax breaks on commercial vehicles have long made November and December strong months for those types of transactions, said Sullivan, adding that, over the past several years, the holiday sales events have broadened the scope of activity to pretty much all brands and all types of vehicles. They’ve made October a somewhat lonely month for dealers, but November and December a time of excitement and, well, anticipation as they wait to see what the incentives will be.
“It’s much like a Christmas present for dealers — we have to wait to open it up when they say ‘the event is now on, and here are the consumer incentives you’ll be able to offer,’” he explained, adding that the numbers are generally known by the middle of November.
And while dealers and consumers are on the receiving end of presents, Subaru’s annual holiday event puts another group in that category — regional and national nonprofits.
“It’s not about car sales or how much you can save on a car,” said Clark. “It’s about Subaru doing what’s right and raising a bunch of money for some great charities.”
Like all the other programs, though, it provides consumers with a reason — or some additional reasons — to shop at the end of the year, he went on, adding that, over the years, the Steve Lewis dealership has supported groups and agencies ranging from area schools to the Dakin animal shelter. This year, the beneficiary will be Cooley Dickinson Hospital’s Cooley Cares for Kids program.
While there are some inventory-clearing motivations for the holiday-sales event, generally Subaru doesn’t have excess-inventory issues, he noted, and, in fact, keeping a supply on the lot is the main challenge.
As he talked while walking through the Lexus dealership on Riverdale Street, Sullivan gestured to the ornate red ribbons atop each of the models on the floor.
He said they’re supplied by a local maker, and generally start appearing on car roofs a few weeks before Thanksgiving. He didn’t say whether this year’s order was larger than normal, but he certainly implied that more ribbons — again, figuratively if not literally — will be needed this year.
That’s because, as he said, this is shaping up to be a joyous a holiday for consumers — one right out of one of those commercials.
The Stinger Provides Ample Evidence That Kia Is All Grown Up
Editor’s Note: This is the second installment of a new series for BusinessWest — car reviews of a sort. These are first-person looks, and some commentary, about some of the vehicles — and issues — that are, let’s say, in the news.
The author found driving the Stinger to be, well, an adventure.
When last we left our heroes — yes, I’m a huge Rocky & Bullwinkle fan and still have a ‘WhatsamataU?’ T-shirt (oldest thing I own) — we were talking about how no one’s driving cars anymore and SUVs now rule the earth.
While that’s an exaggeration (and Bullwinkle loved to exaggerate), it’s not far from the truth. SUVs are the big sellers, and cars are taking, well, a back seat.
These days, people need a good reason to drive a sedan, or several of them. Which is a nice way to segue to the Kia Stinger, the coolest, baddest sedan you’ve probably never heard of. Truth is, you’ve probably seen one and gone ‘what the heck is that?’ You could answer your own question if you, or the car in question, happened to be moving slowly enough to see the word ‘Stinger’ or the Kia logo. Or you were at a red light. It’s probably the latter, because the Stinger doesn’t move slowly. But we’ll get to that later.
Let’s get back to that ‘never heard of’ part. There are reasons for that.
First off, they don’t make many Stingers — it’s a specialty car of sorts and certainly not a big seller. Secondly, it’s made by Kia, which, although it’s made some serious strides in recent years, is still … Kia, a relative newcomer known mostly for making solid, economical cars with lots of value.
And that’s being kind. The company had a reputation, just like Hyundai did 20 to 25 years ago and Honda and Nissan (yes, I know, it was Datsun back then) did 40 to 45 years ago for making practical but uninspiring — and, yes, cheap, cars. Those brands grew up, and Kia has as well.
“It’s a wonderful vehicle — we’ve received a lot of positive response for it; most of the time, when we get them in, they sell out within 48 hours.”
The Stinger provides all the evidence you need, but there’s plenty more, said Mike Spanilo, general manager of Balise Kia in West Springfield, adding that the new Telluride, an in-demand, mid-sized SUV, is certainly making people rethink what ‘Kia’ means.
“It’s a wonderful vehicle — we’ve received a lot of positive response for it; most of the time, when we get them in, they sell out within 48 hours,” he said, adding that Kia now has a deep lineup of cars and SUVs that attract area buyers in all age groups.
Spanilo, who has been with Balise for more than 20 years now and sold GM and Chrysler products most recently, said he came to Kia with some preconceived notions that he soon realized were quite dated.
“My perspective on this, coming from two American-made brands, is that I was pleasantly surprised at what I found when I got here — because I had never driven a Kia before I got here,” he said. “If you’ve gotta sell ’em, you’ve gotta like ’em, and that has not been a difficult thing for me to transition to; this brand has definitely come a long way.”
Looking Sharp
All this brings us to the Stinger, and also … Jose Perozo, a sales associate at Balise Kia, whose story sounds a little like that of Victor Kiam. Sort of.
You remember him — probably. Maybe not. He’s the guy who owned Remington shavers and, later, the New England Patriots — thankfully, not for very long; one of his teams went 1-15. Anyway, the line he used in his commercials for Remington was, “I liked the shaver so much, I bought the company.”
The Stinger blends concept-car looks with performance and value.
Perozo bought a Kia a few years back and liked them so much he went to work selling them. And while selling them, he absolutely fell in love with the Stinger. So much so, he bought one.
Coincidentally, he was bringing his home just a few hours before he took this writer along for a ride — not in his car, but the other Stinger on the lot.
To say that he could barely control his excitement would be an understatement. Every time he accelerated, and every time he thought he saw a Camaro, Mustang, or Charger driver looking over in what he perceived to be envy, you could see some discernable pride in ownership.
And that speaks quite loudly and effectively not only for this model, but the whole Kia lineup.
You don’t have to put the Kerwood Derby on your head (best Bullwinkle plotline ever; Google it) to know that Riverdale Street isn’t a good stretch for test-driving a car. There’s a ton of traffic, red lights that stay red for an hour or two, and long stretches where you have to go in the direction opposite from the one you want to in to get where you want to go.
Fortunately, a U-turn and a few of those lights later, you’re on that stretch of Route 5 that includes the North End, Memorial, and South End bridges, where the Stinger can begin to show what it can do. And after a quick trip over the last of those bridges and onto I-91, you can really get the idea.
The Stinger GT2 we drove ($51,000 fully loaded; top of the line) has a twin-turbo V-6 that delivers 360 horses and goes from zero to 60 in about 4.7 seconds. Drivers can choose a number of ‘modes’ for travel, or the car can pick one itself. These include ‘economy,’ ‘comfort,’ ‘smart,’ and ‘sport.’ The last of those options is obviously the most fun.
As Perozo punched the accelerator while in sport mode, the Stinger showed off its considerable straight-line speed, which is just one of its many positive traits. Others include the exterior design — it has concept-car looks — decent amounts of handling and comfort, optional all-wheel drive, and the requisite bells and whistles in the infotainment category — Apple CarPlay and Adroid Auto are standard.
While the Stinger has many of the safety features available on luxury brands — and even some non-luxury brands — today, it doesn’t go overboard, if you know what I mean.
And the trunk even passes the golf-club test, which, as we all know, is what the experts look for when scoring a vehicle. Forget those JD Power awards — can you get the golf clubs in the trunk?
And there’s something else. While the Stinger has many of the safety features available on luxury brands — and even some non-luxury brands — today, it doesn’t go overboard, if you know what I mean.
(Warning: old-man rant coming!) If you don’t know what I mean, cars that will alert you when to brake or if there’s a vehicle in your blind spot are fine, for the most part. Cars that flash the speed limit for the road you’re on and then make it blink on and off when going above it, and cars that not only alert you if you’re drafting from the center of your lane but yank you back to center, well … I have people yelling at me and telling I’m doing something wrong all day long; I don’t need the car to do that, too.
The Stinger doesn’t do any of that. What it does is almost defy categorization. It’s a luxury car, but not like most. It’s a performance vehicle, but not like most. It’s a muscle car (well, sort of, but not really) that’s not like most. And it can compete with cars in all those categories. It isn’t inexpensive — the entry-level, four-cylinder model is priced at $34,000 — but that’s far less than most of the luxury brands it competes against, and there is considerably more value.
Kia has indeed come of age, and the Stinger is just one of the models that makes this clear.
Speed Thrills
You’re wondering about that Kerwood Derby thing, aren’t you? See, there was this guy on Candid Camera (yes, from the early ’60s, I know), a co-host of sorts named Durwood Kirby who was bland and, quite frankly, dumber than a bag of hammers. The makers of Rocky & Bullwinkle spoofed the name in an episode all about a derby that had magical powers and could make its wearer the smartest person in the world. Guess you had to see it.
If you did, you’re getting old; you need to feel younger. Test driving a Stinger will certainly help.
As for this series of car reviews, in the true spirit of Rocky & Bullwinkle, tune in next time, when ‘O’Brien Vettes a Chevy,’ or ‘O’Brien takes on all Challengers.’
Creation of Truck Dealership Group Brings a Number of Benefits
Moving into the Fast Lane
Mike Howard, assistant manager of ATG Westfield, stands by one of the many trucks for sale at the facility on Southampton Road.
John Paulik summed things up by saying that “something had to give.”
That’s how he described some conflicting forces within the truck sales and service industry in the Northeast, specifically an ongoing pattern of consolidation among many of the players, as well as a desire for some of these players to stay independent.
Again, something had to give. And it did.
While in most respects it looks like a merger, he called it a “joint venture,” the coming together roughly a year ago of Tri State Truck Center of Shrewsbury and McDevitt Trucks, which owned the Patriot Freightliner dealership on Southampton Road in Westfield — along with three other dealerships in New Hampshire and one in Vermont — to create Advantage Truck Group, or ATG.
This larger entity, a comprehensive dealer network, is now the largest Daimler Trucks North America (DTNA) dealer network in New England, said Paulik, its senior vice president and general manager, and it uses this size and geographic reach to, well, its advantage as it specializes in sales, service, and support of DTNA’s Western Star and Freightliner branded trucks.
“Merging all these locations under one roof just made a good deal of sense on a number of levels — central management is a great advantage,” he said, noting that there are economies of scale to be gained and other benefits from the sheer size and scope of the operation. “Another advantage is that we’re not competing against one another anymore.”
Paulik said ATG’s customer base is broad and diverse, meaning it includes large fleets, small owner-operators in myriad businesses, and just about everything in between, including municipal vehicles, ambulances, and utility trucks. For entities of all sizes, keeping trucks on the road is the obvious goal, and ATG supports them in this quest in a number of ways.
For example, it has the largest parts network in New England, supported by a fleet of 25 parts-delivery vans that provide daily service to customers. There’s also an on-site maintenance program and on-call access 24/7/365 to emergency roadside assistance.
But while the business keeps rolling — that’s an industry term — and the merger, or joint venture, is working as those who orchestrated it had hoped it would, there are a number of challenges to continued growth, said Paulik, especially the recruitment of a skilled workforce.
“These small businesses can’t afford to have their vehicles down — that’s their livelihood. When their truck is down, we help get it back on the road again.”
And by workforce, he means much more than diesel technicians, although that’s a big part of it. Indeed, the challenge extends to every facet of the business.
“The biggest story for us is finding employees — not only technicians but parts people, warehouse workers, and those in truck sales,” he explained. “It’s all down the line.”
As a result, ATG works with local schools and the state’s workforce system to bring attention to the many attractive career opportunities within the trucking and transportation industry.
“We’re working to help young people interested in the trades and all aspects of this industry,” Paulik went on. “Yes, there is a huge problem with hiring technicians, but a dealership is more than just technicians; a dealership has many job titles.”
Backing up a bit — something else they do in this industry — Paulik said there were a number of forces that brought Tri State Truck Center and McDevitt Trucks together. Primarily, though, it was the size, strength, and flexibility that such a union can provide that made it attractive.
“DTNA has been promoting dealer consolidation for some time — it’s looking for regional rather than individual dealers,” he explained, adding that there were several reasons why such consolidation was somewhat slow to develop in New England — primarily because several of the locations were family owned, well-established in their respective markets, and wanted to stay independent.
But given the current climate, it simply made sense to bring the two companies and their various locations under one central ownership.
“This was the right time to do this — to create a regional truck dealership group,” he told BusinessWest. “This gives the customers a higher level of support, and it aligns the two dealers.”
Thus, the ATG name is now over the door of the sprawling Westfield facility, as well as those in Shrewsbury, Seabrook, N.H., and Westminster, Vt. Affiliated McDevitt dealers in both Lancaster and Manchester, N.H. are also part of the ATG dealer network.
The Westfield location, which, like the others, is well-situated off major arteries (in this case the Mass Pike, Route 20, and Routes 10/202), sells more than 100 trucks on average each year, and will service more than 700 vehicles of all sizes, from 18-wheelers to municipal vehicles, such as DPW and trash trucks.
ATG’s commitment to providing the highest standard of service for its customers is rooted in its dedication to Elite Support, said Paulik, referring to a collaborative initiative between Daimler Trucks North America and its dealers to improve the customer experience at Freightliner and Western Star dealerships. Elite Support certification involves a rigorous continuous-improvement process that covers all areas of customer service, overall quality of workmanship, rapid diagnosis, turnaround times, robust parts availability, and exceptional customer amenities. Both the ATG-Shrewsbury and ATG-Westfield locations are Elite Support-certified, he noted, and the company is taking the necessary steps to achieve certification at its other Freightliner and Western Star dealer locations.
ATG is adding resources and expanding other customer-support initiatives across its dealer network, he went on, including a “warranty on wheels” program for Freightliner and Western Star vehicles that enables warranty work to be performed by ATG technicians on site at customer locations, and service vans in each state that provide on-call access 24/7 to emergency roadside assistance for a wide range of vehicle brands. Meanwhile, dedicated service and support staff at each dealership have access to information systems that have been integrated across all ATG locations to give customers real-time visibility of parts inventory and service and repair status.
These are just some of the advantages that come with this joint venture, said Paulik, adding that the customers, which, again, come in all sizes, are the real beneficiaries.
Elaborating, he said that, while ATG handles a number of large fleets, including those for Stop & Shop, Burke Oil, and Regency Transport, among many others, the majority of its customers are smaller, locally based businesses that rely on their trucks to keep products moving and revenue coming in.
“We focus on local businesses, and we treat smaller businesses like large ones,” he told BusinessWest. “These small businesses can’t afford to have their vehicles down — that’s their livelihood. When their truck is down, we help get it back on the road again.”
Looking down that road, Paulik said the creation of ATG will continue to bring benefits for the dealers in the group as well as the customers they serve.
As he said at the top, something had to give, and what has emerged from this joint venture is a dealership group well-positioned to stay in the fast lane for years, and decades, to come.
— George O’Brien
Dealers Keep on Trucking
Ben Sullivan, COO of Balise Motor Sales, says pick-up truck sales, especially those involving small trucks, have been moving steadily higher in recent years.
As Pick-ups Evolve and Offer Consumers More, Sales Spiral
While most of the focus in the auto-sales market has been on the meteoric rise of the SUV, pick-up truck sales have also been climbing, and for the same reasons. Like SUVs, the trucks now offer many of the features and amenities of a car — from leather seats to solid gas mileage.
Ben Sullivan notes that while SUVs and cars seem to be making all the news these days — the former because of how well they’re selling, and the latter because how they’re not selling — there is that third segment of the market that is making a lot of noise in its own right; trucks.
This is not a recent phenomenon, noted Sullivan, chief operating officer for Balise Motor Sales, adding that truck sales have been solid for some time and especially since the end of the recession and during the recent, and prolonged period of relatively low gas prices. But the number of truck sales continues to be move higher, and for several reasons, one in particular.
“What we’ve seen over the past decade is a significant investment by the manufacturers in not only styling, but ride comfort, quietness, electronics, safety equipment, and especially fuel economy,” said Sullivan. “To the point where they’ve made the pick-up truck probably the primary choice for people; they can drive it to the country club on the weekend and to a work site during the week. It gives people a lot of flexibility.”
He noted that while the sales of mid-sized, half-ton trucks (think Ford 150, Chevy Silverado, and Dodge Ram, the three most popular sellers, and in that order) have been relatively flat, there is considerable movement in the smaller-truck market, featuring brands like the Toyota Tacoma, Ford Ranger, and Chevy Colorado.
He called this development a “resurgence,” because small trucks were popular in the ’80s, then things cooled off considerably, and now, they’re picking up again (pun intended), and in rather dramatic fashion.
“For years, the small-pick-up-truck market fell dormant behind the explosive growth of the half-ton-pick-up-truck market,” he explained. “Been there’s been a real resurgence in the small pick-up.”
But while the smaller trucks are selling, there is solid movement across the board, especially when there are incentives available.
Indeed, Jeff Sarat, owner of Sarat Ford Lincoln in Agawam, said he normally sells about 20 to 25 super-duty trucks — that would be the F-250 through F-550 and up — each July. Last month, he sold 54, more than a 100% increase.
Jeff Sarat says pick-ups now offer almost everything cars and SUVs do, including solid gas mileage.
“Ford came out with some really aggressive programs — 0% for 72 months – so they created a market, which was phenomenal for business,” he said. “I had multiple customers buy more than one, because businesses — and that’s really who’s buying those type of trucks — they haven’t had that deal for three years.”
The response was quick, too, he added, as Ford didn’t even start the promotion until mid-July. “My guys just got on the phone and started calling people: “hey, we can lower your payment 100 bucks and put you in a brand-new truck.’ And people were flocking in. It was awesome.”
Ford agrees, extending what was supposed to be a two-week promotion through Labor Day, creating worries that Sarat might actually run out of trucks before the October-through-December season, which is traditionally a good time for truck sales — he usually sells about 100 super-duties over those three months — as businesses make year-end purchases for tax purposes.
Looking ahead, those we spoke with said truck sales, like SUVs, will continue to move higher at the expense of the car, because, again like SUVs, the product continues to evolve, improve, and provide more of what consumers are demanding.
Sullivan recently relocated to Western Mass. from Texas, specifically the Dallas area. The Lone Star State is known for many things — from oil to cattle to Friday night football — but it might just be the pick-up truck capital of the world.
“They really like their pick-ups in Texas,” he said with a smile, noting that while nationally, one auto purchase in five is a pick-up, in Texas, it’s at least one in four. And in keeping with the state’s character, bigger — and better-appointed — is better.
“You’re not a gentleman cowboy unless you’re driving an F-250, which is a diesel engine, with King Ranch leather interior,” he said referring to the expensive brand of leather from that ranch in Texas. “And that thing is probably an $80,000 truck by the time everything is said and done.”
Western Massachusetts, and the Northeast as a whole, is a long way from Texas, geographically and also with regard to the popularity of pick-ups, but this region is gaining some ground in that regard, if you will, and numbers supplied by Sullivan bear this out.
He said that since the start of the year in Massachusetts, Connecticut, and Rhode Island, roughly 300,000 vehicles have been sold. Of those, 31,000 would be considered mid-sized, half-ton trucks; 20,000 are larger work trucks, and 13,000 are smaller, quarter-ton trucks, leaving a total of 54,000 pickups sold to date, not quite 20% of the total volume of vehicles.
And, as noted, while the biggest surge has been with the smaller trucks, sales are steady across the board, thanks to a still-solid economy that is fueling sales to consumers and businesses alike, and especially the former.
“Those guys are having good years, and they’re adding people,” said Sarat, referring to the builders, contractors, landscapers, and others that rely on larger trucks and work them hard. “When the economy is up, it’s good for everybody, and that especially helps us because we specialize in trucks.”
And the numbers are only expected to climb higher for those reasons cited earlier by those we spoke with. Where once people had to sacrifice things like comfort, luxury, room, technological bells and whistles, and especially gas mileage when they bought a pickup, now, they don’t have to.
Indeed, Sarat used the Ford F-150 to get his points home. This model remains popular among non-commercial drivers, although some businesses use them in their fleets as well. ‘I drive one,” Sarat said. “If you have a family of five, you can all hop in it and go somewhere — and put something in the bed if you need to.”
And, as noted, the trucks are becoming more car-like in terms of comfort and features which each passing model year.
“Every year, the technology gets better, and the safety features get better,” Sarat said. “I have an app on my phone that I can use to start my truck anywhere in the world. If a check-engine light goes on, from that app on my phone, I can see, ‘OK it’s an oxygen sensor, I’ve got to get it in for service,’ or maybe it’s nothing major, and it’s on because this is something I can fix.”
Safety features like self-parking and anti-collision assist are common in today’s trucks as well, and self-driving vehicles aren’t far away, he added. Plug-in hybrid options are creeping into the truck market as well, for people who crave fuel efficiency – or just want to use less fossil fuels. Even traditional, gas-powered trucks are being built with fuel economy in mind.
“I just drove to Ohio last week with my son, 580 miles. And I got out there on one tank of gas,” he said. “My fuel economy was better than I’ve ever had in any truck. Once I got out there, I still had about 100 miles left. That, to me, was impressive.”
Whether it’s efficiency, safety, or other technology, “it’s slowly getting better,” Sarat said. “It’s ever-changing. They’re definitely not stagnant, that’s for sure.”
Sullivan agreed, adding that all these amenities obviously come with a cost, but it is one that consumers seem ready and willing to pay.
“Manufacturers still have to make the affordable work trucks,” he explained, adding that there’s a work-truck grade, a grade above that, and maybe a few above that. “But by the time you’re done with the leather interiors, the technology and the touch-screen displays, the heated and cooled leather seats, you can drive the price of those trucks up quite a bit.”
By that he meant north of $60,000 or $70,000 — and even higher if one wants a fully loaded F-150 King Ranch. And what’s interesting, he noted, is that the manufacturers haven’t yet determined just what the ceiling is for these vehicles in terms of luxury and appointments — and what people might be willing to pay for all that.
“What the manufacturers have been playing with at the top is … ‘how much truck is too much so that no one will buy it?’” he told BusinessWest. “I don’t think they’ve found that yet.”
The Ride Stuff
While Texas and the rest of the pick-up-truck buying world awaits an answer to that question, dealers here and seemingly everywhere continue to record healthy sales of the vehicles.
It’s a movement that seems destined to continue and probably accelerate, because today’s trucks are not yesterday’s trucks.
As Sarat noted, they are anything but stagnant. They are moving — in every sense of that word.
George O’Brien can be reached at
By Kayla Ebner August 20, 2019
Peter Vecchiarelli, left, and Tom Parsons say that building relationships is the key to success when it comes to commercial truck sales.
Nutmeg Trucks Stands Out by Forging Partnerships with Customers
Peter Vecchiarelli says that selling commercial trucks — everything from box trucks to tanker trucks to huge dump trucks — is a lot like selling … almost anything else.
It’s obviously important to know everything there is about the products you’re selling and servicing, he told BusinessWest. But it’s more important to know and understand everything there is to know about the specific customer.
Indeed, sometimes what a customer thinks he or she needs isn’t really what they need, said Vecchiarelli, general manager of Nutmeg Truck Center in West Springfield, which sells and leases International and Isuzu vehicles and services all makes.
“You don’t want to be a know-it-all, but you want to suggest things that will benefit the customer,” Vecchiarelli said, adding that these suggestions comprise just one of the keys for this business.
Tom Parsons agreed. He sold cars for 30 years before joining Nutmeg, and noted some similarities between that world and this one. In both, and especially this one, success comes from working in partnership with the client to forge an appropriate solution.
“You really have to know the product and what the customer needs,” he explained. “Every single customer has a business, where every person who buys a car probably doesn’t, and each business is different.”
This mindset has enabled Nutmeg — a Connecticut-based business (hence the name) with six locations (the other five are in Connecticut — to stand out in a crowded field of competitors, said Vecchiarelli. He added that success isn’t necessarily dictated by the inventory on the lot (although that certainly helps), but rather by the level of trust that can be established with the client.
“We try to sell ourselves,” Vecchiarelli said. “People buy from who they like and trust, that’s one of our huge mottos. We’ve been around, and people trust us.”
For this issue and its focus on auto sales, BusinessWest talked at length with Vecchiarelli and Parsons about the truck business and what it takes to be leader within it.
This Isuzu truck, suitable for a wide array of potential clients, is one of many on the lot at Nutmeg Trucks.
And Vecchiarelli started by saying that the truck business certainly wasn’t in his plans when he graduated from Westfield State University in 1992.
Actually, he didn’t have any real plans at all.
Indeed, he earned a degree in Communications, but had no solid ideas about what to do with it. For a while, he worked his summer job and coached football with his brother at Agawam High School. One day, he came across an entry level management job at Penske Truck Rental in Chicopee.
That’s how he got his start in the truck business, and when he found Nutmeg in 1996, he never looked back.
And while looking straight ahead, he told BusinessWest, he wears a good number of hats. Many are part and parcel to having ‘general manager’ on one’s business card, but some might surprise you.
For example, he might very well be the one delivering a new or used truck to a client, an assignment he said he carries out on a regular basis.
This is one of those little things that add up, he said, adding that the big things include having quality products to offer and, again, working closely with the client to find solutions.
This is necessary, because, as noted, there is considerable competition within the truck marketplace.
On the International side, Nutmeg competes against the likes of Ford, Freightliner Trucks, and Mack Trucks. Isuzu competitors include Chevrolet, Hino and Mitsubishi.
Overall, business has been solid over the past several years as the economy has continued its pattern of slow yet steady growth, said Vecchiarelli, adding that company sold more than 40 new and used vehicles in 2018 and is on pace to double that number this year.
It’s customer portfolio, as might be expected, is diverse, and includes everything from general contractors to municipalities to area farms.
In addition to selling trucks, Nutmeg also sells truck parts and provides other services to its customers. Vecchiarelli noted that Clean Machine Power Wash buys all its trucks from Nutmeg, which has a great relationship with the owner. A few weeks ago, the business had its company picnic and asked if Vecchiarelli would do a few oil changes on their trucks while the business was closed for the day. Each oil change on a truck takes from an hour to an hour and a half to complete, and Nutmeg did 11 oil changes throughout the day.
“It’s just the little things we do,” Vecchiarelli said. “It’s not always an 8 to 5 job. You have to do what it takes.”
This brings him back to that work involving relationship-building, how it can create repeat customers and often turn relatively small transactions into much larger ones down the road.
As an example, he recalled the story of how the sale of an $11,000 used box truck eventually turned into much more.
“As I was delivering the used truck, the customer said he was interested in buying a new tri-axle dump truck in the future,” said Vecchiarelli while pointing out one of the obvious benefits of doing that work himself. “We put stuff together and sold him one and he then recommended his friend to us for another tri-axle dump; we turned an $11,000 sale into two dump trucks worth almost $400,000.”
Fundamentally Speaking
There have been many stories like that recorded over the years, said both Vecchiarelli and Parsons, adding that by focusing on the fundamentals of customer service, Nutmeg continues to thrive and grow.
“Those fundamental things are so true,” he said. “We practice fundamentals, try to over deliver and exceed expectations.”
Vecchiarelli agreed. “The biggest thing that sets us apart from the competition is experience, getting the job done, and building relationships,” he said in summation. “If you do little things right, people remember that.” u
Rob Pion, says Buick is trying to make inroads in the SUV market and has a lineup to do just that.
Buick’s SUV Lineup Helps Company Shed ‘Uncle Car’ Image
Editor’ Note: With this issue, BusinessWest launches something new and different for its auto-sales section — first-person looks, and some commentary — about some of the vehicles that are, let’s say, in the news.
And that person will be me.
That laughing you just heard was brother Robert. He’s reading this and thinking, if not saying out loud, ‘George is going to do car reviews?!?’
Well, sort of, as I will explain.
First, as to why my brother is laughing … while, like most all guys (and people for that matter), I like cars and shared every Baby Boomers dream of owning a 1972 Dodge Challenger, I am not a ‘car guy.’
Am I, however, like most people. My ability to ‘work’ on cars is limited to adding washer fluid and putting air in the tires. I wash it, I vacuum it, I put Armor All on the steering wheel, I put gas in it, and I drive it. That’s most people. So am I qualified to do this? I guess. As much as anyone else.
What is this? Well, it’s not reviews of the cars and trucks coming onto the market these days. I won’t be rating cupholders, trunk space, and headlights — although they’re all important. I’ll be using test drives to talk about emerging stories in this business — and talk a little about the cars, trucks, and SUVs themselves.
First, more about me … my first car was a 1973 Chevy Impala. There are a lot of Boomers nodding their heads right now. That was a lot of people’s first car. It was a large, four-door sedan, and I have been driving those ever since, with one real exception.
My now ex-wife and I were in Aruba in 1994, visiting the far side of the island. Those who have been there know it looks like the kind of place Kirk, Spock, Dr. McCoy and the crew member destined to die in that episode would beam down to and put the phasers on ‘stun.’ It’s desolate, with lots of sand and pink rocks and things like that. Anyway, to get around, you need a four-wheel drive vehicle, so we rented a Chevy Tracker, a small, as in very small, domesticated version of a Jeep.
We liked it so much, we said ‘when we get back, we gotta get one of these.’ And we did.
My sister in law likened it to a ride at Six Flags. ‘You have to be at least this tall to ride in it,’ she would joke, ‘and you must keep your hands and feet inside the vehicle until it comes to a complete stop.’
Other than that, large four-door sedans. With big back seats and big trunks. This, despite the fact that I don’t think I’ve had a human passenger in my back seat since a funeral procession. In 1993. But I have to have a big back seat. As for the trunk, it’s for the golf clubs, but hardly anyone builds a trunk big enough to put all the clubs down sideways or even on an angle. So I have to take the driver out, which is a pain.
All of this provides a nice segue to … Buick.
This is the company that invented the large four-door sedan. Well, not really, but everyone thinks they did. That’s seemingly all they made for decades, for guys (and women) like me.
I had an uncle who only bought Buicks. I think everyone has an uncle who only bought Buicks. They’re an ‘uncle’ car. Or at least they were.
For some time now, Buick has been working hard to put young people into their vehicles. In the late ’90s and early 2000s, you might remember that GM hired Tiger Woods to be its Buick spokesperson. His mission wasn’t to sell to golf fans, but to the younger audience, and he had some success. That’s some.
Today, Buick is letting its cars do the talking, only the cars are, for the most part, SUVs. (I have been told that in the lingo of the industry, SUVs are not cars; they are SUVs. Large four-door sedans are cars. That’s what I’m told.)
Back to Buick … they’re not selling many cars anymore, but they’re selling more SUVs — and to people of all ages, as Rob Pion, third-generation general manager of Bob Pion GMC Buick in Chicopee, explained as we took the Buick Enclave (Avenir model), the largest of the models in the lineup, for a spin.
Big Improvement
At first, I thought it was the SUV.
The world really does look much different when you’re riding high in a large SUV (maybe 30 inches from the ground) as opposed to your standard four-door sedan (maybe 20 inches).
But it’s not the vehicle, Memorial Drive looks much different from any height, as became clear as we headed north on that road from the Pion dealership toward South Hadley.
Back when Tiger Woods was plugging Buicks and Bill Clinton was in the White House, BusinessWest operated out of a small office on Memorial Drive. Back then, this was the land that time forgot — there was a dead mall (Fairfield), a Ponderosa Steak House (maybe it was a Bonanza), and other chain restaurants seen nowhere else. Things look much better now with new hotels, a strong lineup of stores where the mall was, and many new businesses.
But there is that huge open lot where the Hu Ku Lau used to be.
“We’re not sure what’s happening there,” said Pion as we drove by the grassy lot, obvious concern in his voice. “Everyone’s watching that closely to see what develops.”
Enough about Memorial Drive … back to the Buick and the Enclave Avenir, sticker price just under $60,000. It’s large, with three rows; looking in the rear-view mirror, the back window looks like it’s in another state — one of those in the Midwest — and well-appointed. It features what’s called ‘intelligent all-wheel drive,’ which means it did well on its SATs, and has every safety device one might expect, as well as all the technology, meaning connectivity. It’s six-cylinder engine delivers 310 horses and decent mileage for something this large — 17 city/25 highway mpg (see, I can do car talk). Meanwhile, it easily passes the golf-bag test.
And it’s really, really quiet, meaning my tape recorder had no problem picking up Pion as he talked about how Buick’s SUVs — the smaller Encore, mid-sized Envision, and large Enclave — are expected to compete with the top luxury brands in the market and bring younger audiences into the Buick showrooms.
BusinessWest Editor George O’Brien tries out the Enclave Avenir, the top of the line.
“GM’s vision for this is to go against BMW, Lincoln, Mercedes … the premium SUVs,” he said, referring specifically to the Enclave Avenir, but ostensibly to the whole lineup. And while Buick is still lagging well behind other brands when it comes to SUV sales, it is starting to gather some momentum, especially with the smaller model, the Encore, priced in the mid 20s to just over $30,000.
“We’re getting young people to at least come in and give it a look,” Pion said of the SUV lineup. “Many wouldn’t even do that before.”
Buick still has a long way to go to not only shed it’s old-person’s-car image but also become a serious player in the white-hot SUV market.
But based on this drive down Memorial Avenue and the vehicles now in the Buick showrooms, the carmaker known for sedans, as in big sedans, would appear to have a fighting chance. u
A-Class Gives Mercedes an Affordable, High-tech Addition to Portfolio
The ‘Attainability Factor’
Peter Wirth says the new A-Class presents a huge opportunity to showcase the attainability of several Mercedes models.
Since opening its doors roughly 16 months ago, Peter Wirth says, Mercedes-Benz of Springfield has met or exceeded most all of its stated goals and expectations.
Save one, perhaps.
Indeed, if it is lagging in any aspect of its multi-faceted operation, it is in the broad realm of educating customers across its broad service area that a Mercedes is affordable — or ‘attainable,’ the word he and the industry prefer to use.
It’s not from lack of trying, he said, before adding quickly that the company will try even harder, but probably more a function of the fact that there hadn’t been a Mercedes dealership in the 413 area for a full decade before this one opened on the site of the old Schine Inn just off Route 291 in Chicopee.
And this helps explain why residents of this area might not be as enlightened as those in other markets when it comes to the fact that ‘Mercedes’ and ‘affordable’ can co-exist in the same sentence.
“We missed out on all that communication, getting the cars into the marketplace, talking about them, and showing them,” he said of that 10-year hiatus, during which the carmaker greatly expanded and diversified its lineup.
But Mercedes now has an additional arrow in this quiver of attainability and another intriguing talking point, he said, with the introduction of the A-Class, which will begin rolling into showrooms, including the one in Chicopee, next month. It joins the CLA, introduced several years ago, and the GLA model SUV as Mercedes models that start at under $40,000, and Wirth expects it to be a significant addition to the portfolio.
“We feel that this is a unique opportunity for us to educate consumers in this market,” he said. “This is the first big launch of a car that’s going to shape the brand perception since we opened.”
That’s because the A-Class is about more than affordability, he told BusinessWest. It’s also about technology and a leap from traditional luxury to what Mercedes is calling ‘modern luxury,’ meaning features like MBUX.
“We feel that this is a unique opportunity for us to educate consumers in this market. This is the first big launch of a car that’s going to shape the brand perception since we opened.”
That stands for Mercedes-Benz User Experience, which the carmaker, and Wirth, tout as the next generation of user-friendly technology. The MBUX user interface allows the driver to use voice commands to control everything from the radio station and the volume level to the temperature in the cabin.
“The system is easy to learn because it actually learns you,” said Wirth, adding that the technology comes to understand the driver’s habits, right down to the preferred radio stations and music. “This is something that will trickle up into the other cars over time, but it’s something we’re phasing in with the new entry point to the brand.”
The A-Class is equipped with MBUX, hailed as the next generation of user-friendly technology.
It was explained — sort of — in a commercial that first aired during the Super Bowl. It wasn’t rated high in any of the ‘best of’ polls, but you might have seen it. A young, professional-looking male starts to see everything he says come to fruition, from an ATM spitting out money after he gives the command ‘make it rain,’ to an opera singer magically transforming into rapper Ludacris when he says ‘change the music.’
The trend continues when he gets behind the wheel of his Mercedes A-Class and voices several commands, including ‘change the color’ — and the dashboard lights do just that — as well as ‘make it cooler,’ and ‘play my music.’ The commercial ends with the ‘voice’ saying ‘if only everything in your life listened to you like your new Mercedes.’
Wirth gave similar commands as he gave a demonstration of the first A-Class to arrive at his dealership. Starting each conversation — because that’s what these are — with ‘hey, Mercedes,’ he proceeded to turn the heat up by merely saying ‘I’m cold,’ receive directions to a downtown Springfield business, and get a rundown on the restaurants within a mile’s radius of the dealership.
Meanwhile, the dashboard instrumentation can be changed electronically to display anything the driver wants, from the odometer and tachometer to things like speed limit and the range the car can go on the amount of gas left in the tank.
As for the affordability factor, the A-Class has a base sticker price of $32,000 (which includes a considerable amount of standard equipment, including a sunroof and the user interface), and most will price out at under $40,000.
That’s a number that wouldn’t surprise most people in other markets, who have had a Mercedes dealership to visit through this decade and have become aware of several models that fall into the ‘affordable’ category. But it might still surprise many in this region.
And with that, Wirth revisited another Super Bowl commercial, the one for the CLA model, which debuted at $29,000. It was a spot that turned some heads and put a Mercedes in driveways where one had never been.
“That was a big bang — that was eye-opening for many people,” he said, adding that the CLA, which remains popular, would go on to secure what’s known in the business as a ‘high conquest rate,’ meaning that people were opting out of the cars they were driving and into the new Mercedes model.
This is significant, he said, because, conversely, Mercedes has one of the highest loyalty rates within the industry, meaning that once they own or lease one, the Mercedes customer is very likely to go back for another.
“This is hugely important to us because we feel like we’re establishing a relationship with someone and giving exposure to our brand to people who will ultimately keep on doing business with us going forward,” he said. “They will have kids, they’ll maybe want an SUV at some point, so filling that pipeline with customers is important.”
The company is hoping for a similarly high conquest rate with the A-Class, which can turn heads not just with its styling and price tag, but also the user-friendly technology.
If they’re right, more people will be saying ‘hey, Mercedes,’ before and after they get in the car.
Auto Industry Continues to Be a High-revving Engine
By George O'Brien October 16, 2018
As the 2019 models continue to roll into area showrooms, area auto dealers report that sales remain brisk, at something approximating the levels of 2017, which was a very robust year for the industry. Meanwhile, a host of trends have continued or accelerated, including torrid sales of SUVs and trucks, a high volume of used-car transactions, and a heavy emphasis on improving the overall consumer experience.
Jeb Balise held his hand up with his thumb and forefinger barely a half-inch apart.
And then, for emphasis, he brought them even closer together.
“They’re down about that much,” Balise, president of Balise Motor Sales, told BusinessWest, referring to new car sales in 2018 (which still has a few months left, obviously) compared to a year ago.
Essentially, sales are flat, which, as Balise and others told us back at the start of this year, around President’s Day sales time, is a really good thing, because auto sales — an almost always accurate barometer when it comes to the national economy — have been rock solid the past several years.
“They’re just about the same as last year — down a tiny, tiny bit,” said Balise, adding that there is just that much less pent-up demand (resulting from cars, like their owners, living longer lives these days) this year than the past few. But there are still a number of other factors driving steady sales, including a still-booming economy, record-low unemployment, quality vehicles across the board, attractive incentives from the manufacturers, and more.
So sales are still humming, and Carla Cosenzi, president of the Tommy Car Auto Group, believes that at her four dealerships, sales are actually up from a year ago.
“We’re seeing an increase in 2018 over last year, and 2017 was a very good year for us,” she said, echoing Balise’s comments. “It’s not a significant increase, but an increase nonetheless, and 2017 was a really good year.”
Overall, 2018 has been a year when recent trends in the auto market have maintained their speed or even accelerated slightly. These include red hot used-car sales; white-hot SUV and truck sales (especially the former); growing interest in electric and hybrid vehicles, although they still comprise a very small segment of the market; and new levels of convenience for the consumer.
“We’re seeing an increase in 2018 over last year, and 2017 was a very good year for us. It’s not a significant increase, but an increase nonetheless, and 2017 was a really good year.”
Peter Wirth, co-owner of Mercedes-Benz of Springfield, which opened just over a year ago, says he’s seen all or most of the above at his dealership, a facility that has met or exceeded the lofty goals set for its first year of operation.
And that’s especially true in an often-overlooked but quite important segment of this business — the service department.
There are many qualitative measures for this, he said, especially the fact that the dealership recently hired its 12th technician, tripling the number it started with, for the 14-bay facility.
This surge in business in the service department stems from a variety of factors, from how long Mercedes models stay on the road to the fact that the next-closest dealership is in Hartford, said Wirth, adding that demand has risen steadily since the ceremonial grand-opening ribbon was cut — a clear sign that the new dealership has made its presence known.
“The floodgates opened, and in a good way,” he noted. “We’ve been at capacity for the next few days in the service department since the day we opened, and way we’re keeping up is by adding capacity so we can keep it at a reasonable timeframe for customers.”
“It’s been a 100% success story — we’ve never had to send a technician home early; we’ve never run out of work,” he went on. “Not just in the amount of work we’re getting, but also in the team we were able to build.”
For this issue and its focus on auto sales, BusinessWest talked with several area dealers to gauge the local market and the forces, well, driving it. Cars aren’t selling themselves, obviously, but in many respects this industry is on cruise control.
Those who spoke with BusinessWest said that, these days, the new models arrive at the dealership almost year round, unlike years ago, when all or most would be revealed in the early fall, to considerable fanfare.
Still, many new models do make their debuts as the leaves change colors, and thus this is a good time to take stock — literally and figuratively — of what’s happening at area dealerships and within this all-important sector.
Jeb Balise, seen here at his company’s Kia dealership on Riverdale Street, says new-car sales are down just slightly from 2017, but still at a very high volume.
First and foremost, said Balise, this remains a buyer’s market in most all respects, even though demand remains high, especially for those trucks and SUVs. That’s because supply is also high as the manufacturers continue to make product and dealers try to move it — usually with good success.
“All of the manufacturers are producing plenty of cars, and demand is off just slightly from a year ago — just enough to put the consumer in the driver’s seat, if you will,” he told BusinessWest. “Incentives have never been better — even for SUVs.
“It’s not because there isn’t demand,” he went on, referring specifically to the SUV segment of the market. “It’s more because all the manufacturers have them now, and they’re trying to grab their piece of the pie.”
The seismic shift (another industry term) to SUVs has been ongoing for quite some time now, but it moved to an even higher gear in 2018.
Indeed, all those we spoke with said sales of SUVs now exceed those of cars (sedans) for almost all models they sell. Overall, Balise said, truck and SUV sales now account for roughly 60% of all vehicles sold and leased.
And this trend toward SUVs extends to some manufacturers renowned for their cars, such as Volkswagen and Volvo, said Cozenzi. Indeed, as she stood in the Volvo dealership recently acquired by the TommyCar Auto Group, she was surrounded by SUVs — small, medium, and large — on the small showroom floor.
They’re all selling, at Volvo and other dealerships, and especially the smaller SUVs, said Cosenzi, adding that they appeal to drivers of all ages for reasons ranging from accessibility (they’re easier to get in and out of, for most people, anyway) to decent gas mileage.
“The smaller SUVs, like the Rogue [Nissan] and the Tiguan [Volkswagen], continue to dominate,” she said. “The Rogue is the number-one-selling vehicle at the Nissan store, and it’s been that way for a few years now.”
Even Mercedes is now selling and leasing more SUVs than cars, said Wirth, adding that the company passed that milestone in 2017, and the arrow continues to move upward.
Still, there are plenty of sedans to be sold, said all those we spoke with, noting that, overall, car makers are turning out quality, easy-to-maintain products across the board, giving consumers plenty of often-hard choices to make, thus motivating the manufacturers to offer solid incentives.
And soon there will be an intriguing new choice, said Wirth, noting the arrival — probably by early next year — of the Mercedes A class, an entry-level luxury vehicle, complete with some different bells and whistles, that should bring that famous nameplate onto more driveways.
“This opens us up to a whole new customer,” he said. “You might have someone attracted to this car not because of the Mercedes-Benz design or the Mercedes-Benz safety or the brand image; it might be just because of the technology in the car. You can say, ‘hey, Mercedes, I’m cold,’ and the temperature will come up, or ‘hey, Mercedes, I’m hungry,’ and it will list the restaurants. And this is in the car that represents the entry point, not the $100,000 model.”
Staging a Coupe
Looking back on his first year of doing business in the Pioneer Valley, Peter Wirth, who previously managed a Mercedes dealership on Long Island, said this past 12 months have certainly been a learning experience.
Among the things he’s learned is that this market is somewhat more conservative than the one he left — a trait that shows up in higher volumes of used-car sales as compared to new-car transactions and more sales than leases — and also generally less aware that Mercedes is now more affordable and therefore more attainable than it has been historically because of the introduction of entry-level models.
Peter Wirth, seen here with members of the service team at Mercedes-Benz of Springfield, says the company has exceeded all the goals it set for its first year of operation — especially in service.
“We still have some work to do on the matter of affordability,” he told BusinessWest, adding that perceptions about the Mercedes brand being beyond one’s reach remain despite more than ample evidence to the contrary. And that goes across the board, for passenger and commercial vehicles alike.
But he’s hoping that area residents will follow the lead of Jeff Bezos, who recently ordered 20,000 Sprinters (a cargo van made by Mercedes) for Amazon.
“I’m sure he did the math before he placed that order — I’m sure he sat down and looked at the life-cycle cost, the reliability, the down time, and everything else. He’s a pretty clever guy, and the fact that they committed to us says something.”
To Wirth, it says people need to look beyond the sticker price on the windshield (and Mercedes is competitive in that regard as well with many models) and look at the other ingredients that go into the equation, such as dependability, maintenance costs, convenience, and the sum of all these parts.
“We’ve been having the conversations regarding affordability, but also about how this is an amazing value proposition,” he noted. “We’re still working on it, but we’ve made great headway.”
Something Wirth didn’t need to learn, because he knew it already, is how important customer service and providing convenience are these days, especially to time-strapped, increasingly demanding customers.
“Time is money,” he said, adding that the dealership works to save customers some of that precious commodity in every way it can, from picking up a car bound for the service department at one’s home to getting them in and out of that service waiting room as soon as possible.
Cosenzi agreed, and said the TommyCar Auto Group has responded with something called Click, Drive, Buy, a new program that enables someone to buy or lease a vehicle almost entirely from home and on the internet.
“Especially at our Volkswagen store, we’re seeing a lot of our customers complete the entire transaction online and just come into the dealership to take delivery of the vehicle,” she explained. “I don’t think we anticipated that it would be as popular as it is, but people enjoy the convenience; they like buying a car this way. And it’s been popular with people of all ages.”
As he brought his forefinger ever closer to his thumb while comparing sales this year to last, Balise emphasized, again, that anything at or near last year’s mark is quite good.
And while he didn’t want to make too many projections about 2019, because things can change quickly, as history shows, he implied that he may well be doing the same thing with his fingers this time next year.
That’s because the basic laws of supply and demand — not to mention an economy still in high gear — should keep this industry operating in what amounts to the status quo.
And that’s a high-octane sales climate.
TommyCar Auto Group Adds Volvo Dealership
Expansion Mode
Carla Cosenzi says the recently acquired Volvo dealership in South Deerfield is a perfect fit for the TommyCar Auto group.
Carla Cosenzi says that, like most companies in its category, the TommyCar Auto Group is always on the lookout for possible additions to the portfolio of dealerships.
But growth for the sake of growth is not what this venture — started by her father, the late Tom Consenzi, and taken to a new level by Carla and her brother, Tom — is looking for.
“It’s important for us to have the right brand at the right time and the right location moreso than just looking to grow,” she told BusinessWest, adding that all those boxes could certainly be checked with the company’s recent acquisition of Pioneer Volvo in South Deerfield.
Right location? Check. The dealership is only a few miles north on I-91 from the group’s other facilities — Northampton Volkswagen and the adjacent Country Hyundai, as well as Country Nissan on Route 9 in Hadley.
Right brand? Check. Volvo has always been renowned for its quality and focus on safety, and it has recently introduced several new models, including a small SUV, the XC40, that is turning heads in the industry.
Right time? Check. Auto sales in 2018 are just slightly off the levels set in 2017 — although the TommyCar Auto Group has registered growth over that span — but overall volume remains at very high levels.
Overall, this acquisition is solid in every respect, said Cozenzi, adding that that it gives the TommyCar Auto Group its first real entry into the luxury-car bracket, meaning a brand that won’t really compete with the three sold just down the interstate.
Meanwhile, the group’s size and economies of scale will enable it to give the Volvo dealership greater visibility and opportunities to grow.
“It’s a small dealership, and it was family-owned and operated, so we’re going to continue the same values they had,” she explained. “But since we’re a bit of a larger group, we have the ability to add more amenities than they were able to provide, but with the same core values.
“We’ll grow the brand — we’ll give the brand more exposure through advertising,” she went on. “And since we’re a larger group with more of a following, we’ll be able to attract more people to the dealership, and to Volvo.”
Given all this, it’s understandable why the TommyCar Auto Group has had its eye on the Volvo dealership for some time, and also why it moved quickly and decisively when the family-owned operation came on the market earlier this year.
“It’s a small dealership, and it was family-owned and operated, so we’re going to continue the same values they had. But since we’re a bit of a larger group, we have the ability to add more amenities than they were able to provide, but with the same core values.”
“This is a brand that we’ve been looking at for a long time because it fits in well with the other manufacturers we have in the group, it’s a great location, and it’s a perfect size for us,” she explained. “We’re really attracted to Volvo and everything it stands for in terms of luxury and convenience it provides to customers, the value of the brand, and the safety of the vehicle.”
Cozenzi said the dealership in Deerfield is, indeed, small compared to most these days, and not exactly modern. However, it is comfortable and well-appointed. She said it is likely the company will renovate it in the short term and replace it in the long term, meaning over the next several years.
In the meantime, as she said, it is a solid addition to the portfolio, a brand with a number of redesigned models, cars, and SUVs alike.
“So it’s an exciting time for us to be getting involved with the brand,” said Cosenzi, citing the XC 40 as one example of a Volvo model in strong demand. “I’m coming to learn the brand, and it’s clear that they’re very innovative.”
As an example, she noted ‘Care by Volvo,’ a comprehensive package of services that brings new layers of convenience to customers.
“They take care of the essentials when they lease you a vehicle, including insurance, maintenance, repairs, a concierge service, and more,” she said. “So you can see them changing with the times, and it’s exciting to be partners with an manufacturer that’s so on edge with what’s happening.”
Like she said … the right brand and the right time — and the right location.
Autos Sections
Area Car Dealers Expect the Good Times to Roll
By BusinessWest Staff February 20, 2018
The auto market has been in high gear for the past several years, and area dealers expect that pattern to continue, and for several reasons. These range from a solid economy and abundant consumer confidence to quality vehicles and lingering pent-up demand.
‘Flat.’
In most discussions involving business, that term has a somewhat negative connotation to it. And in many ceases, we can leave out the ‘somewhat.’
But in the case of the auto-sales industry and local dealerships … ‘flat’ has a pretty good sound to it these days. In fact, just about everyone who would use images of George Washington and Abraham Lincoln in their promotions this week, or tie red, white, and blue balloons to the cars in their showroom come July, would be pretty happy with ‘flat.’
Just as they were last year.
Indeed, since the very dark days during and just after the Great Recession, car sales have rebounded nicely, with the high-water mark, if you will, coming in the 2016 sales year, with nearly 17.5 million light vehicles (cars, SUVs, and pickup trucks) sold nationwide.
Last year was off that pace, but only slightly, with more than 17.1 million light vehicles sold. And the projections for 2018 are for pretty much the same, with maybe another slight decrease of 1% or less.
But, again, 1% off what? Even in the super-solid years leading up to the economic nosedive a decade ago (years 2001 to 2006), total sales were under or just slightly above 17 million.
As we said, ‘flat’ has rarely looked so good.
“Yes, last year was off what it was in 2016, but you’re coming off historic highs — and the drop was minuscule,” said Jeb Balise, CEO of Balise Motor Sales, adding (after checking his phone to make sure he had the numbers right) that sales this January were up 1% over a year ago, this despite some bitterly cold days, a few snow days for many adults, and even that dreaded bomb cyclone thing.
Jeb Balise says projections are for another flat year for auto dealers. But ‘flat’ is more than acceptable given the high volume of sales in recent years.
And the various forecasts he’s seen project sales of between 16.7 million and 16.9 million light vehicles, which would be another outstanding year.
Other dealers we spoke were equally upbeat and happy with ‘flat’ or something approximating it, and said a host of factors are contributing to solid sales and optimism that this trend will continue. A healthy stock market (until quite recently), a sound economy, still-low interest rates (albeit amid concerns that they will rise), low unemployment, large amounts of consumer confidence, well-made products, lots of inventory, attractive incentives from the manufacturers, some lingering pent-up demand, and the basics of supply and demand are all on that list.
“It’s just a good time to be buying a car,” said Don Pion, president of the Chicopee-based dealership started by his father, Bob Pion Buick GMC. “The product is good — the best I’ve seen since I’ve been in the business. They’re good products, they get good fuel economy, maintenance is pretty inexpensive on these new cars today, the manufacturers have been aggressive with their offers, there are good lease offers … it’s all good.”
Michelle Wirth, co-owner of Mercedes-Benz of Springfield, which opened its doors last fall, concurred.
“We have a very optimistic outlook on 2018,” she said. “People are feeling good about the economic outlook, and that allows them the mindset to spend money a little more than they would have in years past.”
SEE: List of Area Auto Dealers
Meanwhile, solid sales are not the only trend within the industry on track to continue. Others include the soaring popularity of SUVs and crossovers — Wirth noted that, for the first time last year, Mercedes reported more sales of those types of vehicles than cars — and an ongoing evolution in the role of the dealership.
Indeed, where once that was a place to check out the new models, see what they cost, and explore available options, consumers can now do a lot of that, if not all of that, on the Internet. By the time they come to the dealership, they know what they want, and they know what they expect to pay. Thus, the role for those at that facility is to make the rest of the process as quick and painless as possible.
In response, TommyCar Auto Group, comprised of three dealerships selling Nissan, Hyundai, and Volkswagen, has come up with a new product called Click, Drive, Buy, whereby the consumer can do pretty much the entire buying or leasing process online, and also get a car delivered to their home for a test drive.
“They can fill out a credit application, do the pricing up front, they can go through all the financing options and rebate options and see what they qualify for, all without coming to the dealership,” said Carla Cozenzi, president of the group. “They can even research all of the after-market products like warranties and gap insurance, all of that through our website.
“We’ve evolved because we had to,” she went on, speaking for everyone in the industry. “Customers can literally do it all from their iPhone.”
Fast Times
As he talked about the current market and the forces driving it, Pion referenced one recent vehicle traded in to get some of his points across.
“It had 250,000 miles on it, but it looked like it only had about 50,000 miles on the odometer,” he told BusinessWest. “It was in great shape; you would never know it had a quarter-million miles on it.”
And this was certainly not an isolated incident, he went on, adding that these high-mileage vehicles he’s seeing on a regular basis say a lot about the market today.
They speak to the quality of the cars on the road today and their durability — “you watch the cars drive by every day, and you see a lot of older models,” said Pion — but also to the fact that, eventually, people need, or want, to turn them in.
And this lingering pent-up demand for new models — although there is much less of it than was a few years ago — is just one of many reasons why Pion’s dealership had a 2017 to remember.
Don Pion, seen here with his son, Rob, general manager of the dealership, says the soaring popularity of SUVs and crossovers has helped fuel solid sales for the industry.
Indeed, Buick sales were up 40% over 2016, he said, while GMC sales were up 30%, and used-car sales were up 20%.
Pion attributed these strong numbers to that combination of factors he described above. And while he’s not expecting a repeat, exactly, he’s projecting another very solid year.
“No one’s looking to set a record,” he told BusinessWest. “But I don’t think we’ll see any declines, only more-modest growth, perhaps.”
Consenzi agreed, and told BusinessWest that 2017 was a solid year for all three stores within the group, especially Nissan, and she is expecting improvement on those numbers across the broad in 2018.
Balise was also optimistic, and said that the pent-up demand from several years ago has been replaced by a state of general “equilibrium,” as he called it. Surveying the market now, he sees still-ample demand and considerable inventory, an intriguing mix.
“Business is good, and plenty of cars are being sold,” he explained, “but it’s a little more competitive amongst dealers, which is always good for the consumer.”
As for Wirth, she doesn’t have any numbers from last year to use as the basis for projections, or many of them, anyway.
As noted, the dealership opened its doors in September, and that last quarter or so of 2017 was essentially a time for reintroducing the brand to this region after nearly a decade’s absence, she said, adding that this process is ongoing and has many nuances to it.
Indeed, reminding people that they no longer have to drive to Hartford or Route 128 to buy a Mercedes or get one serviced is just part of the equation, she went on.
Another big part is introducing the region to the people behind that dealership with the huge Mercedes sign in front of it — and they’ve done so in ways ranging from a huge grand opening to a presence on the ice at the MassMutual Center for Thunderbirds games, to various forms of support for several area nonprofits.
Still another is educating people about the brand, how it has evolved in some ways — all those SUVs, for example — and making it clear that, in many cases, and despite popular perception, it is not beyond their reach.
“The brand stands as a symbol of success and the ultimate in luxury, and it’s just a big brand to wear,” Wirth explained. “Mercedes is not just for folks who have made it or are about to retire and end their career; it’s very much for the person who’s still climbing.”
Elaborating, she said the dealership, and Mercedes-Benz in general, are trying to attract people not of a certain age group or income bracket, but people with a certain mindset.
“They’re young at heart, they’re entrepreneurial, they enjoy craftsmanship and brands that stand for something,” said Wirth as she explained this mindset. “As for the brand, they look at it like, ‘this is this best, everyone deserves the best, so reward yourself.’”
Into a Higher Gear
Getting back to the outlook for 2018 and the factors driving those optimistic projections, one of the influencing forces is the quality of the vehicles now parked at dealerships across the region. Indeed, while those cars and SUVs with 100,000 or 200,000 or even 300,000 miles on them are still getting the job done, the products rolling off the assembly line are appealing — enough to prompt some trade-ins.
Michelle Wirth says the role of the dealership continues to evolve, and the focus now is on transparency and making the consumer’s experience as easy and painless as possible.
Especially the crossovers and SUVs. As noted earlier, even brands that have built their heritage on sedans, like Mercedes, are selling more SUVs than cars these days. Buick, known for most of its existence for its sedans, now has a lineup flush with SUVs and crossovers, said Pion, and there’s only one true sedan left — the LaCrosse.
The Balise company counts nearly a dozen makes in its portfolio, including Ford, Chevrolet, Toyota, Honda, Nissan, Lexus, Mazda, Subaru, Kia, and more, and for nearly all them, SUV and crossover sales now exceed those of sedans, said Jeb Balise.
And there are many reasons for this, everything from relatively low gas prices to the additional room in the SUVs and crossovers; from the added height of such vehicles, and the fact that they’re somewhat easier to get in and out of, to their ability to take someone virtually anywhere they want to go.
“People are more active,” said Wirth. “They want to go more places and do more things, and those vehicles present themselves as being more versatile.”
Cosenzi agreed, and noted that most manufacturers, including those she represents, now have SUVs and crossovers in small, medium, large, and even micro sizes, and they are attracting consumers in all age groups. And for most people trading in a car, she said, the SUV they’re getting into will offer comparable mileage.
Even Volkswagen, which has traditionally lagged well behind in SUV and crossover sales, is making great strides with additions like the Tiguan, a smaller SUV, and the Atlas, a much larger model.
“Volkswagen always lacked in that category, but now it’s catching up,” she said. “We’re seeing it across all brands — the demand is really healthy in the SUV/crossover market.”
All that said, compact and mid-sized cars are still a huge segment of the market, said Balise, using one of the more iconic nameplates, the Toyota Camry, and some numbers off the top of his head to get his point across.
“Let’s just say Camry was selling 400,000 units and now they’re selling 315,000; that’s still a lot of momentum for that segment,” he said. “While the phenomenon is happening and it’s material — it impacts business, and we have to figure out what to do — it’s not a total-sum game. Sometimes you look at these reports and it looks like you’re never going to sell a car again, and it’s all going to be trucks — it’s not that dramatic.”
But it is still a sizable movement within the industry, as is the overall ‘dealer experience’ and the changes that have come to it, and the ever-greater emphasis on transparency and all that phrase implies.
As noted earlier, much goes into this equation, but it comes down to making life as easy as possible for the consumer during and after the buying or leasing process.
Putting it another way, Wirth said, while no one realistically expects to enjoy the car-buying process, dealers, and especially hers, are succeeding in making it far less painful that it was years ago.
How? By being up front and transparent with pricing, putting information in consumers’ hands, and adding convenience when possible, such us applying for financing online.
Balise agreed. “When it comes to the customer, their time is extremely important to them, and they don’t want to waste it,” he explained. “So when they come in, you need to be on your game and give them the information in an easy, transparent way; what you’re really doing is being as helpful as you can to help them make a decision.”
Pion echoed those thoughts, noting that a good number of people who come into a dealership ready to buy want to drive off in their new vehicle the next day — or even later that day — and dealers have to respond to such whims with inventory and an ability to get such deals done.
But these efforts to enhance the customer experience don’t end with the sale, as those in this industry like to say. Indeed, service is a huge part of the equation, especially with cars remaining on the road as long as they are, and emphasis on this part of the experience manifests itself in everything from spacious, well-appointed waiting areas to car washes built into the dealerships.
At the Mercedes dealership, said Wirth, the technician will create a video of the vehicle in for service and text it to the customer so he or she can see what the issue is.
“We’re in it for the long haul, and it’s more valuable to us and more important to us that people feel taken care of and understood,” she went on. “It’s more about how we meet people’s needs at that moment in time and have all the information at that moment.”
The dealers we spoke with said those Presidents Day sales that once dominated the airwaves and turned Washington and Lincoln into pitch-people are still a part of the landscape, just not on the same scale as years ago.
Those sales were needed to propel the industry out of winter doldrums and create a bridge to spring, said Pion and Balise, both industry veterans. Today, car selling is different, and there is more of a even flow of transactions throughout the year — although a boost in February is always welcome.
That’s just part of a changing landscape in this business, where ‘transparency’ is now the watchword, and where ‘flat’ sounds really good.
Balise Continues to Expand Its Portfolio of Facilities
On the Move — Always
The new car wash in West Springfield is the latest addition to an ever-growing portfolio of facilities for the Balise Auto Group.
As he talked about the very latest addition to the already-expansive portfolio for the Balise Auto Group, a car wash just off Riverdale Street in West Springfield, Jeb Balise said it was a capital-intensive, very necessary supplement to the collection.
Capital-intensive because car washes, as some might know but others might not, are now very sophisticated, computer-operated facilities offering an ever-greater array of wash options. And necessary because … well, consumers are becoming ever-more demanding, and, likewise, the auto business is ever-more competitive.
So auto groups like Balise need to respond with the proverbial ‘more’ and ‘better.’ ‘More,’ as in more products and services to offer those customers, and ‘better,’ as in better than the competition.
And this mindset reflects itself in everything from the company’s growing stable of car washes (there are now three, including two in Western Mass.) to the ongoing work to replace or renovate the group’s large roster of dealerships, including the Balise Nissan store a half-mile east of the car wash on Riverdale Street, to an insurance agency in Rhode Island as part of the mix.
“We’re making sure we’re giving the customer everything they want for support instead of just selling them a car,” said Balise as he talked about additions to the number of collision centers, used-car facilities, and more. “So if someone buys a car from us, they don’t have to worry about collision repair or getting their car cleaned or insurance; we can pretty much provide holistically everything they need for the life of that car.”
He offered those thoughts in an interview in one of the sales offices at Balise Nissan, the latest of the company’s dealerships to be replaced, or, in this case, given a huge makeover. Long operated under the name Jerry Rome Nissan, the facility now bears the Balise name.
Open for just over two months, the ‘new’ dealership was essentially gutted and rebuilt from the ground up, said Balise, adding that it is the first store selling this brand to incorporate new imagery and design elements developed by the carmaker.
The Nissan dealership on Riverdale Street now carries the Balise name. It’s the latest of the company’s dealerships to undergo extensive renovations or new construction.
“There was nothing left of the showroom — we stripped it right down to columns and roof, basically,” he explained. “We really rebuilt it, and you can feel it; you would never know it was a retro.”
That’s the word he chose for a dealership built in the ’80s and ’90s — before they became far more spacious (50,000 square feet in the case of the Toyota dealership, also on Riverdale Street), comfortably equipped, and customer-friendly.
As he talked about the Nissan store and offered a quick tour, pointing out its larger, revamped showroom and well-appointed service waiting area, Balise said there are a few minor touches to be completed before a grand opening can be staged — probably later this month.
And as those final touches are made, thoughts are already turning to what’s next, said Balise, adding that the company embarked on a massive campaign to make over facilities for all the brands it sells more than a decade ago, and there are still a few projects left to undertake.
One is the Balise Mazda facility on the other (north) side of Riverdale Street. Built in 1984, it is certainly showing its age, said Balise, adding that plans will be on the drawing board soon for either new construction or another extensive renovation.
Meanwhile, another nameplate in line to have a new home is Kia, which became part of the Balise stable in 2015 and has been housed in a small facility that was once a Mercedes dealership a decade ago.
Kia is a rising star in the auto galaxy, said Balise, adding that it has an attractive mix of cars, vans, and SUVs, and it will soon have a home befitting that status. Various options are currently being reviewed, and no formal plans have been announced, he went on, noting that both the Kia and Mazda facilities will be upgraded within the next 24 months.
“Our plans will be really impressive,” said Balise in reference to both projects, still in the developmental stage. “These will be either brand-new buildings or significant renovations — total change.”
As for the car washes, Balise said they are part of broader efforts to serve the full gamut of customer needs and provide additional layers of value.
The company started with a facility in Hyannis, where it also has several dealerships, then added one on East Columbus Avenue in 2016; the West Springfield location opened in January.
There are two more car washes on the drawing board for the next 24 months, said Balise, adding that the specific markets have not been identified.
The car washes offer ample evidence of consumers taking better care of their vehicles, but also of the value that auto groups are trying to provide.
Indeed, the car washes are strategically located to serve customers at the Balise dealerships (there are three on Columbus Avenue and a half-dozen on Riverdale Street), he noted.
Those who buy a car at any of the Balise dealerships get 60 days of free washes, he went on, and they also get special pricing on both everyday washes and the hugely popular ‘unlimited plans,’ whereby consumers can wash their car as often as they want for one monthly fee.
As for new dealerships, the company is always looking for new opportunities — in this market and others, he went on, adding that, despite an ongoing wave of consolidation within the industry, there are still a number of single dealerships and small groups that could be added to the portfolio if the conditions were right.
“Even with all the consolidation, it’s still a fragmented business,” he told BusinessWest. “The majority of facilities are owned by someone who might have two or three stores, or one store.
“We’re just focusing on the best-location, best-franchise philosophy,” he went on, and then making sure our facilities exceed the customers’ expectations.”
Autos Cover Story Sections
Mercedes-Benz Set to Make Its Return to Western Mass.
By BusinessWest Staff August 22, 2017
Awaiting the ‘Autohaus’
Michelle and Peter Wirth
Michelle Wirth started her career with Mercedes-Benz as a mechanical engineer. Early on, after only a few visits to Stuttgart, Germany, where the cars are designed and manufactured, she learned that the company doesn’t build to industry standards — it creates an environment where engineers can design to their own, higher standards. These are lessons she and her husband, Peter, apply to their life and how they do business, especially with their new venture, Mercedes-Benz of Springfield, set to open next month.
Peter Wirth doesn’t know exactly how long it’s been since Mercedes Benz has had a presence in Western Mass. with a dealership.
He does know that it’s been … well, long enough.
As in, long enough that he knows he and his wife, Michelle, and fellow partner Rich Hesse have a lot of work to do in many different realms as they prepare to open Mercedes-Benz of Springfield on the site of the old Plantation Inn across from Mass. Turnpike exit 6 in Chicopee.
For starters, the partners in this nearly $12 million enterprise have to let people know that Mercedes is, indeed, back in the 413 more than a decade after a small dealership on Riverdale Street, this region’s auto mile, if you will, closed its doors, leaving area consumers to travel to Hartford or just east of Worcester to do business.
And they intend to get that job done in a number of ways, from intensive, targeted marketing to a grand-opening celebration (date to be determined), to some work within the community even before the doors open, to show that they are not just here to sell cars (more on that later).
But there is other work to do, and most of it falls in the category of showing just how much Mercedes-Benz — the company, the cars, and the brand — have all changed since the last time someone had the opportunity to buy or lease a new one in Western Mass.
“What I recognized is that we have to — and we love to — reacquaint people in our area of influence with the Mercedes-Benz brand; a lot has changed in 10 years,” said Michelle Wirth, who will oversee marketing efforts and other duties for the company, but started her career with Mercedes as a mechanical engineer. “There are something like 3,000 to 4,000 Mercedes cars in Western Massachusetts currently in operation. I don’t have exact figures, but I’m sure most of them are older, because people haven’t made the trek to Hartford or Shrewsbury or Albany pick up a new car.
“We want to make sure that those folks who are already convinced about the brand know we exist, and then reacquaint them with the new cars,” she went on. “The vehicles themselves have just transformed in the past 10 years.”
An architect’s rendering of the new Mercedes dealership, which will emphasize transparency.
By that, she was referring to everything from the number of models to the depth of the price range. For example, she pointed to the CLA, a Mercedes model that retails for under $33,000, a number that would likely surprise many people, including some who know cars — and Mercedes.
Other things that have changed since Mercedes models were last sold in this region include the carmaker’s focus on safety, and not merely luxury and style (although those are still points of emphasis, to be sure), as well as the dealerships in which the cars are sold and, especially, serviced.
Indeed, dealerships today are well-appointed, convenience-focused, customer-friendly facilities that exist not so much to showcase cars, although they still do that, certainly, but pamper those who buy them.
SEE: Auto Dealers
So much so that Michelle Wirth, as she described the process of designing, outfitting, and operating the facility in Chicopee, said the mindset is that she and her husband are not competing with other dealerships, necessarily, but against hotels, restaurants, and even the new $950 million MGM Springfield casino due to open in about a year, in the manner in which they are all focused on hospitality and taking care of the customer.
“When they walk away from a fine hotel establishment, people say ‘man, they did everything right’ — it’s just a feeling they have,” she explained. “When they walk away, they’re going to feel it, they’re going to feel, ‘wow, they care about me, and they took care of me. That’s the feeling we’re going to create.”
For this issue and its focus on auto sales, BusinessWest visited the dealership a few weeks before its doors are due to officially open to gain some insight into what the partners in this venture are anticipating as Mercedes makes its much anticipated return to the area.
A Major Coup
By now, most in the region’s business community are at least somewhat familiar with the story behind Mercedes-Benz of Springfield.
Back in late 2014, Peter Wirth and Hesse, owners of a Mercedes dealership in Nanuet, N.Y., were approached by the carmaker about bringing the brand back to Western Mass. with a dealership after that aforementioned lengthy absence, and after some extensive research, the two concluded that this region was, indeed, underserved, and that a facility here had considerable potential.
Especially at the site they eventually chose, two turnpike exits east of Riverdale Street, at the old Plantation Inn site. This location is literally across the street from where the tollbooth once stood, and at the eastern end of Route 291, giving the location great accessibility.
And it will be needed, because this dealership will have a huge coverage area, one that includes parts of four states: Western Mass., Northern Conn., Southern Vermont, and Southern New Hampshire.
That large swath of territory will bring some challenges, said the Wirths as they talked about their business venture — especially the large number of markets they must advertise in — but also a great deal of opportunity to better serve thousands of Mercedes customers.
“It’s a big area, and it’s a big task,” said Peter. “But it’s a huge opportunity for people in the Springfield metro area, who have to drive 45 minutes to Hartford, or almost an hour to Shrewsbury, the next-closest dealership, or an hour and a half to Albany.”
More than three years after those initial talks between Mercedes, Wirth, and Hesse began, the Western Mass. Mercedes dealership, or ‘autohaus,’ as such facilities are called in Germany, is nearly ready for prime time.
When BusinessWest toured the site in mid-August, the exterior of the dealership had been completed, and work was continuing inside. The projected opening date will be late September.
Like most of the dealerships being built, many of them replacing facilities 30 or 40 years old, this one will be spacious, well-appointed, modern-looking, and heavy on glass and metal.
There is a corporate identity and design standards for these dealerships, and they make them easily recognizable as Mercedes-Benz dealerships. There are certain kinds of columns, tiles, paint colors, and furniture that are pretty standard across the dealer network. But at the same time, we, together with Mercedes-Benz, worked on laying out the dealership in the way we know it’s going to work.”
And while the Mercedes corporation has a desired look and feel in mind that its dealers must create, there is plenty of room to personalize one’s autohaus, said Peter, citing, as just one example, the dealership’s car wash; Mercedes doesn’t require one, but the partners considered it a key part of the “experience.”
“There is a corporate identity and design standards for these dealerships, and they make them easily recognizable as Mercedes-Benz dealerships,” he explained. “There are certain kinds of columns, tiles, paint colors, and furniture that are pretty standard across the dealer network. But at the same time, we, together with Mercedes-Benz, worked on laying out the dealership in the way we know it’s going to work.
“That’s something that has now become specific to this site,” he went on. “Mercedes-Benz has ideas, but they will also take our input, and we’ve been very vocal in that process and made it our own. While we’ve been using their design cues, the feel and flow of the dealership is what we know works and will serve our customers best.”
Asked to elaborate, he said this dealership isn’t just open, it’s incredibly open.
Wirth said his office has four glass walls, and from it, he can see the front desk, the sales office, the lounge, and the service drive. In many ways, that office embodies the intended feeling of openness, ease of transition from one department another, and a word that’s becoming ever more prominent in business and politics today — transparency.
“It’s easy for customers to not just find their way around, but to transition from one department to another — we’re not compartmentalized,” he explained. “We don’t think of a dealership as a sales, service, and parts department; it’s one unit to us.”
As she talked about the new dealership, plans for it, and the level of service she and her partners plan to create, Michelle Wirth thought this was the time to discuss her career with Mercedes-Benz, which began soon after she graduated from Lehigh University with a mechanical engineering degree.
Peter and Michelle Wirth say much has changed in the decade since Mercedes had a presence in the area, and they intend to reacquaint the region with the brand.
“I got hired right out of school and worked in environmental and safety engineering,” she told BusinessWest. “I went to Germany a number of times a year, and actually got to go to the design center in Stuttgart, where they design and build these vehicles. I got to learn — I didn’t know this when I walked in the door — that Mercedes doesn’t just build to standards. They rise above those standards, and they have a holistic approach to safety and a holistic approach to design.
“It’s more about ‘what’s the best solution for the customer,’ and that’s impressive,” she went on, “because it creates a space where engineers get to design to the best possible standard, not just the least common denominator. And that translated over to me. As a young person, eyes wide open, I learned a lot from that. It’s like a standard you set for yourself, and it’s the highest one around.”
This attitude, or mindset, permeates everything the couple does in life and in business, Michelle explained, adding that it shapes everything from how they’ll do in business in Chicopee to how they’re already getting involved in the community that will soon be home — to them and their business.
That involvement has taken the form of support for organizations ranging from Square One to Baystate Children’s Hospital, said Peter, adding that these endeavors are part of a culture the company wants to instill. In other words, rather than doing something that might be expected, such as simply meeting auto industry design and performance standards, they’re setting the bar much higher.
“It’s not just checking a box for us,” he explained. “If you can be involved with the children’s hospital, and you have four healthy children; that comes naturally to us. Yes, you’re getting your name out, but it’s also a natural contact point for us; we can help and do good at the same time.”
Meanwhile, back in the realm of car sales, the Wirths believe they have the right brand at the right time to go along with the right location and the right culture.
Indeed, while some luxury brands have struggled with making all-important connections with younger audiences, Mercedes has made inroads, if you will, by creating lower price points and getting younger people into its vehicles.
And once that happens, they often become customers for life, said Michelle, noting that Mercedes not only has one of the highest loyalty rates in the business, but one of the highest conquest rates (winning over the drivers of other brands) as well.
At the same time, the company has adjusted its marketing messages, said Michelle, to appeal not only to the young, but to those who want to think, act, and, yes, drive like the young.
“Now, the marketing focus is more on ‘young at heart,’” she explained. “That’s how we describe people; it’s ‘do you have that Millennial mindset? You may not be that age, but you have that mindset. By doing that, you broaden the audience that you’re speaking to.”
Getting in Gear
Given the huge geographic area it will be serving, Mercedes-Benz of Springfield will already be speaking to a very broad audience.
The initial message will be that Mercedes is back in Western Mass. after a decade’s hiatus. But soon — in fact, almost immediately — there will be much more to communicate: that Mercedes is back, and that this is a brand for both the young and the young at heart.
Also to be communicated, especially through a visit to the new dealership, is that this venture fully embraces that corporate culture of not merely meeting standards, but setting higher ones.
Despite Some Dire Projections, Dealers Having a Solid Year
Mike Lapointe says effective pricing and “making it easier for customers to do business” have been keys to success at Lia Honda.
Mike Lapointe said he considers himself an “outlier” in most respects when it comes to the automotive market and what’s happening within it.
He used that term in reference to everything from his ability to sell the generally older cars being traded in these days — a development he attributes to the market he serves as general manager of Lia Honda in Northampton (one with thousands of college students on tight budgets) — to the manner in which his dealership is defying what all the ‘experts’ projected as a somewhat down year for the industry.
“Our sales are up 130% as far as new-car business is concerned, so Honda is very, very happy with us,” he explained. “It was the opposite of what we expected; during the winter, we had record months, and in the summer, we ran into vacation season, and things slowed down quite a bit. But we’re maintaining above 100% of our new-car objectives.”
But while Lapointe may well be an outlier when it comes to those older used cars — many are a decade or more older and not retailable in most markets — that term doesn’t seem to apply to overall dealership performance, at least among the owners and managers we spoke with.
Indeed, while analysts were predicting that 2017 would be the year the bubble would burst in the auto industry — when a run of several successful if not record-breaking years would come to an end and the needle would starting moving in the other direction — that really hasn’t happened, at least not locally.
“We actually expected to start to see a downturn, and internally, we were trending for that,” said Carla Cosenzi, a principal with TommyCar Auto Group, which operates Country Nissan in Hadley, Country Hyundai in Northampton, and Northampton Volkswagen. “That was the rhetoric within the industry, but we’re not seeing that; we’re trending upward at all our locations this year.”
Don Pion, president of Bob Pion Buick GMC in Chicopee, the dealership started by his father, Bob, agreed.
“We’re having a very solid year — I can’t complain,” said the 40-year industry veteran. “Both Buick and GMC have good products out there right now, rates are still good, and all those things help us sell cars.”
Carla Cosenzi says TommyCar Auto Group is seeing continued growth across all its lines, despite projections for an industry-wide downturn.
With one voice, the dealers we spoke with said the forces that were supposed to bring an end to the auto industry’s fun ride, or at least pump the brakes — and they include everything from uneasiness over the scene in Washington (and around the globe, for that matter) to the fact that many of those older cars had already been replaced — are there. But they haven’t had the expected impact.
“We read all those reports … have we hit the bubble? Are we starting to trend down? Every possible thing that could affect the business in a negative way — that’s what they’re predicting,” said Pion. “You read all that, and you think, ‘what’s going to happen?’ But we haven’t seen it. People are still coming in, and they’re still buying cars.”
For this issue and its focus on auto sales, BusinessWest talked with area dealers about what they’re seeing — or not seeing, as the case may be.
When asked how his dealership and others in this region have fared so well when the industry was supposed to take a step back — and still might; projections for the summer were especially glum — Pion paused for a moment.
“You would need someone smarter than me to answer that,” he said eventually, adding that he’s only doing what his father said needed to be done when the industry analysts’ predictions weren’t rosy — and also when they were.
“He always said that you read all that stuff, those industry projections, and you put it away for reference,” he told BusinessWest. “But you come to work every day ready to do business.”
Indeed, while Pion and the others we spoke with said they were, and are, well aware of the predictions for a slower year, all they can do is respond to what they see out their windows, in the showrooms, and on their books.
And the numbers do not reveal a slowdown of any kind.
“We sold 150 cars in February, 140 in March, and 160 in April,” said Lapointe, adding that the average for a typical year at his dealership is about 110, and ‘150-car months,’ as he called them, are solid, to say the least.
Meanwhile, Pion said, so far this year, his Buick sales are up 24%, GMC is up 30%, and used-car sales are up 20%.
Cosenzi, meanwhile, used more words than numbers to convey pretty much the same information.
“We’ve continued to see growth. And usually, we don’t see that across all brands at the same time, but we’ve seen that this year,” she explained. “Usually, one will take off a little more than another, or one will have a new-product launch or something else that will create a little more excitement. But we’ve seen growth across all three.”
What’s driving this better-than-projected performance? There are a number of factors, said those we spoke with, ranging from effective pricing (Lapointe cited this as a key to Honda’s continued solid performance) to seemingly ample amounts of confidence on the part of consumers, to quality products — especially SUVs of all sizes and shapes.
At his Honda store, Lapointe said the keys to success are having inventory that appeals to buyers in the Five College market — again, Millennials on tight budgets — and going the extra mile, whatever that may be, to clinch a sale.
“We have to find new ways to do business,” he explained. “Other dealer groups may not take a deposit over the phone; they might force you to come into the store. Other groups might not give you a trade over the phone. Those would be outdated strategies for me. We do whatever makes it easier for the customer to do business, because the next guy won’t do that.”
As for what’s selling, while car sales have been decent, said area dealers, SUV purchases and leases continue to fuel the numbers cited earlier. Each carmaker now has such vehicles in the ‘small,’ ‘mid-size,’ and ‘large’ categories, and they all seem to be selling.
“The car market is still struggling somewhat, but the SUVs, from the smaller models right up to the full-size SUVs, are doing very well,” Pion said, citing solid numbers for models ranging from Buick’s Envision (a new product) to GMC’s Acadia (a larger model).
Cosenzi agreed, noting that the SUVs made by all three carmakers she handles are doing well, as are entry-level cars — those generally under $20,000 now — such as Hyundai’s Elantra and VW’s Jetta.
As he talked about the market moving forward, Pion said his plan, in most all respects, is to continue following his father’s advice.
That would be to read and listen to the analysts’ projections, put them away for reference, but show up to work ready to sell cars.
Thus far this year, dealers have been selling more than the forecasts said they would. And they believe the conditions are such that things will continue in this vein.
This won’t make them outliers, necessarily, but it will make them quite happy.
Auto Dealers Predict Sales Will Continue Rising
By BusinessWest Staff February 7, 2017
A High-revving Engine
Carla Cosenzi says sales have been on the rise for several years at TommyCar Auto Group, and she expects this trend to continue at its dealerships.
Initial national projections for 2017 called for the recent rise in auto sales to level off and then perhaps slow down. But those forecasts have been adjusted recently. Indeed, the experts say a host of favorable factors, from low gas prices to a stable economy to the advanced age of many cars on the road, will continue to fuel increases in sales volume.
John Kupec III has been in the automobile-sales industry for 40 years. But he has never seen trade-ins with as many miles as the ones being brought to Gale Toyota in Enfield today.
“We’re seeing cars come in with more than 250,000 miles,” the general sales manager told BusinessWest.
Indeed, a poll conducted last month by market research company IHS Markit shows the average age of light vehicles on the road is 11.5 years, and the trend Kupec observed is mirrored at other dealerships.
“This week alone, I saw trade-ins with 160,000 miles, 180,000 miles, and 240,000 miles — vehicles last longer than they used to, but people have taken it to the extreme,” said John Lewis, general manager at Chrysler Jeep Dodge Ram and Bertera Fiat and Collision Center in West Springfield, as he spoke about reasons that led so many people to keep their vehicles for a decade or more.
John Kupec is optimistic about the year ahead, and says Gale Toyota of Enfield hopes to increase sales by 10% to 15%.
The practice began in 2008 when the economy crashed. Consumer confidence plummeted, 401(k) plans lost their value, and people worried about job security and began to realize they could drive their vehicles much longer than they had believed possible without incurring a lot of repairs.
“Today alone, we took in a 2001 with 160,000 miles and a 2005 with 155,000 miles,” said Craig Dodenstein, sales manager for Toyota of Greenfield, who noted that people usually upgrade to a new vehicle when the cost of repairs becomes prohibitive.
Sales began to rise a few years ago in line with a renewed confidence in the economy that has slowly taken root. But last fall, the National Automobile Dealers Assoc. predicted 2017 would be the year in which sales would reach their peak and begin to slow down. That projection was changed, however; now, sales of new vehicles in the U.S. are expected to remain above 17 million for the third straight year in a row, and even rise slightly toward the second half of the year.
Chart of area Auto Dealers
Aging vehicles still on the road have resulted in pent-up demand, and that factor, coupled with new models, aggressive manufacturer incentives, low interest rates, reasonable gas prices, and an upswing in the economy, are fueling optimism at local dealerships for the coming year.
“Last month, our sales were up 10% over January of last year, and we expect a 20% increase in 2017,” Lewis said, attributing the number not only to the company’s reputation and the service it offers, but the fact that Subaru sales have climbed and a new $5 million Chrysler Jeep Dodge dealership is under construction, which hindered sales last year when they started working from trailers.
Fathers & Sons in West Springfield also has a new dealership, an $18 million facility that is home to Audi and Volkswagen franchises.
“We want to grow, plan to grow, and have the tools in our arsenal to do it,” said Sales Manager Ethan Prentiss. “In December, Volkswagen had the best month in company history, and this year we expect a 10% to 12% increase in Volkswagen and Audi sales, and an 8% to 10% increase in Volvo sales,” he said, referring to the company’s other dealership on Memorial Avenue, which houses the largest dedicated Volvo dealership in the country in terms of square footage.
Ethan Prentiss says the demand for SUVs and crossovers such as the new Volkswagen Touareg continue to rise at Fathers & Sons Volkswagen.
Incentives are also boosting sales, and Kupec said Toyota’s are higher than they have been in decades. “The manufacturer is offering 0% interest on some models, which they have never done before; hefty rebates of $2,000 to $3,000; and bonus cash on leases,” he said. “We’re off to a great start and hope to have a 10 to 15% increase this year in sales.”
Bill Peffer concurred. “It’s a very exciting industry to be in, and our outlook for 2017 is very, very positive,” said the president and chief operating officer of Balise Motor Sales, which has 24 stores in three states. “The market is very strong, and any volatility has been offset by manufacturer incentives. There are tons of new choices for customers — it’s a very good time to buy a car, truck, or SUV.”
For this issue and its focus on auto sales, BusinessWest looks at the current landscape within the industry and what the road ahead might bring.
Getting into High Gear
Last June, Volkswagen agreed to buy back its 2.0L diesel vehicles after a lawsuit that proved it had used emissions-system-defeating software. The VW Group also agreed to pay owners $5,100 to $10,000 in additional compensation on top of a fix or buyback of their car.
The negative press that ensued made sales challenging for a period of time, but buybacks began last October and accounted for a quarter of the Volkswagen sales at Fathers & Sons in December.
“These people would normally not be in the market for a new car, and the projection is that we will be able to retain 25% of them; many of our customers love the way their Volkswagens drive and handle,” Prentiss said, explaining that this situation, coupled with the new dealership and a lineup of exciting new products, is not the only reason for the projected increase in sales.
“We are now a negotiation-free dealership, which is what customers want,” he continued. “Buying a vehicle here has become all about the experience. Our salespeople are non-commissioned, and customers can find what they are looking for and complete the purchase within two hours.
“We give them our best price up front and make it fun to buy a car,” he continued, adding that Volvo sales are also up, as the manufacturer broke records last year due to the launch of a new image and the release of new products.
Toyota of Greenfield is another dealership that has undergone change. It moved into a new, $7 million dealership last winter and held a grand opening last May, so 2016 was a year of transition as they were able to move out of the trailers they worked in during 2015 while construction was underway.
“We’re looking for a 5% to 10% increase in sales this year, and if January was any indication, we are headed in the right direction,” said Dodenstein, adding that January sales had almost tripled over last year’s numbers by the third week of the month.
Although the new dealership certainly makes a difference, manufacturer incentives and new products add to the enticements. The new electric Prius Prime is a leader in its class; it gets 133 miles per gallon, beat a preliminary 22-mile electric volt range estimate with 25 miles, and gets 54 mpg in hybrid mode.
Meanwhile, Carla Cosenzi said last year was a great one for TommyCar Auto Group, which includes Hyundai, Nissan, Buick, GMC, and Volkswagen franchises. Some stores did especially well, including Hyundai, which experienced strong demand for entry-level vehicles.
“Hyundai gives customers a lot of value for their dollar, including technology, safety, and the aggressive pricing people are looking for,” Cosenzi explained, noting that consumers are excited about the fact that new technology is standard in many brands of entry-level models and ranges from adaptive cruise control to lane assist, collision warning, and backup cameras.
TommyCar is expecting another excellent year, and the sales of the new Volkswagen Golf All Trac station wagon, which has all-wheel drive, accelerated right after it was released. In addition, SUVs and crossovers are becoming increasingly popular, such as the 2017 seven- passenger Nissan Rogue and Volkswagen Tiguan.
“People want the space, comfort, and luxury they provide. They are more expensive than compact cars, but with interest rates and gas at all-time lows. they’re affordable,” Cosenzi noted.
Other local dealers agree that the demand for trucks, crossover vehicles, and SUVs is growing. They point to the fact that unemployment rates are low, people use trucks to do business, and buyers of all ages want to be able to travel in the winter.
“The weather in New England is unpredictable, and people want mobility whether they are driving to the ski slope or have the kids in their vehicle during a snowstorm,” Peffer said, adding that today’s crossovers and SUVs offer that versatility.
He noted the trend has changed over the past few decades. “Station wagons were popular from the ’40s through the ’70s. But when Chrysler came out with a minivan in the ’80s, the evolution of SUVs began, and so did the way people chose to be mobile,” he told BusinessWest, noting that crossovers and SUVs are affordable, offer more utility than mid-sized cars, and get good gas mileage.
Prentiss said Fathers & Sons sells seven-seat vehicles as quickly as they get them, and Audi’s Q7 and Volvo’s XC90 SUV models are popular because they offer utility plus plenty of cargo space. In addition, Volkswagen’s Tiguan and Golf All Trac have made the brand competitive with Honda and Toyota.
Changing Landscape
Local dealers say leasing has increased and accounts for a good portion of their new-car transactions.
“Leasing allows people to move into cars with low payments without the hassle of long-term maintenance; they can lease them to drive what they want and turn in the car before the warranty is up, as opposed to incurring costs over a six-year loan period,” said Peffer, noting that, a decade or two ago, leasing was reserved for commercial buyers, but today it has gone mainstream, and a third or more of Balise’s new-vehicle sales are leases.
Leasing is also popular at Bertera and accounts for 38% of its new-car business. “Technology is moving so fast, and people want the latest advances. Plus, a segment of the population is always going to have a payment, and they can get a brand-new car every two to three years with a lease,” Lewis said.
He explained that the average payment on a purchased $40,000 vehicle is $500 a month for six years, but the same vehicle can be leased for $300 to $350 a month with very little money down, which makes it attractive.
Kupec noted that the appeal extends to different age and economic groups, especially since people who do a lot of driving can build additional miles into a lease.
“People are more receptive to leasing than ever before,” he said, adding that 40% of the store’s new-car transactions are leases.
Prentiss told BusinessWest that a large portion of Millennials would rather lease than buy a new vehicle. “It has to do with their psychology; they think a three-year lease is long enough.”
The market for electric vehicles is also growing. Cosenzi said the Hyundai Ioniq, which is scheduled to come out in the next month, will have a battery-only model with an electric driving range of 124 miles and an EPA rating of 136 miles per gallon.
Positive Signs
From a big-picture, national-economy perspective, the road ahead is certainly marked by unpredictability and guarded optimism.
In the auto industry, through, there would appear to be fewer potential bumps in that road and apparently smooth riding. As noted by all those we spoke with, a number of factors are contributing to greater confidence on the part of consumers, and this is translating into greater activity at area dealerships.
As they say in this business, there is plenty of tread left on those tires.
Millennials Are a Growing Force in Auto Sales
Jennifer Cernak says technology and connectivity features often appeal to younger buyers.
With the Millennial generation quickly becoming a more powerful force in the economy — totaling around 85 million, they’re now in their 20s and 30s, and their spending clout is only growing — auto dealers have definitely taken notice.
“They’re becoming more influential in the purchase of durable goods, including vehicles,” said Bill Peffer, president and chief operating officer of Balise Motor Sales. “They’re buying for themselves as they get older, but many are still living with their parents, so they’re also influencing their parents’ decisions. That’s quite a reversal from the Baby Boomers, who wanted to break free of the Greatest Generation and develop their own tastes.”
One way Millennials are changing the car-buying process is in their reliance on technology, specifically the online experience of car shopping.
According to Automotive News, more than 90% of car shoppers begin the journey online, visiting an average of 18 sites, including Google, online shopping networks, and social media, before showing up at a dealership, usually unannounced. However, Millennials take this process further, visiting an average of 25 sites before buying a vehicle.
“They definitely use technology to find what they need before they come into the store,” Peffer said. “Not too many years ago, the average consumer visited four or five stores. Now, with the explosion of technology and social media and the Internet, they’re making visits to far fewer stores before they actually make their purchase.”
Most Millennials don’t like to negotiate. They have information; they know what the cost is. They do their negotiating online.”
The average, actually, is fewer than two, he said. “They go to one store, and if the experience isn’t pleasant, if it’s not to their satisfaction, they go to the next one. Particularly with Millennials, they know what they want; the question is, are you able to meet their needs? You have to arrive at a mutually acceptable price and respect the convenience of when they want to make the purchase.”
J.D. Power reports that Millennials — usually defined as the generation born between 1980 and 1998 — bought 4 million cars and trucks in 2015, their share of the new-car market jumping to 28% — a number expected to rise steadily each year, with some estimates having them accounting for 75% of all purchases by 2025. So dealers need to understand their habits and preferences.
“I think it forces everyone to be on their game. It forces dealers to adopt — and not only adopt, but utilize — technology to fulfill the dealer’s end of the process,” Peffer said. “This is how shopping has evolved, not just for vehicles, but for everything. You can shop from your house for a suit at 10 o’clock at night.”
As for car shopping, he continued, “the deal has to be completed in the store, but we can make it convenient as well. We can deliver the car to the house for a test drive. We help the consumers make the decision where and when they want to.”
It’s all about meeting demand — for a generation of car buyers that can be well, demanding.
Jennifer Cernak, co-owner of Cernak Buick in Easthampton, understands the demands placed on a dealership by a prepared shopper.
“Most customers have already spotted the car they want; they’ve seen it online, and they know what they’re looking for,” she said.
Young people tend to appreciate technology, she said, from smartphone apps that connect a smartphone’s navigation feature to the vehicle, and infotainment apps like Pandora, Apple CarPlay, and Android Auto.
“There’s definitely some cutting-edge technology,” she said. “People don’t always think of that when they think of Buick; they don’t realize we have some of the latest and greatest technology and features out there.”
Bill Peffer says young, Internet-savvy shoppers, armed with data before they arrive at the dealership, are changing the car-buying game.
While Millennials certainly appreciate infotainment and connectivity packages — features that make the car a sort of platform for all one’s personal tech — that’s only one part of what they’re looking for in a car, Peffer said.
The second big draw is safety features — everything from lane-departure sensors and active braking systems to multiple airbags and safety shields: in other words, components that both help avoid crashes and protect riders in the case of one.
The third attraction is, quite simply, value, a concept that goes beyond the bottom-line price, encompassing everything from how well a vehicle holds its resale value to how it will serve their lifestyle and needs. That explains the popularity of compact SUVs, or crossovers, because they tend to support the activities of families and outdoor enthusiasts at a more reasonable price than larger SUVs.
Cernak noted that the Buick Encore compact SUV has broad, cross-generational appeal, and that includes Millennials, who appreciate features like all-wheel drive, Bluetooth connectivity, in-car wi-fi, backup cameras, and being able to start the car from their phone — a mix of traditional and thoroughly modern amenities. “The younger generation seems to like these things — not that the older generation doesn’t like them too. But older buyers are looking for a more traditional luxury experience.”
She also said young buyers are increasingly leasing, but that’s true across the generations. “More and more people are leasing. If someone likes to get in a brand-new car every few years, it can be more affordable. Some people just want to keep up with the latest and greatest.”
Peffer likewise doesn’t see much difference in the popularity of leasing between the generations, but noted that, as a whole, the New England region leads the country, along with the West Coast, in the percentage of car shoppers who choose that option. “I don’t see that waning. No matter what the generation, it’s a great option.”
Jeff Sarat, president of Sarat Ford Lincoln in Agawam, said he sees plenty of crossover in what vehicles and elements of the car-buying experience appeal to the different generations, though he noted that some of the company’s outreach, particularly search-engine marketing, is created with younger, more tech-savvy consumers in mind.
One big difference, however, is the loyalty factor. Baby Boomers were far more likely to develop brand and even dealer loyalty and return for new product every few years for decades. Millennials, Sarat said, are less likely to forge those bonds, and are much more willing to switch models, brands, and dealerships if they see more value elsewhere.
“Millennials are apt to jump around a little bit, meaning they might go with a Volkswagen this time and then next time try a Ford,” Sarat said. “Maybe their friend recommended a car they thought was phenomenal, so they try that. They’re more likely to switch around, and they don’t have set buying habits, so you really have to work to make them a customer for life. We try to do that with everyone, of course, but with Millennials, if you don’t stay in contact with them, they’re more likely to move around.”
Unfounded Fears
According to Business Insider, there was some concern in the auto-sales industry about how enthusiastic the growing Millennial generation would be; among the questions were whether they’d reject SUVs and whether they would gravitate toward mass transit. But those fears proved unfounded, as young professionals and families were a key factor in the industry’s surge to its current sales pace, which has topped 17 million for two straight years, with the same expected in 2017.
Yes, Millennials are demanding, and their penchant for Internet research doesn’t make things easier on auto dealers, but it’s not a negative, Peffer said; it just means dealers have to know as much as buyers do, and be ready to clearly explain subtle differences in pricing and features, skills they should already have.
“Most Millennials don’t like to negotiate. They have information; they know what the cost is. They do their negotiating online. They come in knowing exactly what they want to pay,” he told BusinessWest. “This is how shopping has evolved in the overall economy. The question is, are you able to meet their needs?”
The Modern Car Dealership Is All About Customer Experience
By BusinessWest Staff October 4, 2016
Waiting to Leave
Carla Cosenzi says her newest dealership was designed to give the customer a positive experience and not waste their time.
There’s no one way to design an auto dealership, but increasingly — driven by both manufacturer requirements and an ever-more-demanding clientele — newer stores boast a number of specific features, from spacious, drive-in service departments to comfortable, well-stocked lounges; from energy-efficient touches to an emphasis on openness and transparency in the showroom. At a time of fierce competition for business, dealers say these elements are necessary to attract buyers — and keep them coming back.
Gary Rome summed up the experience of most of his customers succinctly and bluntly.
“When people are waiting for a car, they’re waiting to leave,” said the president of Gary Rome Hyundai. And that goes for both people in the market for a vehicle purchase and those bringing their rides in for service — in either case, no one wants to spend any more time at a car dealership than they have to.
On the other hand, sometimes it takes a while to, well, leave. Which is why so many aspects of his new facility on Whiting Farms Road in Holyoke, which opened last month, are designed to keep customers occupied and … let’s just say in less of a hurry to go home.
“One of the most important things to customers is time,” Rome told BusinessWest. “If you value their time and make it easy to purchase a car or have their car serviced, you’ll get loyal, repeat customers. So I want to make the process as enjoyable as possible by offering all the amenities I think are reasonable for our customers.”
Gary Rome says energy-efficient touches throughout his new dealership are aimed squarely at reducing his carbon footprint.
To that end, the customer lounges — there’s one for watching TV, another for quietly doing business, and a play area for kids — border a coffee bar with free coffee, fruit, and muffins, as well as vending machines loaded with healthy snacks. Beside the TV is a screen detailing the status of every repair job currently underway, and the lounges overlook the service department so people can watch their cars being worked on.
Northampton Volkswagen and Country Hyundai, two neighboring stores in TommyCar Auto Group, opened their doors in 2014 with a similar focus on the customer experience. People bringing their cars in for service are met with high-speed doors followed by a porter who shows the way to a waiting room decked out with a TV, wi-fi, business workstations, smartphone jacks, free drinks and snacks, and even complimentary bicycles outside in case customers would rather take to the nearby bike trails instead of waiting indoors.
“We designed everything for the comfort and convenience of the customer,” said Carla Cosenzi, president of TommyCar. “We’re doing everything with the customer in mind.”
To that end, the facility has improved the employee experience as well, incorporating air conditioning, high ceilings, large windows, and LED lights in the service department — a far cry from the hot, cramped workspaces of old. Productivity has soared under those conditions, she said, which means, yes, less waiting for customers.
“They’re set up for efficiency, so they can be more productive and make the best use of customers’ time while they’re here. That’s where the majority of our focus was while building this.”
See: Area Auto Dealers in Western Mass.
Damon Cartelli agreed that efficiency, as it impacts the customer experience, is paramount — and a major design trend in the auto industry. His company, Fathers & Sons, opens its new, connected Audi and Volkswagen dealerships this week on Memorial Avenue in West Springfield, which boast the same type of high-speed doors — which trap air inside, keeping the space cool during warm days and warm during cold ones — that Cozensi spoke of. The driver then parks, gets out of the car, and walks directly into the shop, where a lounge with a TV area and workstations awaits.
“That’s now standard across the industry,” said Cartelli, the company’s president. “New dealerships have an area that’s comfortable and quiet so you’re able to work or sit in a lounge and have coffee and watch TV.”
While comfortable lounges and drive-in service bays may be among the more obvious hallmarks of the modern auto dealership, other trends — from a focus on transparency in the sales area to environmentally friendly features — are surging as well. For this issue’s focus on auto sales, BusinessWest explores three dealerships, two of them brand new, to talk about what dealers are doing to move customers out quickly — and get them to return, time and again.
No Secrets
Cartelli noted that many features of a new dealership — particularly Volkswagen, which demands uniformity in new dealerships with their nameplate — are blueprinted by the manufacturer, and many of the touches, including the high-speed doors, the finished service driveway (as opposed to a concrete look), the high-tech customer lounges, and display areas where customers can buy clothing, branded items, and vehicle accessories are required elements.
Damon Cartelli says the prominent use of glass inside and outside his Volkswagen and Audi dealerships promote transparency, in both design and customer dealings.
So is the transparency. To look around the showroom is to see office walls of glass, so sales associates and managers are never hiding from customers. Cartelli said the look reflects his own philosophy of doing business in a transparent way.
“We have a transparent pricing model. We’re transparent with everything we do, with how you buy a car. We don’t want customers asking, ‘what is he doing back there?’ You can see what he’s doing. We have nothing to hide. That’s part and parcel with how we do business, which is nice.”
Cosenzi had to deal with the same demands from VW, although Hyundai was more flexible in its requirements. But she agreed with Cartelli that openness is a positive for customers.
“Sales managers are no longer in big podium stations; they’re approachable, in the middle of the showroom, and all the salespeople work in an open environment at their desks,” she said. “As you walk through the dealership, you see the open sales stations, the glass. When you’re in the finance office, you constantly see and follow what’s happening with paperwork and flow.
“We worked really hard to make the customer experience great,” she went on. “You see a lot of light when you walk in, and you’re immediately greeted by a warm, friendly body at the greeter station. We made sure all the customer parking was up front, made it really easy for them. We want customers to feel like they’re getting the VIP treatment all the way around.”
Cartelli said the best way to make customers feel important, quite simply, is to not waste their time. “If you can increase efficiency in how you do business, that’s important — the speed with which business gets done is second only to price. People want a fantastic customer experience, and they want to know how quickly you’ll get it done.”
Rome incorporated elements of transparency in his new dealership as well. “It’s important for me that customers come inside the building and are able to watch their cars being worked on,” he said, pointing out the line of sight between customer lounge areas and the spacious service department. “Some dealerships take the car around back to some black hole, and you don’t know what thery’re doing or when it will be ready. This is a much better experience.”
In this day and age, customers expect this treatment. If you don’t have it, there are other dealerships out there that do, and you’ll be missing out.”
But Rome also wanted a dealership that’s cutting-edge in environmental ways as well, incorporating a number of green elements aimed squarely at reducing the store’s carbon footprint, from energy-efficient LED lights to insulated windows to a car wash that reclaims and recycles water. All the oil collected during oil changes isn’t discarded, but rather stored in drums and pumped back into the heating system and used to heat the service department, while oversized fans circulate air in that area and control temperature. He even installed electric car-charging stations on the premises that anyone — not just customers — can stop by and use.
“Simple things like automatic faucets and toilets, motion-sensing lighting in the offices, reduces our carbon footprint,” he said. “In addition to that, we’re putting a 650-megawatt solar array on the back of the property. We’ll be generating energy.”
Lots of Options
There’s one other feature the new dealerships share: more space.
“The main feature is being able to display every model Hyundai makes,” Rome said, noting that the new showroom holds 15 cars, an outdoor canopy houses eight more, and the vast property contains hundreds more vehicles than could have been displayed at the former location on Main Street.
Cartelli’s new property is designed to handle 200% growth. “We’re in growth mode, and we have the ability to grow into it,” he said. “We’ve overbuilt for today’s business, so we can overserve the customer.”
That service begins right away when a driver enters the wide indoor bay and a device instantly tests the vehicle for alignment — a feature at the other new dealerships as well. Once out of the car, customers notice the tiled floors, which are slip-resistant and easier on the feet than cement.
In short, everything is geared to giving customers an enjoyable experience while they wait to leave. At Gary Rome, people leaving with a new car are able to fill out their paperwork in a glass-walled business office looking out over a covered area where their new car sits beside a red carpet. From the moment they walk in, he said — his rule is that associates greet any customer within 10 feet of them on the showroom floor — to that roll outside on the red carpet, everything is designed with the customer in mind.
Cosenzi said such touches are more important now than ever.
“In this day and age, customers expect this treatment,” she told BusinessWest. “If you don’t have it, there are other dealerships out there that do, and you’ll be missing out.”
Mercedes Dealership Comes to Chicopee
Groundbreaking Event
As they took to the podium placed near the front door of the hotel known long ago as the Schine Inn (it’s had many names since), several politicians reflected on the important place the site has had in Chicopee’s history, especially its political and business history. And they noted that this legacy will certainly continue as the site is prepared for its new life — as home to a Mercedes dealership to be operated by Springfield Automotive Partners. Ground was broken for the ambitious, $12 million project on Sept. 21. The dealership, highly visible from the exit 6 tollbooth of the Mass Pike just a few hundred yards away, is due to open in just under a year, said Peter Wirth, managing partner of Springfield Automotive partners, who is undertaking the project with his wife, Michelle, and partners Rich and Amy Hess.
An architect’s rendering of the 37,000-square-foot Mercedes dealership
A large group of officials take up shovels for the groundbreaking
Managing Partner Peter Wirth addresses the large gathering for the ceremonies
At Area Dealerships, Crossover Sales Continue to Soar
By BusinessWest Staff June 14, 2016
More for the Money
Sport utility vehicles have long staked out significant market share in the auto-sales world, as Americans appreciate their roominess and flexibility. But their price tag has been a little high for sedan owners who might otherwise consider a larger vehicle. Enter crossovers, or compact utility vehicles, which are small SUVs that handle like cars — and typically boast a price point in the sedan range. For these reasons and others, they’ve soared in popularity in recent years, and are a main reason why SUVs now outsell sedans in the U.S.
A look at any parking lot might suggest America is the land of SUVs, but the past two years have seen hard statistics back up that perception.
Indeed, as recently as 2013, sedans accounted for half of all new-vehicle sales in the U.S. Last year, they accounted for just over 40%.
Ken Cernak, president of Cernak Buick in Easthampton, has seen the trend play out locally. “This is the second year SUV penetration been greater than sedans — last year and this year,” he told BusinessWest. “Before that, it was equal, but the last two years, it has changed, and people are buying more SUVs than passenger cars.”
At the heart of this trend is the continued dominance of perhaps the past decade’s most significant auto-sales trend: CUVs, or compact utility vehicles, also known as crossovers.
It’s easy to see why. While traditional, large SUVs are built on a truck platform, CUVs are built on a car platform and handle more like a car. But they offer much of the roominess of SUVs at often lower gas mileage and a sticker price more in line with midsize sedans.
“It’s not that people don’t still like to buy cars,” Cernak said, “but more people coming into the market are looking for SUVs of all kinds, both new and used.” And CUVs — Buick’s version is called the Encore — are driving the shift.
Though SUVs have long been popular with American motorists, the capability, passenger room, and storage space of most sedans is adequate for the needs of most families; to those who didn’t need the extra space (for camping and other hobbies, or toting multiple pets around, for example), SUVs were a luxury the price difference didn’t justify.
But CUVs, which compete with sedans at a very similar price point, are making converts. It partly explans why even hugely popular car models like the Toyota Camry and Prius fell last year to sales lows not seen since 2011, while the BMW 5 Series and Ford Focus and Fusion saw drops of up to 20%, according to Carbuzz.
“This isn’t a bad thing for automakers because crossover and SUV sales remain strong enough to keep the trend of total vehicle sales going up,” the publication notes. “Companies that have strong SUV lineups are seeing the greatest benefits from this shift in power.”
Like Balise Auto Group, which specializes in close to a dozen nameplates. Bill Peffer, the company’s president and chief operating officer, said CUVs are just one more step in America’s ever-evolving shift in driving tastes.
“If you go back through the decades, it was the sedan in the ’60s, the station wagon in the ’70s, minivans in the ’80s, sport-utility vehicles in the ’90s and 2000s,” he said. “But the traditional SUV, which was on a truck platform, has moved to a car platform and created a new segment of CUVs, or crossovers, if you will. CUVs offer the utility and some of the capacity of a truck, but still retain the comfort and drive and fuel economy of a car. It’s the best of both worlds.”
He said the crossover — popular models include the Toyota RAV4, the Honda CR-V, the Ford Edge, the Mazda CX5, and the Nissan Rogue — appeals to any number of groups, from empty nesters to newlyweds looking for weekend adventure; from hobbyists to growing families.
“They’re a lot more comfortable overall, and the footprint is a lot smaller than the Expedition, Tahoe, or Explorer,” said Peffer. “And with so many choices in the $25,000 to $35,000 range, many with four-wheel drive or all-wheel drive, it’s a pretty compelling proposition. If you have any type of utility needs or a big family, it’s hard not to go the way of the CUV, and manufacturers are picking up on that; their products are reflecting more and more of that.”
Price and Performance
Michael Oleksak, general manager at Burke Chevrolet in Northampton, has done well in recent years with Chevrolet’s crossover, the Equinox, which offers front-wheel drive or all-wheel drive, depending on the buyer’s preference.
“They’re very popular,” he said. “There’s the price-point part of it, but another part is the way the vehicles are built. You’re not getting up into it, and you’re not getting down into it; it’s almost level. So, if you’re an average-height person, they’re very easy to get in and out of.”
Bill Peffer says manufacturers have picked up on the growing popularity of crossovers and are busy introducing more to the market.
The utility aspects aren’t dissimilar from a larger SUV, he added. “The back is very functional because the rear seat actually moves forward and back just like the front seats, so you can get a little extra cargo room. Or, if you have a larger person sitting in the back, they have the extra room.”
In addition, Oleksak said, the low base price of most CUVs gives buyers an opportunity to add amenities, from leather seats to a moonroof, and remain below a large SUV’s price tag. “You can get something very well-equipped, very top of the line, or something very basic, or in between. The way it’s built, it’s very versatile with regard to budget.”
Cernak agreed that crossovers are easier than SUVs to enter and exit, which is especially helpful for elderly people. “It’s easier to step up and step down; in a car you drag yourself up and out. So the Encore is very popular with both young and elderly women; their size isn’t too small and isn’t too big. It’s easy to park and drives and handles well. Also, a lot of our women customers like the idea of sitting up a little higher, for better vision.”
Ken Cernak says his dealership, reflecting a national trend, now sells more SUVs than cars, and crossovers are driving the shift.
On an aesthetic level, the appeal of CUVs has become so well-understood that they adhere to a certain formula, Gregory Lang, corporate strategic planning manager for Toyota in California, told the Atlantic last year. “Frankly, if you lined up a Ford Escape, a Honda CRV, and a Toyota RAV4, and you were looking at them 50 yards away and you were an average customer, I don’t think you could tell the difference. Somebody in the industry could, but the crossovers have collapsed on a certain formula that seems to be very in vogue — some sleekness but a strong dose of utility.”
They also tend to be quieter inside than most cars, Cernak noted, which is another selling point.
However, their main appeal remains their sheer utility, Peffer said. “You can load furniture, load people, whatever your heart desires. Americans are fairly nomadic, and they’re also adventuresome, and SUVs fit that lifestyle. And because we have different sizes [with CUVs], the affordability aspect brings access to more people.”
Fueling Sales
Another element in the surging popularity of crossovers — especially for buyers who would traditionally purchase a sedan — is the currently low gas prices.
“They do make a difference,” Oleksak said, noting that the Traverse, Chevrolet’s next size up — larger than the Equinox but smaller than bigger SUVs — is also reaping the benefits of savings at the pump, and is a solid choice for, say, larger families who want a third seat.
Peffer agreed that the fuel-cost situation has been good for sales of larger vehicles, from crossovers to larger SUVs to trucks, which are selling well.
Whatever the reasons, automakers have begun to adjust to a landscape where sedans are currently being pushed to the side by SUVs and crossovers. For example, this past January and February, The Truth About Cars reported that a dozen premium brands produced 150,000 SUV and crossover sales, up 17% from the same period one year ago. Even luxury names reflected the shift; in February, Lexus was down 1,883 new-car sales from a year earlier but added 1,978 SUV and CUV sales.
Meanwhile, Automotive News reported that Hyundai’s new-car sales slipped 5.8% just last month, while its crossover sales nearly doubled.
Cernak isn’t surprised by such trends. “It’s been going in that direction for a long time,” he said, noting that Buick will soon unveil the Envision, which, like Chevy’s Traverse, bridges the size gap between the Encore and the brand’s large SUV, the Enclave. In other words, more choices for a buying public that’s increasingly ditching sedans.
As for crossovers, “when we get them, we sell them,” Peffer said. “That’s pretty much across all brands, from Lexus to Kia and everything in between. That’s where all the news is. That’s what’s selling.”
Motorcycle Shops See a Slow but Steady Rise in Sales
Revving Up for Success
Ray Smith does a brisk business selling motorcycle accessories because most owners upgrade and customize parts on their bikes.
Ray Smith left his career as a homebuilder 14 years ago to live his dream.
“Motorcycles are my passion,” he told BusinessWest, as he recalled how he opened Cycle Stop, an independent motorcycle shop in South Hadley.
In 2104, he put on a 13,000-square-foot addition because he needed more room to display the pre-owned, low-mileage motorcycles, accessories, clothing, and parts that he sells and also needed to expand his thriving service department.
Smith has seen small and large motorcycle shops and franchises close their doors over the past decade, but his business has done well, and he predicts this year will be a good one not only locally, but for the industry as a whole.
Other dealers agree and say growth has been on a slow but steady trajectory for the past few years, and they expect the trend to continue.
“We sell fun and are on the road to success,” said Glenn Morin, sales and finance manager at Valley Motorsports in Northampton, adding that the company’s inventory includes cruisers, touring bikes, sport bikes, and adventure bikes, which have become very popular because they have both on- and off-road capabilities.
Sales at Valley Motorsports have risen 9% to 10% each year since the recession ended, and the goal for 2016 is to do at least slightly better than that. The company expects to reach it, because it has seven makes under their roof, the economy is rebounding, and manufacturers are introducing new, exciting models.
Owner Jerry Randall, who opened the business in 1973, said Valley Motorsports provides financing and does its best to make a purchase seamless, which helps boost its numbers. But although it carries models that include cruisers, touring bikes, sport bikes, and adventure bikes, he doesn’t think sales will ever return to the levels seen before the recession: in one year spanning 2004 and 2005, nearly 1.1 million motorcycles were reported sold in the U.S., compared to last year, when the Motorcycle Industry Council reported that 500,678 street bikes, dual-sport, and off-road motorcycles were sold.
“Things have been inching up over the past few years, but it has been a long, uphill struggle, and I don’t think sales will ever be as good as they were; motorcycles are still a luxury,” said Randall, noting that, in today’s economy, people think very carefully about assuming debt and how they spend their money, and motorcycle owners are keeping their bikes longer, which is a trend mirrored in auto sales, where the average trade-in is 10 years old.
But interest in racing and other forms of off-road cycling is picking up (more about that later), which adds to the fun, desirability, and, therefore, the motivation to buy a bike.
Indeed, spring is the season to take to the road. “People have been pent up all winter and are anxious to get out on their bikes,” Smith said, noting that most of his sales occur between March and June.
Jerry Randall, left, and Glenn Morin say Valley Motorsports sells Ducati motorcycles, which are popular, but can be difficult to find because few dealers carry the Italian bikes.
Aaron Patrick, who owns Harley-Davidson of Southampton, projects a 20% increase in sales over last year, when the company sold more than 400 motorcycles.
“We expect to sell 476 new or used models this year; sales are always dependent on weather, but if we have the June that we are expecting, we will be about halfway to our goal,” he said, adding that, although they stay open all year, the bulk of their sales take place during an eight-month period.
The company’s worst year was 2012, when it sold 375 bikes, and during its best year, that number reached 600. “We hold our own,” he told BusinessWest, noting that Harley-Davidson is careful to keep the number of new bikes manufactured in line with supply and demand, and also has a number of marketing campaigns.
He promotes sales in a different manner that focuses on local riders, and sponsors the Pioneer Valley Harley Owners Group, which has more than 100 members who take part in charity rides and other events to help the community.
Catering to Customers
Harley-Davidson offers a mixture of traditional motorcycles and trikes, which are bikes with three wheels. Prices for new units start at $7,000 and reach above $40,000.
Patrick said the Southampton dealership spends a lot of time fitting its customers to the right bike, and the number of available models make it possible for people of any shape, size, or ability to enjoy riding.
“Comfort and fit are a big thing, so we have people sit on a lot of bikes, and if they have a motorcycle license, we allow them to take models on test drives,” he said.
The dealership boasts $15 million in annual revenue and holds special events that cater to the growing number of female riders. They include Ladies Nights and a Ladies of Harley group within the Pioneer Valley group that has about 15 members.
Sales Manager Rob Thompson says Harley has five families of motorcycles to choose from. Baby Boomers tend to like touring models, which can come equipped with saddle bags, storage space beneath the seat, a backrest for the passenger, and a windshield, and which appeal to people who ride up to 20,000 miles a year.
Boomers make up a large percentage of the client base, but manufacturers’ marketing efforts are geared toward raising awareness and demand for the brand among younger generations, and include buyer promotions and special financing deals, along with two new entry-level street bikes.
One has a liquid-cooled engine that makes riding in the summer cooler, and although Harley diehards don’t like the idea, Thompson said it appeals to many people, including first-time buyers of all ages.
“A Harley is no longer just a retirement gift,” said Patrick. “It can be a birthday or graduation gift, and younger people are getting more involved with them because of their comfort and ride quality.
“Harley-Davidson is a lifestyle, and more affordable than most people think,” he went on, adding quickly that new owners typically begin customizing their bike at the time of purchase or shortly after they get it home, which can add to the price.
Aaron Patrick, left, and Rob Thompson say that, although Baby Boomers are a major part of the customer base at Harley-Davidson of Southampton, their popularity is growing with younger people.
Indeed, selling accessories plays a vital role in annual revenue for many dealers, especially since styles wax and wane in popularity. For example, over the past five years, many Harley owners have chosen matte finishes on their wheels and exhaust systems instead of chrome, which requires considerable maintenance, and some models are built with the finishes.
Smith carries a large number of parts and accessories, and said the rise in sales over the last two years, coupled with solid jobs reports recently and an uptick in the economy, led him to project a 10% increase this year.
The service department at Cycle Stop is on track to meet that number, but so far sales are at a 4% to 5% increase, so he has throttled back his expectations in that arena.
But he also does a brisk business selling accessories and says it’s not uncommon for people to spend $500 to $600 on a new seat and $1,800 on an upgraded exhaust system with a computer and air- flow cleaner.
“Some customers want custom paint, and others want fancy wheels, seats, and handlebars,” he said. “We do Massachusetts state inspections, and I had a guy today whose headlights passed, but were dim. When I pointed it out, he immediately purchased a $500 LED upgrade because he saw the benefits in terms of safety and added value. And another customer purchased an $18,000 bike earlier this spring and immediately spent another $8,000 to customize it.”
Valley Motorsports specializes in European and Asian manufacturers, including the Italian Ducati (its flagship brand, which Morin called their “bread and butter”), the Austrian KTM, and Japanese bikes manufactured by Honda, Kawasaki, and Yamaha.
Sales are higher this year than at the same time last year, and Morin says Ducati has introduced new models such as the Scrambler G2, which ranges in price from $8,000 to $32,000 for a fully equipped, race-ready model which can be ridden on the street and at the racetrack.
Indeed, race bikes that don’t have mirrors, lights, or blinkers are gaining in popularity and appeal to riders of all ages who want to race.
“They’re becoming very popular and have helped increase our sports-bike sales; people like to take their motorcycles on the racetrack because they can ride as fast as they want without having to worry about other vehicles or the speed limit,” Morin said, adding that some bikes can reach speeds of 186 mph. Valley Motorsports is sponsoring two race events this summer at New Hampshire Motor Speedway and Thompson Speedway in Connecticut.
Adventure bikes with touring capability on paved and unpaved roads are also gaining in popularity, and Randall says dirt bikes account for one-third of the overall business at Valley Motorsports. Although they appeal to a broad age range, most owners are in their 20s and 30s and enjoy taking part in competitive events held on a weekly basis.
“The evolution of technological advances over the past 10 years has given people the opportunity to use these motorcycles in a safe, controlled environment where they can enjoy their performance no matter what kind of bike they’re on,” Randall said.
A recently issued consumer report says the motorcycle industry is facing a number of challenges: motorcycles are rarely an individual’s primary vehicle, there is an aging core group of owners, and efforts to draw women into the market have been less effective than manufacturers hoped for.
But the influx of new racing bikes and the thrill of taking to the open road are certainly fueling optimism within the industry.
“It’s great to be able to feel the wind in your face,” said Smith. “You can clear your thoughts when you ride, and if you go to a place like the Quabbin Reservoir, you become aware of flowers, birds, hawks, and other things people don’t pay attention to when they are driving a car.”
Randall agreed. “Everyone here is a motorcycle enthusiast, and it’s fun for all of us,” he told BusinessWest, as he spoke about the fact that some bikes get good gas mileage and insurance is reasonable.
“You can cloak the reasons to buy a bike in the economy, but it’s really about having a good time and enjoying the wide, open road.”
Auto Industry Poised for Another Solid Year of Sales
Jennifer Cernak says Buick’s new models, including its first convertible in 30 years, due to arrive in a few eeeks, are just one of many reasons to be optimistic about 2016.
Last year was nearly one for the record books when it came to new-car sales, with more than 17 million transactions recorded nationwide. There were a host of factors that contributed to that stellar performance, from attractive interest rates to low gas prices to an aging fleet of vehicles on the road. As the new year kicks into second gear, little has changed, playing-conditions-wise, so dealers are expecting more high-octane results.
Jennifer Cernak says there’s an intriguing story behind the 1922 Buick, model 22 37, parked in the showroom of the dealership her grandfather, Samuel, opened on Route 10 in Easthampton in 1940.
It turns out the car was a trade-in, a key piece in a deal the elder Cernak clinched in 1962.
“It wasn’t worth a lot of money, but my grandfather really wanted the antique, so he took it in trade,” she explained, adding that it’s been front and center, in one respect or another, ever since.
It’s been driven in various parades over the years, for example, and it’s been put on display at several classic-car shows across the region. But while it still runs fine, it hasn’t been out of the showroom much lately, Cernak told BusinessWest, because it doesn’t easily negotiate the ramp used to bring vehicles in and out of that room.
Go HERE for a PDF chart of area auto dealers
But it might soon have to make that trek and lose the spot it has owned for years, she went on, because Buick has a number of new models coming out over the next few months, and showroom floor space will be at a premium, to say the least.
“We’re already thinking about what to do,” said Cernak, adding that, while the antique holds a special place in this three-generation family business, it may have to go — somewhere — to make room for the Cascada and the Envision.
The former is a convertible, the first one Buick has offered in perhaps 20 years, and it’s due to arrive later this month. The latter, expected by summer, is a mid-sized SUV, smaller than the company’s Enclave and bigger than its Encore. Both are expected to be real assets in the carmaker’s ongoing efforts to convince the buying public that Buick isn’t just a model for your uncle or grandfather.
“There’s a lot of buzz about these cars, and we’re really excited to have a lot of new models,” Cernak explained, adding that the new nameplates are just one of many reasons why she believes the robust performance of 2015 — witnessed across the auto industry — will carry over into this new year.
And she’s not alone in that assessment.
Bill Peffer, COO at West Springfield-based Balise Motor Sales, told BusinessWest that industry analysts are predicting another solid year for sales, perhaps even something approaching the 17.4 million new cars sold in 2015, a total just shy of the record set some 15 years ago.
The reasons for such projections include everything from attractive interest rates (0% is still available, although harder to find), to low gas prices; from a still-strong economy to lingering, pent-up demand in the form of many older cars still on the road that need to be replaced; from decent weather (knock on wood) to an abundance of intriguing, well-made products.
“The stars are certainly aligned,” Peffer said of the current auto-sales sky, adding that, while this is a buyer’s market in every sense of that phrase, it’s an environment in which many constituencies benefit.
This includes consumers, dealers, and auto makers, who are, he said, taking the profits from the surge in sales and plowing them back into research and development, which will in turn lead to innovations and new products, which will continue the current cycle and fuel more growth.
“Forecasts we’re getting from various sources show growth this year,” he told BusinessWest. “Gas prices are lower, consumers have access to credit and low rates, we have a fairly robust economy, we’re seeing demand for vehicles, and there’s adequate supply. It all adds up to a very positive environment for sales.”
For this issue and its focus on auto sales, BusinessWest talked with several area dealers about what to expect in the months to come, and why all the experts are expecting another year in the fast lane for this industry.
Firing up the Grille
Don Pion calls it “old iron.”
That’s an industry term of sorts that Pion, second-generation president of Bob Pion Buick GMC in Chicopee, summoned to describe the volume of elderly vehicles still on the road.
Don Pion and his son, Rob, note that many factors point to continued solid sales in 2016, especially all the “old iron” still on the roads.
There are many of them, he said, noting that there are a number of contributing factors to this phenomenon, including better quality, which prolongs a car’s life, and several years of lingering doubts about the economy and the direction in which it was headed, which prompted many consumers to get another year — or two, or three, or four — out of their vehicles.
“The age of the fleet, the cars on the road today, remains at an all-time high,” he said. “It’s almost 12 years, according to the reports I’ve heard, which is pretty remarkable given the number of cars that were sold last year.”
This old iron — and ‘old’ is a relative term, certainly — is one of those aforementioned stars now in alignment and a contributing factor to solid projections for the year ahead, said those we spoke with.
Indeed, the more elderly vehicles — which have kept service departments jammed, providing a different source of revenue — are finally being traded in, spawning sales of new and used cars. Meanwhile, a large amount of younger old iron — especially a huge number of cars coming off leases after 36, 24, or even 12 months — is creating attractive inventory for the used-car market, where profit margins are usually better than those for cars right out of the box.
It’s part of an intriguing cycle, with a number of moving parts, but sales of the new models definitely set the tone.
“The new-car side of the business is kind of the catalyst that makes everything go,” said Pion. “It keeps everything running.”
Peffer agreed, and said that current trends collectively comprise the best news for the industry — the fact that there is plenty of fuel to keep this fire burning through the year and probably well beyond.
Indeed, while more than 50 million cars were sold in 2015 — those 17 million new models and north of 40 million used cars — there is still plenty of demand for both.
“There is a lot of activity out there, and as dealers we sell new and used vehicles,” he explained. “When you take a used vehicle in, you sell a new vehicle, so that helps new-car sales. You recondition and then sell the used car, creating another transaction, creating more service department work, creating another customer that comes back for repeat business and service.”
Meanwhile, in a departure from recent years for some models, there is ample supply of new cars and trucks, although dealers could always use more.
The 1922 Buick at the Cernak dealership may soon have to find a new home to make way for the new models to roll in over the next few months.
“For many years following the recession [in 2008], you had a situation where there was maybe more demand than there was supply,” said Peffer, adding that this scenario was true with some carmakers more than others. “Most manufacturers, though, have caught up, and will, or already have, satisfied demand through additional production.”
As for the nature of that demand he and others mentioned, it comes in a number of flavors, and this is yet another reason for the rosy outlook for the industry.
Much of the focus, of course, is on the huge and seemingly insatiable appetite for SUVs and trucks, and especially the latter. Peffer said these vehicles have always been popular, and become even more so when gas prices fall below $3 a gallon. When they’re below $2, like they are now, it’s hard to keep trucks on the lot, and soaring truck sales, he noted, create a rising tide that, as the saying goes, lifts all boats.
“Low fuel prices generally move people into bigger vehicles, heavier vehicles — truck-based vehicles, so trucks are really hot right now,” he explained, putting additional accent on ‘really.’ “And when people buy more trucks, that’s good for the manufacturers — they take that money and put it into R&D, and that yields new products. The truck business is profitable for the manufacturers, and it’s profitable for dealers as well.”
But while trucks are white hot, so, too, are SUVs, a class of vehicle that has seen its appeal spread well beyond soccer moms.
“They’re attracting people of all ages, including a growing number of older individuals because they’re much easier to get in and out of,” said Rob Pion, Don’s son and a member of the third generation of management at the dealership. “There’s interest across the board.”
So much so that there is now demand for a host of different-sized and variously appointed SUVs to meet the wide variety of needs within that growing market. And that’s why Cernak is so enthusiastic about the Envision.
“Some people find the Enclave too big and the Encore too small,” she explained matter-of-factly, adding that the Goldilocks factor is prompting all makers, including Buick, to respond accordingly. “We really needed a mid-sized SUV, and now we’re getting one.”
And with gas prices low and expected to stay that way for the near future, sales of these vehicles should remain brisk, said the Pions, both noting that the near certainty that these prices won’t last isn’t nearly enough to deter most all buyers of these larger vehicles.
Setting a President
Don Pion’s memories of life in the auto business stretch back more than a half-century, to when his father was a salesperson at the old Boulier Chevrolet in Springfield and he would accompany him to the lot.
He recalls the fall season, when the new models would roll in and the dealership would cover the showroom windows with brown paper to build suspense and draw customers in.
He also remembers Presidents Day and how it was a much bigger deal decades ago, when red, white, and blue balloons would often populate the showroom, dealers would give away cherry pies with sales, and area newspapers would be crammed with full-page ads announcing deals.
Most all of that is gone now, especially the newspaper ads, he said with a hint of lament in his voice, adding that the Presidents Day sales, always a bigger event in the Northeast than other parts of the country for some reason, were designed to break the winter doldrums and give people a reason to get into the showrooms.
Such sentiment still exists, and some dealers continue to mark the holiday with special sales, he told BusinessWest, adding quickly that promotions are now a near-constant in this business, with new incentives on a monthly or quarterly basis. As for February, in many respects it’s just another month, although sometimes a challenging one when winter hits with full fury, as it did in 2015.
This year, of course, it’s expected to be a solid month, as all those aforementioned stars continue to shine an optimistic light on the industry.
“Everything is very favorable right now,” said Don Pion as he surveyed the scene. “All the signs are positive.”
There are always threats to this sector, though, and things could change in a hurry. But most potential stumbling blocks, such as the stock market’s dreadful start to the year, are minor or temporary in nature, said Peffer.
Bill Peffer says the “stars are aligned” when it comes to the auto industry and sales projections for 2016.
Still, while most of the arrows are pointing up for this industry, there are challenges in various forms, starting with heightened competition in the form of quality vehicles carrying seemingly every nameplate.
“Where quality was once a market differentiator decades ago, now it’s cost of entry,” said Peffer. “I can’t think of a brand that doesn’t have really good quality.
“There are so many new-product offerings on the market right now that are full of technology, full of safety features, full of performance and styling,” he went on, adding that all this competition is in many ways a positive more than a negative. “All this really piques a customer’s interest; it’s a very good time to be in the market for a new or near-new vehicle.”
Pion agreed. “In the age of consumerism that we have now, bad products don’t survive in any segment, whether we’re talking about automobiles or whatever,” he explained. “You have to build a good product because anyone can go online and read the reviews — and people do that before they buy.”
For the Buick dealers, meanwhile, there’s the almost age-old (no pun intended) challenge of convincing younger audiences that this brand is not just for their father or grandfather.
Rob Pion recalls a recent episode involving a younger individual who test-drove one of the Buick models, liked it, but then offered, ‘I’m not old enough to drive a Buick,’ or words to that effect. And that’s a fairly common refrain.
“We battle that all that time,” said the younger Pion. “If I could just blindfold people until they got in the car and took it for a test drive, I know I could sell more people on these vehicles.”
Super Models
Time will tell whether that 1922 Buick retains its long-held parking space at the Cernak dealership. But at the moment, it looks like the family may well have to find a new home for the antique.
The Cascada will be arriving in a few weeks, and the Envision not long after that. In the meantime, the existing models, including more traditional offerings like the Lacrosse and the Verano, are in solid demand.
Add it all up, and the focus clearly shifts to the present and future, not the past.
And to the stars, which, as Peffer and other dealers said, are certainly aligned.
Tenacity, Talent Help Women Navigate the Road of Auto Sales
A Subtle Edge
Bonnie Nieroda says she encountered a “boy’s club” when she first started selling cars, but times have changed in some respects.
When Carol Buker started selling Fords 42 years ago, it wasn’t unusual for her to encounter blatant sexism. Some male customers refused to talk to her, while others didn’t believe a word she said.
“I remember one man who came to the dealership wanting to know about trucks; he told me, ‘I am not about to talk to you,’” said Buker, a sales and leasing consultant for Toyota of Greenfield, adding that the roles of men and women had been set in stone and many people didn’t feel a female had any credibility or belonged on the sales lot.
Bonnie Nieroda faced similar challenges that were exacerbated by male co-workers who wanted to drive her out of the business.
“It was a tough industry, and selling cars was a boy’s club,” she said, citing memories of a finance manager who refused to process her deals because the salesmen didn’t want her there. “They conspired against me and took bets on how long I would last. They gave me a month.”
She not only beat their predictions, but outlasted most of them, became a success, and has been happily employed as a master certified sales consultant at Marcotte Ford in Holyoke for seven years.
Barbara Spear expected to confront discrimination when she was hired as a salesperson at Balise Lexus because she had encountered it during her previous job as general manager of a construction company. However she didn’t anticipate cynicism from other females, and was shocked by a friend’s response when she told her about her new job.
“She asked me why they would even consider hiring a woman,” Spear said, admitting, “I knew nothing about cars and had never even pumped my own gas when I took this job. But I had spent my whole life in sales, knew I could sell anything, and am a people person who really loves making my customers happy.”
Today, she numbers among an elite group of females who excel in a male-dominated industry. In fact, only 7% of auto salespeople are female, despite the fact that women play a leading role in 85% of auto purchases.
“It’s not an easy job. You have to shovel and brush snow off cars in the winter and deal with the heat in the summer,” Buker said. “You miss out on a lot with your family due to the long hours, but you also gain a lot.”
Those gains include close relationships that females tend to form with customers who share stories about deaths, divorces, illnesses, and family problems with them. There are also financial rewards because it can be a very lucrative career, and these women say they couldn’t imagine doing anything else.
“It gets into your blood,” said Jodi Colter, a sales manager for Fathers & Sons Volkswagen in West Springfield. “I took a two-year break when a family member became ill, but I always return. I like my staff, enjoy coaching people, and love the daily challenge of trying to make sales.”
Barbara Spear says selling cars isn’t easy, and doing it well means time spent away from family. But there are many rewards as well.
Spear concurred. “This business is about making new friends and continuing the relationships. I am a workaholic and tend to be here seven days a week to accommodate customers, but I compete against myself and do very well,” she noted.
These women, in other words, are willing to go above and beyond to make prospective buyers happy.
For example, Nieroda had a female client who had her drive two different cars to the graveyard where her father was buried because she felt he would give her a sign as to which vehicle she should purchase.
“I just sat in the car while she got out,” she explained.
Bumpy Road
Some women find jobs in auto sales by happenstance, while others enter the field dreaming of autonomy and economic sufficiency. But the substantial sacrifices required to travel down such a road cause many to drive away from the futures they projected for themselves.
Colter’s career began after she was hired as a receptionist by Balise Motor Sales in 1996. She took the job to pay for college, and “became enchanted by the sales process” when she worked with the sales team.
Since that time, she has seen many female sales associates come and go, and said one of the toughest obstacles they face is balancing family life with the demands of a job that can require them to work six or seven days a week, plus holidays.
“I have a 4-year-old and a 14-year-old, but I also have a nanny; I’ve seen many single parents quit because of the hours,” she told BusinessWest. “Every mom wants to be home with her kids, and although it’s important to guys, they may be geared a little bit differently. Throughout the history of time, men have always been away from home working.”
But Colter and other saleswomen said that, if their peers are lucky enough to have family to help with children, or choose to make the sacrifices required to perform this work, they quickly discover their innate ability to communicate gives them a subtle — or maybe not-so-subtle — edge over male co-workers.
“When customers see me come out of my office, there is always an element of surprise,” Colter noted. “But then they seem to let their guard down … they joke with me and say, ‘so you’re the boss?’”
She takes such comments in stride. “You have to have a thick skin in this business, and I don’t get the objections some males do when they start to discuss numbers,” she went on. “Seeing a woman’s face can be refreshing, and some female buyers are more comfortable dealing with another woman. And if someone only wants to deal with a man, you can’t take it personally.”
Jodi Colter says selling cars “gets into your blood.”
Buker says things have improved dramatically over the years and agrees that women have an advantage that comes to them naturally: their ability to listen empathetically and form bonds with people quickly.
She recalled one woman who purchased a car, then came back and sat at her desk and sobbed because her husband was very sick and she knew Buker would be sympathetic.
“I interact with my customers as if they are my friends. It’s just how I am,” she said, explaining that she knows many people have felt intimidated by auto salespeople and believe buying a vehicle is a confrontational experience.
She fell into the job after graduating from college and has never regretted it.
“I really love being able to help people,” she said. “Sometimes they don’t know what they want, have a problem with the website, or don’t know whether to repair their vehicle or buy a new one. I give them advice and have taken them into our service department if I feel it’s necessary because I want them to feel comfortable with their decision.”
Indeed, feeling respected is a critical factor in the profession, but saleswomen have heard stories from women about how they were insulted by salesmen.
“Women have told me they felt as if they have been talked down to,” Nieroda said. “But nine times out of 10, the woman in the family is the one who controls the sale. If she feels it’s not a good value, the answer will be ‘no.’”
Still, the stories abound. One woman told Spear she picked out a car, and when she was ready to purchase it, the salesman told her he would not discuss price unless she returned with her husband. Meanwhile, she recalled, another woman sat in the parking lot and sent her husband inside to buy a car until Spear coaxed her out of her car and listened to stories about bad experiences she had had in the past.
“I think women tend to be softer and a little more compassionate when it comes to sales. I tell my customers it’s their money, so it needs to be their decision; there shouldn’t be any pressure,” she said.
Changing Field
The Internet has had a dramatic affect on the way vehicles are sold.
“It has opened up the doors to the world,” Spear said.
But there are pros and cons: dealers lose sales because a car doesn’t have the exact specifications someone is looking for, but gain them if they have it in stock, even when the buyer lives in a distant state.
“I’ve shipped cars to Nigeria, Texas, Washington State, and California,” Spear said, noting that it’s not uncommon for people to purchase a certified auto via the Internet without ever test-driving it because they know it has gone through a 161-point inspection and is under warranty.
However, some still want the experience of seeing the vehicle, sitting in it, or taking it for a test drive, and will drive long distances or fly to the dealership, then make the purchase and drive their new auto home.
However, this can lead to less personal interaction, and although Buker applauds the research people do in advance of a purchase, she misses the ties that are forged when both parties work together to find a vehicle that fits their needs.
Other changes in the industry include the fact that advertising is being geared more toward advances in technology than improvements in the vehicles.
“We used to sell cars, but now we are selling technology — cars that can park themselves, radar that lights up when another automobile is passing, power lifts, and all types of sensors,” Nieroda said.
Buker agrees. “When I was a kid, it was a big thing when a new car was introduced to the market. People would line up in front of a dealership to see it, but today everything is online, and people can find what they want there.”
That includes prices for new vehicles advertised on general websites, which can become problematic because they don’t include docking and destination fees, CARFAX reports, or the cost of certifying a vehicle.
“Some people expect dealers to function without making any profit at all,” Nieroda said, citing another challenge.
She thinks sexism still exists in the auto-sales industry, although it definitely has lessened.
“I sell more trucks than the guys here, but you still don’t see many women in this business, and I imagine some people think I’m an anomaly,” she said. “The industry continues to be dominated by males, but it’s a lucrative field and women are not only smart, we probably have an edge because some people are more comfortable dealing with us. I can’t tell you how wonderful people are; I’ve gotten cards and flowers, and it really is a wonderful feeling to sell to one generation, then the next.”
Colter agrees. “If you love automobiles, this is a great field, and seeing a woman’s face can be refreshing. We’re compassionate and good listeners, so even men drop their guard and talk to us. But you do have to have thick skin, and you can’t take things personally.”
These women have conquered these challenges and others they have faced, and focus on the positive aspects of their business as they navigate the road to success using skills — both natural and honed — to help people purchase the perfect vehicle.
Chart of Auto Dealers in Western Mass.
Lots of Choices
Click HERE to download the PDF chart Auto Dealers in Western Mass.
Auto Dealers Report Record Sales for New Vehicles
As the calendar cruises into October, area auto dealers report that they are well on their way to a banner year. A combination of factors — from a need to replace aging cars to lower gas prices to an improved economy — are fueling solid sales across virtually all classes of vehicles. And as the final quarter commences, dealers are keeping their foot on the gas when it comes to programs and incentives to drive more purchases and leases.
Jay Dillon called it the “perfect storm.”
But instead of a maelstrom of events leading to a disastrous outcome, the co-owner and dealer operator for Dillon Chevrolet in Greenfield was referring to a strong and rising gale that is driving new-car sales in the region and across the country.
Local dealers say their numbers have exceeded January forecasts by industry leaders, who predicted an increase of 3% and a rise in sales for the sixth year in a row, which would translate to 17 million new vehicles, a figure that hasn’t been seen since 2005.
And even though many people stayed inside last winter due to the bitter cold and record snowfalls, pent-up demand resulted in what Dillon called an “amazing” spring.
“Every day when we opened our doors, there were people waiting to come in,” he told BusinessWest.
Other major dealerships also reported healthy spring and summer sales, and as to that storm, well, it resulted from a convergence of conditions related to the economic climate. People held onto their cars during the downturn in the economy, so the average auto on the road today is 10 or 11 years old, which means its useful life is coming to an end. Meanwhile, gas prices have dropped significantly, while consumer confidence has risen and manufacturers have become aggressive in their competitive quest to attract buyers, offering incentives that range from cash back to 0% interest on many makes and models. In addition, buyers are enticed by advances in safety, design, and technology.
“People have been able to keep their cars longer because they are much more reliable than they were in the past,” said Bill Peffer, president and chief operating officer at Balise Motor Sales. “Quality has become a commodity, but eventually they have to be traded in, and everyone in the industry has benefit1ed from this factor. Buyers also have more choices than ever before.
“The biggest segment of growth is in crossovers; they have great fuel economy and the capability of a truck, but are more compact,” he went on. “Manufacturers continue to build new products that give people compelling reasons to purchase a vehicle, and overall, our sales have exceeded our expectations; they are equal to or greater than those in the general market.”
TommyCar Auto Group is also doing well. “Our sales are up over last year by quite a bit in every store, especially Hyundai,” said President Carla Cosenzi, adding that small crossover vehicles such as the Nissan Rogue and Hyundai Tucson have become big sellers, and she expects sales to remain high through the end of the year.
Carla Cosenzi says TommyCar Auto Group is planning major promotions to ensure that solid sales continue throughout the fall.
“Although we expected an increase, we kept our projections conservative, but we have definitely outsold what we anticipated, and are looking forward to a really strong end of the month in September, October, and November,” she said. “A lot of people are beginning to think about the weather. As we head toward winter, they want to make sure they are in a safe, reliable car, and we will have great offers that should make a difference in our year-end sales. We have two major promotions that will start in October and run until January. We have revamped our strategy and are excited to roll it out.”
However, local dealers differ in their tactics to attract buyers and retain customers, so for this edition and its focus on auto sales, BusinessWest explores the strategies that help fuel sales.
Tried and True Methods
Cosenzi said TommyCar’s three dealerships each gave away a brand-new car in recent weeks — a Volkswagen Passat, a Hyundai Accent, and a Nissan Versa.
Advertising for the promotional event kicked off at the beginning of the summer, which increased volume during the busiest time of year. “It drove a lot of traffic,” she said, adding that many people who entered the drawing decided to test-drive a vehicle, and the 0% financing offered by Hyundai and Nissan on leases propelled sales higher.
It’s not the first time TommyCar has given away new automobiles; in the past it staged a jingle contest and a TV-commercial contest, and the winners drove home new vehicles. But it never had a contest people could enter simply by showing up and dropping an entry form in a bucket.
“Our customers couldn’t believe it, and three happy people went home with new cars. Two had shopped us before, one was waiting to buy until she saw if she had won, and the other had recently purchased a car from us,” said Cosenzi, adding that “a really aggressive plan for the coming months should make 2015 the strongest and best year we have had in some time.”
The deals are sweetened across the board right now, however, thanks to the ‘summer selldown’ events taking place at every dealership. The 2016 models are rolling in, and spokespeople say manufacturers are offering special incentives to clear out the 2015 editions.
“It’s a time of year when people can get a really great price on a new vehicle,” said Dillon.
Peffer agreed. “Although new models are launched throughout the year, manufacturers typically offer aggressive incentives in the fall before the majority of new vehicles arrive, so we create a market,” he explained. “We’re motivated to sell all of our 2015 models before Jan. 1, when they automatically become a year older.”
Again, one of the factors in that perfect storm Jay Dillon referred to plays heavily into the stream of buyers seeking a good deal: the age of the average vehicle on the road, which is around 10 years. “Many people are facing the situation of having to repair or replace their vehicle due to its mechanical issues and high mileage. The entire industry is benefiting from this; it’s a wave we’re riding right now,” Dillon said.
Tom Dillon, co-owner and general manager of Dillon Chevrolet, said many people bring their older car into his dealership for service, and when they find out what it needs in terms of repairs, they are driven to purchase a new one. In the majority of cases, that purchase is at Dillon Chevrolet.
“We’re big on retention and people return to us because they have gotten good service. My father opened this business in 1962 and always said, ‘the sweet taste of a good deal is quickly soured by bad service,” he said, explaining why exceptional service has always been one of the dealership’s priorities.
Tom and Jay Dillon say most 2015 Chevy products are equipped with 4G LTE wi-fi hotspots, which make them particularly attractive to young buyers.
“Three-quarters of our sales are repeat customers. We’re hands-on owners who are here every day, and if someone has an urgent problem, we accommodate them immediately. We are a small town and are selling to our friends and neighbors,” Jay Dillon noted, adding that they discount vehicles beyond manufacturer’s rebates, and most customers spend less than an hour completing a sale.
It’s that same loyalty that Balise relies on to spur sales.
“We offer state-of-the-art facilities and low prices,” Peffer said. “We’re a large dealer group, and we’re consistent with our advertising, which is based on our great selection, facilities, and the fact that we treat our customers right. We generate trust and do an excellent job of staying connected to our customer base.
“Our focus is on retention, so our strategy is to develop a long-term relationship with our customers. And we have so many brands that we can offer a solution to anyone’s driving,” he continued, remarking that, although sales at all of the company’s dealerships are growing at a fairly consistent rate, Balise Subaru in Rhode Island is doing exceptionally well. “But we want people to think of Balise first, before they think of any type of vehicle.”
Attractive Options
Special promotions, such as the free cars TommyCar Auto Group gave away a few weeks ago, increased the number of visitors to the group’s dealerships. “We welcome people into our showrooms, and after they see the amenities we offer and meet our staff, they often buy a car,” Cosenzi said.
But other things attract buyers as well, and Tom Dillon says General Motors’ 2016 products will be game changers for the industry and his family dealership.
Bill Peffer says sales have been robust at Balise Auto Sales, and he expects the upward trend to continue into 2016.
“The all new Chevy Malibu is a big player in the mid-size segment; it’s a hybrid with a turbo engine that gets 47 miles per gallon. And the 2016 Chevy Cruze has been redesigned; it gets 42 miles per gallon, is safer, more efficent, and has 10 airbags,” he told BusinessWest. “There is also a new Camaro coming out that is lighter and has more horsepower and better handling. And every GM car will have 4G LTE.
“GM is the only one with 4G in all their new products, and we’re seeing more and more young people in our brand because of the technology — it gives us a competitive edge,” he continued, adding that manufacturers constantly make changes, but complete redesigns of a multitude of vehicles like this take place only every eight or nine years. “The Equinox will also be all-new, and demand will be high.”
Peffer agrees that technological advances are effective lures. “The new-car experience is exciting because of rapid changes in products, style, technology, and performance,” he said. “More and more cars are equipped with parking assist and lane departure, which started in Lexus. It allows the vehicle to sense if another automobile is in the blind spot, and warns the driver with a beep or a light. Back-up cameras, which offer a 360-degree, bird’s-eye view of what is in every direction, didn’t exist a few years ago, and some are in entry-level products, including most, if not all, Hondas. There are also cars with wi-fi hotspots that allow passengers to connect to the Internet in real time. Competitiveness in the industry has led to more choices for consumers than ever before.”
Leasing is another sales avenue on the rise because these vehicles are under factory warranty, payments are low, and regular maintenance is the only out-of-pocket expense.
“People see advertisements for payments on a brand-new car that are less than they are paying for an older vehicle, which entices them to visit the dealership,” Cosenzi said, adding that the value of trade-ins get worked into the deals.
Racing Ahead
New auto sales plummeted in 2008 due to the downturn in the economy and the fact that gas prices reached $4.25 a gallon. Those factors affected all dealers as well as a multitude of other industries, but fast-forward to 2015, and it’s an entirely different market.
“Our sales were up by 20% in the first six months of this year, and we have already approached our 2007 numbers,” said Tom Dillon. “We’re expecting that 2015 should be the biggest year ever for the entire auto industry.”
Peffer expects sales at Balise’s 13 dealerships to continue to be robust through the end of the calendar year and into 2016, due to manufacturer’s promotions and the aforementioned economy-related conditions that are inspiring people to get behind the wheel of a new car.
“For anyone considering buying a new vehicle,” he concluded, “it’s a great time to buy.”
Four-wheel Drive or All-wheel Drive? That Is the Question
Measures of Control
Brian Farnsworth says all-wheel drive is appealing because drivers don’t have to think about turning it on and off.
Though casual car shoppers may speak of four-wheel drive and all-wheel drive as if they’re interchangeable, that’s far from the truth, Damon Cartelli says. Which system is preferable comes down to how that vehicle will be used.
“Any time you have an option that adds security — that allows people to drive to their destination with a little more security than in a traditional front-wheel-drive vehicle — people want that,” said Cartelli, president of the local Fathers & Sons chain of auto dealerships.
But while four-wheel drive dominated the market for a long time, all-wheel drive has long been recognized as the superior option for driving in inclement weather — including those snowy and icy days of a typical Massachusetts winter.
“With four-wheel drive,” Cartelli said, “each tire receives 25% of the vehicle’s power at all times. So, while a rear-wheel drive car gets 50% in each of the two rear wheels, with four-wheel drive, the power is broken down evenly between right front, right rear, left front, and left rear.
“The difference with all-wheel drive is, the system has the capability of transferring power to the wheels that are gripping, based on sensors detecting which wheels have lost traction,” he continued. “The result is better traction in wet or inclement weather — or any weather, for that matter.”
Cartelli said Audi was a pioneer of all-wheel drive back in the 1980s with its Quattro system, which helped it dominate rally racing for a decade. “Audi was eventually banned from this race circuit because the Quattro system gave them an unfair advantage against rear-wheel-drive cars.”
Today, he noted, all-wheel drive is a selling point in a wide range of cars for drivers who want stability in any weather condition.
“If you’re not buying a truck, you’re looking for classic all-wheel drive, and you don’t have to worry about anything. You get in and do your thing,” added Brian Farnsworth, a sales consultant with Marcotte Ford in Holyoke, which features four-wheel drive in Ford trucks and larger SUVs, like the Expedition, but all-wheel drive in cars and smaller SUVs.
“The main thing with all-wheel drive is, there’s no user input. You don’t have to select it; it’s always monitoring road conditions and what you’re doing, whether that’s steering, braking, or accelerating,” Farnsworth noted.
The latest all-wheel-drive systems use high-tech software and wheel sensors to detect wheel slippage more quickly than ever before, then react by activating traction control to reduce that slippage while rerouting engine torque to the wheel with the best grip on the road — as opposed to the evenly divided torque of four-wheel drive.
“It may sense when you’re taking a corner too quickly and transfer power to the wheels that are getting the grip,” Farnsworth said. “In that scenario — in any scenario, whether it’s hitting ice, sand, whatever — it senses spin in milliseconds, sometimes correcting it so that it doesn’t happen in the first place. Same thing when you take an off ramp too quickly, things like that.”
It also automatically reverts to two-wheel drive when cruising on the highway to improve fuel economy, he added.
“Four-wheel drive is a lot more heavy-duty, more work-oriented, for things like towing a boat out of the water, towing up a grade, things like that,” he went on. “It can’t be used on dry pavement, so if you take that off ramp too quickly, it doesn’t help you.”
In short, dealers say, the choice often comes down to how much off-roading a driver expects to do.
Four-wheel drive, they note, provides added traction when needed and is generally less expensive than all-wheel drive because it’s based on simpler technology. And, of course, it’s the preferred system for difficult terrain.
However, it doesn’t provide extra traction and better handling in everyday driving situations — but drivers often believe it does, leading some to take more chances on the road. The driver also has to actively turn four-wheel drive on and remember to turn it off afterward to prevent draining fuel economy.
On the other hand, all-wheel drive increases grip and control under any condition and works all the time. While it can’t match the levels of traction in low-speed off-roading that traditional four-wheel-drive systems provide, all-wheel drive does pose some clear advantages, notes Peter Braun at digitaltrends.com.
“In the sort of winter road conditions that most drivers experience, it’s nice to have a drivetrain, like a modern AWD system, that responds instantly without the driver having to toggle any switches,” he writes. “In addition, most vehicles featuring AWD tend to have better weight distribution, which also aids in traction.”
For many drivers, he added, particularly those down south who rarely experience wintry driving conditions, basic front- or rear-wheel drive is fine. Still, many drivers value the added level of comfort and peace of mind an all-wheel-drive system provides.
Farnsworth said Ford, like other car makers, has incorporated a number of different all-wheel-drive systems that shift power around in different ways, but one thing they all have in common is the ability to operate without any user input or thought, and then switch back off under normal conditions. “It’s always on when you need it most, but always trying to save you gas when you don’t.”
That does not, however, free drivers from basic common sense when operating in wintry weather, like speeding down hills during snowstorms.
“Some people think they’re invincible. They think if they’re going down a hill and hit ice, they’ll be fine because of their four-wheel or all-wheel drive,” he explained. “But it only helps you get going. It doesn’t help you stop.”
It’s also no substitute for tires that have proper tread, Farnsworth added. “It really all comes down to this: no matter what kind of drive train you have, your tires are the most important thing. The fanciest all-wheel drive in the world is not going to help you if your tires are bad. It’s just simple common sense. It’s constantly monitoring slippage, but if nothing’s getting a grip, if the tires aren’t catching, you’re not going anywhere.”
That’s a common refrain in the industry, even among those who sing the praises of all-wheel and four-wheel drive.
“You can’t put a price on safety, but shelling out [for all-wheel drive] isn’t a get-out-of-a-ditch-free card either,” writes Ben Bowers at gearpatrol.com. “No matter what you wind up picking, our advice is to study up on good winter driving skills, focus on regular maintenance, and work on improving your decision making behind the wheel first. After all, at the end of the day, it’s the man behind the machine, not the other way around.”
Even today’s front-wheel-drive vehicles handle well in wet or snowy weather as long as they’re fitted with the proper seasonal tires and the driver is careful, Cartelli said. But for people who don’t have the option of staying home from work during those New England snowstorms — doctors and nurses, for example — all-wheel drive brings an added layer of comfort. “If you have to be somewhere no matter what, all-wheel drive with the right tires will get you there.”
No matter how they use their vehicles, Farnsworth added, purchasing drive-train options beyond front- or rear-wheel drive is an investment worth making, if only for the peace of mind.
“All the new SUVs drive much like cars; the all-wheel-drive systems are not as bulky, so they don’t drive like a truck,” he said, adding that many drivers come to take the systems for granted — until it’s time to buy a new vehicle. “When they come in, it’s the first thing out of their mouth: ‘I need that all-wheel drive.’ It makes them feel safer; it’s definitely a security blanket for them.”
Event Aims to Raise Awareness, Funds for Breast-cancer Research
It’s a Pink Party
By any measure, Sandy Cassanelli is living the American success story at a young age, raising two daughters and serving as CEO of Greenough Packaging in West Springfield, the business she co-owns with her husband, Craig.
But she also understands that youth is no guarantee against cancer.
Cassanelli was diagnosed with stage-3 breast cancer in 2013, at age 37, well before women typically start regular mammograms. After a tough fight that included a bilateral mastectomy, eight rounds of chemotherapy, and 28 days of radiation, doctors told her she was cured.
“I was fine for about two years,” she told BusinessWest. “Then, in April of this year, they told me my breast cancer had spread to my liver.”
It was a devastating blow, because, as she explained, once cancer metastasizes into other parts of the body, “you’re never cured. You can be treated, but not cured. I’m lucky enough to be at Dana Farber right now, being treated with a new medicine that was a trial and was recently approved by the FDA, in hopes it won’t metastasize further and spread to other parts of the body.”
Throughout her cancer fight, Cassanelli forged a bond with representatives of the Massachusetts and Connecticut chapters of Susan G. Komen for the Cure, a nonprofit organization dedicated to fighting breast cancer. Impressed by the charity and its assurance that all money raised locally stays local, she wanted to do something to boost its profile. So, with the help of the Fathers & Sons auto group and Max Catering & Events, she’s throwing a party.
The purpose of the “Pink Party” — to be held Thursday, Oct. 15 from 5 to 7 p.m. at the Fathers & Sons dealership at 989 Memorial Ave. in West Springfield — is to raise awareness of the mission of the Massachusetts affiliate of Susan G. Komen for the Cure and to raise funds to support the local fight against breast cancer.
There is no cost for admission, but donations are appreciated. Cocktails and hors d’ouevres will be provided by Max Catering and Events. Silent-auction items include Patriots tickets with club-level seating and premium parking. Guests are encouraged to wear pink in support of those fighting breast cancer. Anyone wishing to attend should RSVP to Cassanelli at [email protected] Those who cannot attend but wish to donate to the cause may do so at www.komenmass.org.
The Massachusetts affiliate of Susan G. Komen for the Cure (Komen Mass) works with, and on behalf of, breast-cancer survivors and those who support them in local communities. The organization is dedicated to protecting the most vulnerable residents in Massachusetts from the impacts of breast cancer, particularly those who face barriers to care. Komen Mass sponsors various fund-raising events, including the Race for the Cure, and is a resource for information and education on breast health throughout the Commonwealth.
Cassanelli said she had met Fathers & Sons President Damon Cartelli at Komen events and was pleased that he offered to host the Pink Party. “We want to raise awareness of what Komen does for the people of Massachusetts, and encourage people to get their mammograms early,” she added. “Really, early detection is key, and we want to get the word out.”
Massachusetts has the second-highest incidence of breast cancer in the U.S. This year alone, more than 5,000 Massachusetts residents will be diagnosed with breast cancer. Seventy-five percent of funds raised by Komen Mass are invested back into Bay State communities through local grants that provide education, screening, and treatment services. The remaining 25% is invested into life-saving research.
To date, Komen Mass has invested over $68 million in Massachusetts-based organizations and an additional $26 million in research in the Commonwealth, and has contributed to numerous breast-cancer research breakthroughs over the past 30 years.
Cassanelli’s voice broke a little bit as she expressed hope that research funded by Komen and others may pave the way for a cure, and that she will be able to watch her daughters grow up. “People don’t realize this does affect young people. But it can happen to anybody.”
Gaining Ground
Truck Sales Accelerate Due to Several Driving Forces
Jeff Sarat says businesses that held onto their trucks during the recession are now upgrading their fleets.
Jeff Sarat predicts Sarat Ford Lincoln in Agawam will sell more trucks in 2015 than in any year since it opened in 1929.
That’s a bold statement, but he’s more than prepared to make it.
“Normally our busiest time of the year is October to December because companies make year-end purchases. It drops off to nothing from January to March, but this year there was no lull; we slowed a little, but sales are so high, we have doubled our inventory of super-duty trucks,” said the general sales manager, noting that a high percentage of buyers are businesses that put money into maintenance during the recession rather than replacing their fleets. But the combination of reduced gas prices and an upswing in the economy has changed that trend, and business owners and managers are finally trading in vehicles and buying new ones.
But they’re not the only ones creating this historic run on trucks.
Bill Peffer says most people want to own the largest and most expensive vehicle they can afford, and in today’s world, that translates to a truck.
“I can’t think of a better time in the past 10 years to buy one,” said the president and COO of Balise Motor Sales, as he listed interest rates, incentives, and lease options. “The industry has certainly returned to the level of pre-recession sales, the market is robust because the economy is getting healthier, interest rates are low, there is easy access to credit, and the option of leasing at an affordable cost have combined to drive truck sales.
“Passenger cars have limitations,” he added. “And part of the fabric of America is to utilize a vehicle in a way that fits your lifestyle.”
National reports show truck sales began climbing about two years ago and quickly gained traction. Manufacturers have introduced new models that are fuel-efficient, quiet, comfortable, and have room for a family, yet offer the versatility and utility that a truck with a towing package can provide.
“Trucks have come a long way, and the new ones ride like a Rolls-Royce — some models will even parallel-park themselves with a push of a button,” Sarat said, adding that industry forecasts predict more than 16 million new vehicles will be sold this year, and a significant percentage will be trucks.
Brett Starbard, sales manager for Metro Chrysler Dodge Jeep Ram in Chicopee, said the new, redesigned Ram 1500 was named Motor Trend’s Truck of the Year in 2014, and better technology and design have fueled demand.
Bill Peffer says the rise in truck sales has led to a highly competitive market, which translates into good deals for buyers.
“Our truck sales have gone up by 50% since we started carrying Chrysler Rams a few years ago,” he noted. “We’re seeing an increase in people who want a truck, but don’t necessarily need one. Gas prices are down, and people live on a budget; if they are spending $50 less a month on fuel, they can afford $50 more on a new car payment.”
Ed O’Grady, sales manager for Central Chevrolet in West Springfield, said 60% of the dealership’s new truck business can be attributed to the fact that they are a bargain. Used trucks are retaining their value, and the manufacturer is offering $3,600 discounts that, in the past, were available only to employees who worked for suppliers, such as US Tsubaki in Holyoke, which sells timing chains. “Another $6,250 in incentives and rebates brings the savings on new trucks to $10,000,” he noted.
In addition, the cost of leasing has come down. “We have 2015 Silverado double cabs with four-wheel drive that are leasing for as low as $259 a month,” O’Grady said. “Leasing protects the consumer from depreciation; if the value goes down in three years, they can drop the vehicle off without taking a loss. But if a person does choose to purchase a truck, they can get a better price on a new one than on a two-year-old model due to all of the incentives.”
Starbard says Metro leases the majority of its new trucks. “Our average MSRP is $40,000 to $45,000, so the payments on a five-year loan would be $600 to $700 monthly. A lease is about half of that because the residual [remaining value] when the lease ends is as high as 60 to 70%, which means the person who leases only has to pay 30% over the term. Plus, there is no cost for maintenance,” he explained, noting that trucks have retained their value as sales were slow throughout the recession, so there are fewer used trucks on dealer’s lots, which leads to higher demand.
Body of Evidence
Although most businesses kept their trucks when gas prices reached $4 in the summer of 2008, Sarat said, many of his customers who didn’t need them took them off the road and purchased vehicles that get good gas mileage, such as a Ford Focus, which averages 40 miles per gallon.
However, other dealers report that many people took real losses by trading in their trucks for fuel-efficient cars. “People were very concerned with operating costs and some made irrational decisions as they traded in trucks for something that was far more fuel-efficient,” Peffer said.
Ed O’Grady says it often costs less to lease a new truck than to purchase a used one.
Starbard recalls contractors who begged him to take their truck on a trade-in. “It wasn’t a smart thing to do, and they took huge losses, but if they had a job 100 miles away and were getting 10 miles a gallon, they were spending more on gas than they were making,” he told BusinessWest. “Gas prices are cyclical, like stocks, and I advised people not to sell when prices got high, but many of my customers didn’t feel they had an alternative when gas went over $4 a gallon.”
O’Grady said the government’s Cash for Clunkers program helped fuel trade-ins, and the prospect of getting an additional $4,500 for a vehicle that got poor gas mileage motivated many people to get rid of their trucks between 2008 and 2010.
“But now that fuel prices have dropped, they want their trucks back, and they are buying models that are more fuel-efficient than ever before,” he said, adding that the new Silverado with a V-8 engine gets 18 miles per gallon around town and 21 to 22 miles on the highway.
Sarat concurred. “There is definitely a pent-up demand, and as the economy continues to get better and businesses expand, we expect them to add more trucks,” he said, citing the example of a man who bought a van last year and added another this year as his business is flourishing.
Manufacturers such as Ford are also doing whatever they can to motivate prospective buyers, which includes offering 0% financing or rebates of up to $4,000 for certain vehicles. And although leasing is popular at some dealerships, Sarat said the majority of his customers purchase new trucks.
“They tend to retain their value so well that sometimes people find they can get a new truck for about the same price as a used one,” he noted. “People hold onto their trucks, so it becomes an issue of supply versus demand. Since vehicles get more expensive every year, it makes it easier to sell a new truck when you can offer really good money for a trade-in.”
Trucks have become all-around vehicles, and people today want trucks with four doors and ample interior cabin space to accommodate a family.
“Ten or 15 years ago, most trucks had regular cabs, but you don’t see many of those today; they make up less than 5% of my inventory,” Starbard said. “Today, a gentleman who owned an SUV can replace it with a pickup with full-size doors; plus, the RAM can be purchased now with a six-cylinder diesel engine that is much better in terms of fuel economy.”
Another factor that attracts people to trucks is the fact that they can customized with accessories that range from running boards to side steps, different types of wheels, exhaust systems, bed covers, and cover liners. “The average truck buyer spends $1,000 to $2,000 in accessories after the purchase,” Starbard said.
Although there are five main competitors in the truck market, which Peffer lists as Ford, Chevy, Ram, Toyota, and Nissan, new products are coming on the market because manufacturers seek to attract new buyers and retain customers looking to upgrade.
“They don’t want to lose market share, so they have become very competitive, which is good for the consumer,” Peffer said. “For some buyers, a truck is a tool of their trade, but for a growing segment, it’s a want more than a need, and luxury features such as leather seats and navigation systems appeal to a wider audience.”
Ford recently introduced a new Econoline cargo van with a choice of three engine options. “You could never stand up in them before, but now they come in two lengths and three heights, and you can stand in the medium and large models,” Sarat said. “They are a phenomenal addition and have been very popular. We have been selling several every week, and demand is starting to pick up, so we are taking in as much inventory as we can get.”
Ford also introduced an all-aluminum F-150 this year that is fuel-efficient, Chevy brought a new Silverado model to market last year, and Nissan will introduce a new Titan in the next few months.
Chevrolet stopped producing small trucks in 2012, but demand is skyrocketing for its new 2015 Colorado, which gets 27 miles per gallon on the highway and was named Motor Trend’s 2015 Truck of the Year.
“It comes with a four- or six-cylinder engine, but can tow 7,000 pounds, and every dealership across the country is taking orders,” said O’Grady. “They sell the day they arrive.”
He noted that the trend is moving from trucks with clamshell doors to four doors, and Chevrolet’s offerings convince buyers to purchase new trucks. They include a five-year, 100,000-mile power-train warranty with two years of free maintenance; wi-fi Internet connectivity that comes in every 2015 Silverado; and Remote Link, a smartphone app that allows people to lock and unlock doors remotely, view tire pressures, and send directions to their truck with their phone, which are announced via OnStar navigation.
“Sales have been on the rise for the last few years, and we believe the numbers are sustainable,” O’Grady went on, explaining that GM used to stockpile vehicles to keep people working, but have stopped that practice and now fill orders.
Still, many dealers say leasing is the best deal available, due to the fact that trucks hold their value. “More vehicles are leased in New England than in any other part of the country,” Peffer said. “There are a lot of advantages, and manufacturers recognize it as an opportunity to grow or maintain market share.”
Sarat Ford’s truck sales continue to grow, and several years ago it expanded its service department to help its commercial truck customers.
“We added six new bays, and as we continue to sell more big trucks, we continue to need more room,” Sarat said. “This year our sales are up by 10% over last year, and the truck business is pushing the increases.”
O’Grady has been in the auto industry for 23 years and says this is “an exciting time for truck sales.” He pointed to a study conducted by Chevy last year with focus groups representing all ages and income brackets. Participants were shown two photos taken in the same location; the only difference was one had a man in front of a truck, and the other had him standing in front of a car. The groups rated the guy in front of the truck as more handsome, rugged, dependable, resourceful, and someone they would want to date their daughter.
Whether that image plays into the increase in sales is unknown, but Peffer says stiff competition makes it a great time to buy a truck.
“We are seeing an acceleration of people trading in all types of vehicles,” he noted. “There is a propensity to shift to a truck, and there have never been more product offerings and choices in the market.”
Market Factors Create a Surge in Used-car Sales Volume
As the economy gains strength, Rob Pion says, many people are trading in older cars and trucks for new and pre-owned vehicles.
“The car market as a whole is strong right now, but it’s especially true for used vehicles,” said the general manager of Bob Pion Buick GMC in Chicopee, noting that sales have changed significantly in recent years due to Internet advertising, which gives shoppers endless choices and the ability to locate and purchase a pre-owned, certified car or truck with an excellent warranty.
“We’ve had buyers fly here from Indianapolis and Las Vegas to pick up a vehicle,” he noted. “We shipped a used car to a buyer in Louisiana, and last year, a couple drove a 50th-anniversary Corvette here from Minnesota, traded it in for a 60th-anniversary model, then drove it back home.”
Other auto dealers note the same trend, and Carla Cosenzi says a variety of factors play into the popularity of pre-owned vehicles.
Robert Pion says certified vehicles offer warranties that equal or exceed those of a new car or truck.
“The used-car market has changed dramatically over the past few years,” said the president of TommyCar Auto Group, which includes Country Nissan in Hadley, Country Hyundai in Northampton, Patriot Buick GMC in Charlton, and Northampton Volkswagen. “Vehicles are made better, and their overall quality and durability has increased. They are built to last, so people don’t have to sacrifice reliability and condition to get a great deal, which makes purchasing a pre-owned vehicle more attractive.”
She agreed that the Internet broadens customers’ options because it allows them to peruse and compare vehicles within a 100-mile radius or more, via websites such as Autotrader.com or Cars.com. “It gives people a reliable, easy way to shop, and allows them to feel confident that they’re getting a good price,” Cosenzi said.
But Pion said price doesn’t matter if a person is not happy with their purchase, and although customers have bought vehicles from his dealership based solely on Internet pricing and photos, it’s important to look a car or truck over carefully, sit in it, and take it for a test drive before making a final decision.
“Two vehicles of the same make and model with the same mileage can drive very differently,” he told BusinessWest. “The vehicle with the best price may not be in pristine condition, so you really have to look at what you are buying. I remind people that it’s a huge purchase, and they need to be sure they are happy, or the price won’t matter.”
Brian Yarrows, general manager of Bertera Chevrolet in Palmer, says there are pros and cons to buying used vehicles.
“The perception is that they are more affordable, but that’s because people budget a certain amount for a payment,” he noted. “However, they fail to factor in the cost of maintenance, and since a vehicle that has between 60,000 and 70,000 miles typically costs $1,000 or more a year to maintain, people need to budget another $100 each month for repairs.”
It’s one reason why leasing is such a good option, he continued, explaining that the monthly payments can be less for a new, leased car than for a used one with 50,000 to 60,000 miles when it is paid for over a period of 75 months, which has become standard for auto loans. “In the 1700s, Ben Franklin said, ‘Lease what depreciates, and buy what appreciates,’” he continued, adding that Franklin was speaking about machines, farm equipment, and horses and buggies used for travel. “If you pay off a loan over 75 months and spend $4,000 in maintenance along the way, a lease may make more sense, as there is no maintenance cost.”
However, people who purchase a pre-owned vehicle should buy it in Massachusetts, Yarrows added. “In Connecticut, New Hampshire, Vermont, and Rhode Island, dealers can sell a used car ‘as is’ — all it has to do is pass inspection. But the Commonwealth has the strictest warranty policy for pre-owned vehicles in the nation, which can extend up to 90 days depending on the year and age of the model. It’s one of the reasons people come here from all over New England to purchase pre-owned vehicles, and as a result, it’s not uncommon for us to spend more than $1,000 before the customer takes a car or truck home.”
Auto dealers say there are many advantages to buying a pre-owned, certified vehicle instead of a new one. They cost less; have warranties that sometimes exceed that of a new car, SUV, van, or truck; and often come with low interest rates.
Cosenzi said certification guidelines are stringent and include testing everything from the brakes, transmission, heating and air conditioning, tire tread, steering alignment, horn, seatbelts, radiator, exhaust system, lug nuts, upholstery, and body, to a myriad of other factors.
“If there is a small tear in the fabric, the vehicle doesn’t qualify,” she explained. “Certified cars can be a little more costly, but the benefits far outweigh the difference, and they provide people with the same peace of mind they would get if they purchased a new vehicle.”
Pion said his dealership strives to certify every used vehicle on its lot, using General Motors standards set by the factory. “The vehicles must be less than five years old and have under 70,000 miles,” he said, noting that, if trade-ins don’t meet these standards, they are disposed of at an auto auction or sold to another dealer.
However, those that qualify undergo GM’s 172-point inspection, which includes any needed reconditioning. Buyers receive a vehicle history report and Sirius XM Satellite Radio4 and OnStar5 trial offers, along with a three-day, 150-mile customer-satisfaction guarantee, as well as a 12,000-mile or 12-month warranty.
Pion, who includes two years of factory maintenance, oil changes, and tire rotation, has a lot of demo models right now and is expecting more because GM began leasing vehicles about three years ago, and the terms are expiring. “Most of them have between 30,000 and 45,000 miles,” he said.
Other reasons to purchase pre-owned vehicles include the fact that the excise tax is lower than a new vehicle, and they have already depreciated.
“Typically, the first owner takes the biggest loss, so if you can buy a used vehicle for $10,000 less than a new one, it’s a substantial savings,” Pion said.
Brian Yarrows says it’s important for people to check the Carfax history and test drive a pre-owned car or truck before purchasing it.
Yarrows agrees. “Pre-owned certified vehicles are amazing buys,” he said. “General Motors offers lower interest rates on them, along with 24-7 roadside assistance that includes fixing flat tires and towing, and they come with a full year warranty on top of any warranty that remains. A car that is certified is worth $2,135 more than the same non-certified vehicle, but we don’t add that to the price.”
Still, people want options, so most dealers try to stock a range of different pre-owned vehicles.
“We like to have a wide selection for people so they can shop multiple lines and drive cars that are similar, such as a Buick Regal and a BMW3 series,” Pion said.
He explained that, although 90% of shoppers know what they want when they arrive, they often see something attractive and decide to take it for a test drive. “It can start discussions and lead to trials of different vehicles.”
Although Yarrows manages a Chevrolet dealership, it sells makes and models that range from Acuras to Volvos. “Most dealerships try to stay within their line, but we have seven acres here and run the gamut of every make and model,” he told BusinessWest, pointing to a row of cars that included a Volkswagen Beetle, two Cadillacs, a Chevrolet, a Chrysler, a Nissan, a Kia, a Hyundai, and other selections.
In fact, Bertera keeps 300 pre-owned vehicles on its lot, but has access to more than 11,000 through its 10 dealerships. “People may come here with a predetermined idea of what they want, but are actually looking for something that will meet their needs, which is why we call our salespeople ‘solution specialists,’” Yarrows said, adding that customers often get behind the wheel of far more vehicles than they initially planned to drive.
But Cosenzi said it is becoming more difficult to keep a large number of certified vehicles in stock, because owners are keeping them longer. The industry average is 10 years, and Yarrows said he’s seeing an unprecedented number of trade-ins with 100,000 miles or more. However, even vehicles with much lower mileage need to be compared carefully, which includes looking at the Carfax report in detail and noting maintenance that has been undertaken.
“Owners can be classified into three categories: those who do preventive maintenance, those who change their oil on a regular basis, and those who do nothing but drive the car and put gas into it,” Yarrows said, explaining there is a grading system at auto auctions which ranges from 1 to 5, which dealers can pay for.
“It’s based on a number of factors, including previous paintwork and repairs, the tire depth, whether there are gouges in the wheel, how clean the interior is, and a number of other things,” he explained. “It’s a very intricate system which runs in increments of 0.1, and some dealers focus on purchasing below-average vehicles so they can meet a price point.”
Ideal Conditions
Bob Pion’s sales are up from what they were at this time last year, and the expectation is that the numbers will continue to climb.
“The roads are clear, the cars are clean, and it’s not too hot or too cold outside,” Rob said. “We’re definitely expecting another good year.”
TommyCar Auto Group is also on an upward trajectory. “The winter was tough, but we had a great March, an even better April, and an unbelievable May, and on the fourth day of June we are off to a good start at all of our stores,” Cosenzi said. “Interest rates are still really low, but people know they may not stay that way, so they are taking advantage of them. It’s a great time to purchase a new or pre-owned vehicle, as dealers are more aggressive than ever with their Internet pricing.”
Bertera Chevrolet is up a whopping 48% in their overall sales from last year, despite the fact that the winter was terrible.
“I’m very excited about this year,” Yarrows said. “The economy is getting, better, businesses are hiring, people have more money in their pockets and are more comfortable spending than they were a few years ago. They are finally coming out to trade in their used cars, and there are incredible deals available on all types of vehicles.”
Especially those with some miles on them.
Area Auto Dealers Expect Sales to Accelerate in 2015
Carla Cosenzi says people who visit an auto dealership are often surprised at the advanced technology available in today’s models.
Carla Cosenzi doesn’t mince words when she talks about 2015 and her expectation that it will be a great year for auto sales.
“The economy continues to gain strength, interest rates remain low, and there are a lot of exciting new models coming out, so the outlook is really positive; the auto industry is predicting a record year,” said the president of TommyCar Auto Group, adding that sales have been on the rise in the past few years and the company was confident enough to build brand-new Hyundai and Volkswagen dealerships in Northampton over the past few years.
Jeb Balise agrees that sales are moving in a forward direction. “The industry is predicting a phenomenal year, but we had our best year ever last year,” said the chairman and CEO of Balise Auto Sales. “We sold just under 25,000 units, so any growth will be a bonus. But we are pretty excited about the future and continue to add new stores.”
Mike Marcotte said Marcotte Ford saw a 9% increase in new-car sales last year. “Sales were really strong, and we are hoping to be at 10% this year. We’ve hired new employees and ramped up our commercial sales department,” the company president told BusinessWest.
Such optimistic projections are in line with national forecasts. In fact, on Jan. 21, analysts at the American Financial Service Assoc. Vehicle Finance Conference in San Francisco said they expect the numbers to continue to grow in 2015 for the sixth consecutive year.
TrueCar and J.D. Powers are also optimistic and predict that sales of new vehicles should hit 17 million this year for the first time since 2005, a 3% increase over last year.
A number of factors are playing into the equation. Consumer confidence has risen, many vehicles can be purchased at low or 0% interest, gas prices have dropped dramatically, and consumers are impressed by the new features, gas mileage, and technology offered by manufacturers today, who find themselves in a highly competitive market with lean margins.
The reduction in gas prices has fueled the growth of SUVs and trucks, which slowed considerably nationwide when prices at the pump increased a few years ago.
Local dealers also noticed the trend. “People are very reactive to current circumstances, and we are already seeing sales of trucks and SUVs increasing because of low fuel prices; when gas prices went up, customers gravitated to hybrids,” Balise said. “But now, sales of mid- and full-sized SUVs and trucks are growing at a particularly fast rate.”
He believes the trend is exacerbated by the fact that construction jobs are increasing in the area, and with projects accelerating in Springfield, contractors and people in related businesses are buying the trucks they need to run their businesses. “There is a real demand for pickups again,” Balise said.
Marcotte concurred, and said the timing is serendipitous for Ford, due to its new, full-sized F-150 pickup, which has an all-aluminum body; redesigned Explorer and Edge SUVs; and a wide range of other new vehicles.
“We saw people trading in their big trucks for smaller cars three years ago,” he told BusinessWest, “But due to better gas mileage and the price of gas, there has been an upswing in sales of trucks and SUV’s.”
Marcotte Ford bulked up its inventory of 2014 F-150s last year to take advantage of the increase in demand, with the game plan of being able to offer attractive prices when the 2015 model came out. “There are great incentives for the 2014 models,” Marcotte said.
But the biggest factor in any sale is affordability, which has been a common denominator that is motivating people to purchase new vehicles.
“Transportation is less expensive today than it has been just about anytime in the past,” said Balise. “Low interest payments have exacerbated the advantages of new vehicles, and we are often able to offer people a lower payment than they had for their last vehicle.”
Jeb Balise, left, and Ken Maffia say that providing exceptional service is a key component in repeat business.
Industry analysts say that, although people are borrowing more than they did in the past for a new vehicle, the fact that they are spreading payments over longer terms at low or 0% interest rates makes payments especially alluring. Experian Automotive reports the average new-car buyer financed approximately $27,799 in the third quarter of 2014, and although that was an increase of about 4% over the year before, their average monthly payment was only about 2.6% more.
“When people get a loan at 0% interest, it allows them to get more features and keep their payments the same,” Marcotte said.
Drumming Up Business
Auto dealers say that, although some people still trade in their vehicles every two to three years, most are keeping them for longer periods of time. “The average is 11 years, and the trade-ins we see have about 100,000 miles or more,” Marcotte said.
Balise agreed. “We’re seeing trade-ins with up to 270,000 miles. There are plenty with well over 100,000 miles that range between 175,000 and 205,000 miles, which is something we rarely saw prior to 2008.”
However, dealers say the fear of taking on new debt that existed during the recession has led to pent-up demand. “It’s greater today than it has ever been,” Balise said, adding that many people who put off purchasing new cars for several years are eager to buy again.
And since many haven’t entered a dealership for some time, they are wowed by what is being offered.
“Ford makes major changes every three years,” said Marcotte. “And people who visit a dealership for the first time in years are surprised by the technology and safety features in the vehicles.”
He told BusinessWest that Ford introduced two models that can be run on gas or electricity — the Fusion and the C-Max hybrid — to the market about three years ago. “People can plug into charging stations at dealerships and travel about 1,000 miles before they have to recharge. There are more options than ever before, so vehicles can really be tailored to suit people’s needs.”
Cosenzi agreed and noted that Volkswagen’s E-Gulf was named Motor Trend Car of the Year, and that vehicle, along with Nissan’s Leaf, another electric model, not only qualify for large state and federal rebates, but also ensure that buyers will never have to purchase gas again.
“We have a quick-charging station that fully charges a vehicle in under an hour, and more places are adding fast-charging stations so people can stop along the way when they want to take a long trip,” she continued, adding that customers who visit TommyCar’s dealerships often look for the latest safety features, including the BlueLink by Hyundai and Car Care by Volkswagen, which are similar to the OnStar system, which provides an emergency-response system, navigation, and diagnostics.
“BlueLink allows people to set a mileage parameter that alerts them if the driver goes outside of it or the speed limit, as well as step-by-step navigation. It also alerts them whenever the vehicle needs maintenance,” Cosenzi told BusinessWest. “But these features aren’t driving traffic, and people are not buying because they want the latest technology. They are just impressed by it when they come in.”
Balise agreed. “People are smart shoppers and more frugal than they used to be when it comes to options,” he explained. “They only want them if they see their value and know they will use them. They are more pragmatic and less emotional about purchases than they were in the past.”
Dealers are in agreement that most buyers know what they want when they enter the dealership because they have done research online. But they want to touch and feel the vehicle as well as test drive it, Cosenzi said.
However, due to fierce competition, they also know there is flexibility in pricing, and Balise said what used to be a painful transaction is now something that can be pleasant for the buyer.
“We’ve streamlined the process and discount vehicles in a forthright way with full disclosure so the customer is in control,” he said. “When they arrive, they are well-educated due to the Internet, so it behooves dealers to live up to the knowledge and understanding they have. Our success is based on high volume, so we are able to make transactions at low prices.”
Repeat business is important and is measured by manufacturers, and because the service people receive while they own a vehicle weighs heavily in their choice of where to go when they are ready to purchase a new model, dealerships are doing everything possible to make visits easy and pleasant.
“Manufacturers and dealers go to extremes to provide a great experience,” Balise said, adding that his dealerships’ customer-retention and loyalty rates are very high.
Marcotte explained that the trend of keeping vehicles longer than in the past led his dealership to outgrow its existing number of service bays. “So we are building new bays for commercial vehicles,” he said, adding that he will break ground next month on a new building with 16 bays. It will be positioned next to Quicklane on 933 Main St. in Holyoke, which services any make or model and was built by Marcotte six years ago.
He added that the dealership’s service department is open until midnight, and people who buy from Marcotte Ford can take advantage of its 150 free loaner vehicles. “We want to make things as convenient for customers as possible,” he noted. “We also offer breakfast catered by the Log Cabin Restaurant on Tuesdays and Saturdays so people can have a nice meal; some customers schedule visits at these times just because of the free meal.”
Balise said offering exceptional service is no longer an option, but a necessity. “Being good is not good enough today. Our growth is based on being customer-focused and is driven by that more than anything else. Standards have continued to rise over the last 10 years, and we are maniacal about being the absolute best in class.”
Optimism Prevails
Overall, Cosenzi said, consumers are more confident than they were a few years ago.
“Sales in the second half of 2014 really accelerated for us, and we are coming into our good months. Sales typically start to increase in February, and the outlook is really positive,” she noted, mentioning President’s Day specials and tax season because buyers who get large refunds often use them as a down payment for a new vehicle. “Plus, there are a lot of new models coming out.”
Balise concurs and said the company completed construction on four new dealerships last year and now has 19 in Massachusetts, Connecticut, and Rhode Island. “We are predicting a 2% to 4% increase in sales this year and feel pretty confident we will sell more than 30,000 units,” he told BusinessWest.
If interest rates and gas prices stay low, and the economy continues to improve, the numbers should add up to a good outcome for consumers and dealers alike.
Cap & Hitch of New England Continues to Broaden Its Scope
Jeff Hanks, left, and Jim Maynard turned their lifelong friendship, and mutual interest in cars and trucks, into a successful business partnership.
Friends for life.
That’s as good a description as any for Jim Maynard and Jeff Hanks, co-owners of Cap & Hitch of New England, a West Springfield store that sells those namesake products, plus dozens of other kinds of car and truck accessories.
“We grew up together in Wilbraham, playing hockey together, going to school together,” said Maynard as the pair sat with BusinessWest in the shop on Riverdale Street where 10 employees work. “Our main guys here are also friends we grew up with. We have a lot of history together, and all of us come from similar industries.”
Hanks, a certified mechanic — he prefers the term “auto technician” — and Maynard, who has worked in a number of automotive-related fields, from snowplowing to auto sales, saw an opportunity several years ago when Hanks’ father was planning to get out of the truck-cap and trailer-hitch business, and they took over ownership of the store.
“We decided to go into business together,” Maynard said. “His father had a business here, mainly caps and hitches. We brought a broader scope to it. We also brought in the whole electronic aspect with a website.”
That site, www.capandhitch.com, details what has become an impressive array of products, including bed liners, tonneau covers, snowplows, emergency lighting, step bars and running boards, grills and grill guards, bug shields, roof racks, rain guards, chrome trim accessories, wheels, ladder racks, toolboxes, shelving — and much more.
“We do contractor equipment, commercial van outfitting, we do everything,” Hanks said. “It’s tough to nail down. We have all types of car accessories, interior and exterior, work-related, aesthetic-related.”
Cap & Hitch fills a need in the marketplace, he added, because many of these products aren’t typically carried by car dealers. “We do a lot of work for dealerships because they don’t want to do that. There aren’t a lot of people doing it.”
Caps and hitches remain the store’s lead products, however, Maynard noted. “We have everything from fiberglass truck caps for commercial and personal use up to heavy-duty commercial caps, and trailer hitches of all types, from small cars to commercial, fifth-wheel, and gooseneck hitches.”
Hanks said the customer base is about 75% retail and 25% commercial, and he and Maynard try to give buyers access to as many product lines as possible. “We have all kinds of truck accessories, towing equipent, snowplows, mobile electronics, emergency lighting, strobe lights for vehicles — you name it.”
For the most part, he added, customers are bringing in newer cars and trucks to get decked out with accessories. “We still get people with used cars who want to get stuff done, but a good majority of the work we do is with new vehicles.”
When he and Maynard took over the business in 2006, “it wasn’t in the best shape to begin with,” Hanks said. “Then, with the recession, we struggled.”
Those struggles were a direct result of depressed auto sales from 2008 onward, which meant fewer customers visiting Cap & Hitch to accessorize.
Jim Maynard and Jeff Hanks have significantly broadened the store’s products and services beyond truck caps and trailer hitches.
“It was tough,” Maynard said, “but we survived by stressing customer service, getting the job done. We pride ourselves on that. Customers will come in here and say, ‘you guys are so highly recommended, I asked a two friends and a car dealership, and they all said the same thing.’ We put ourselves in customers’ shoes and solve any needs they have. We want to give them fair prices, too.”
Part of staying successful in the business of selling and installing vehicle accessories is keeping on top of new products and trends, whether that’s reading industry publications or attending the annual trade show of the Specialty Equipment Marketing Assoc. One of their more recent services is installing breathalyzer equipment for drivers who are ordered by a court to use them.
“We really want to focus on the product knowledge we have here — our knowledge of what customers need and want,” Maynard said.
Hanks agreed. “We’re constantly updating our knowledge base on new products. So much new stuff comes out every year — new products, new toys. Half the stuff we do now, we didn’t do on day one.”
‘Toys’ is an appropriate word, because car and truck enthusiasts get genuine pleasure from customizing their vehicles to their needs and tastes.
For example, Maynard said, “I’m a drummer. I love music, and even though it isn’t a big part of the business, I love putting a sound system in somebody’s car, somebody who’s also a music lover, and watch them sit in their car and turn it up.”
That’s the kind of enthusiasm he wants to generate with every customer, he added.
“Honestly, besides coming to work with friends and the good times we have, I love delivering a vehicle to a customer, then seeing a smile on their face, seeing them happy with the end product, happy to pay for the job, excited about driving their vehicle.”
Maynard and Hanks enjoy connecting with people outside of the store, too, especially in the realm of youth sports.
“We both play hockey, and we sponsor a lot of youth activities, a lot of youth sports, like the Springfield Caps and various soccer teams,” Maynard said, adding that the company buys jerseys for youth teams and sponsors a golf tournament, among other efforts.
“We want to give back as much as we possibly can,” he added before thinking back to his days in youth hockey. “Part of our upbringing was sports, and we saw good people and small businesses doing things for us. I grew up playing with a sponsor’s name on my shirt so our parents could afford the most ridiculously expensive sport on the planet.”
In addition, Cap & Hitch of New England offers discounts to military, police, and fire personnel, Maynard noted. “They’re out there risking their lives for us so we can get up every day and play with vehicles.”
Hanks finds similar pleasure working in a field he’s loved from his childhood. “My whole family is in the automotive industry in one way or another. I grew up around it.”
And now these lifelong friends are prepared to take Cap & Hitch to the next level, with a goal of eventually moving beyond the small store that’s already bursting with products.
“We’ve continued to grow,” Maynard said. “And we want to keep growing.”
A chart of the region’s auto dealers
Click HERE to download the PDF chart
By BusinessWest Staff September 23, 2014
John Robison’s Auto-repair School Helps ‘Different’ Students Succeed
Growing up in the 1960s, a victim of abuse at home and an inability to fit in socially at school, John Robison had every reason to worry that he wouldn’t find success in life.
Yet, he did. Diagnosed as an adult with Asperger’s syndrome, which finally began to explain why he was different, Robison is the author of three bestselling books, a former electrical engineer who pioneered several innovations in the world of rock music, and currently the owner of J.E. Robison Service, a sprawling auto-repair and restoration complex on Page Boulevard in Springfield.
And now, by partnering with a special-education high school on the TCS Automotive Program — a vocational training center based at his workplace — he’s helping teenagers with the same challenges he faced gain the skills and confidence they need to succeed in the auto-repair field.
It’s a unique endeavor, but Robison has never been one to do things in the traditional way.
“I was always into cars and electronics,” he said of a set of interests that bordered on obsession in his younger years — a common trait among people with Asperger’s. “When I dropped out of high school, I taught myself about electrical engineering and found success as the American engineer for Pink Floyd. Then, a lot of big bands in the ’70s used our sound equipment. I’m best known for the work we did for KISS, engineering all their special-effects instruments” — such as custom guitars equipped with fiery smoke bombs.
After that, he got a job as an engineering manager in the corporate world, but disliked the experience. “I really didn’t understand the dynamics of the company. I decided, rather than be somewhere I didn’t really know what was going on and didn’t feel I fit in, I’d start a business of my own,” he said.
“The other skill I felt I had was fixing cars,” Robison continued. “But I wanted to fix cars that people cared about, thinking that somebody who’s a real car enthusiast would be interested in dealing with someone like me who had a real love of machinery, and that proved to be correct.”
His business — which specializes in repairs of luxury European models such as Rolls-Royces, Porsches, and Land Rovers — began as a part-time activity in South Hadley 30 years ago, and has since evolved into an extensive restoration and repair complex boasting 30 service bays, making it the largest independent garage complex west of Boston. And, unlike the service facilities of large area auto dealers, he said, he’s eschewed the sales side, which would only distract him from his mission of “fixing things.”
Some things don’t need fixing, of course, and today, thankfully, people tend to be much more aware of children on the autism spectrum, unlike Robison’s parents, who toted him to several mental-health professionals who labeled him lazy, angry, or even socially deviant, and said he might have to be institutionalized if his inappropriate behavior continued.
Just because the medical community and parents understand autism and Asperger’s much better today, however, doesn’t mean their challenges aren’t daunting. But Robison knows they can make their way in the world — after all, he’s exhibit A — and his new training school is demonstrating how.
Doing Things Differently
Robison has gained a much higher profile through his three books: Look Me in the Eye, which chronicles his life growing up; Be Different, which is filled with practical advice for “Aspergians, Misfits, Families and Teachers”; and Raising Cubby, a memoir of his unconventional relationship with his son, who also was born with Asperger’s.
And with that higher profile has come a greater sense of responsibility.
John Robison’s sprawling car-restoration complex in Springfield boasts 30 service bays across a number of buildings, along with space for the training school.
“Ever since my first book, Look Me in the Eye, was published, people have come here to see what we do, and they’ve asked for years about apprenticing autistic family members in the automotive trade,” he explained. “I’ve always tried to do things to help the community. Before I knew about my own autism, I worked with abused kids at places like Brightside and the jail because I grew up in an abusive environment; I would have been a kid taken by Social Services had I grown up today and not in the ’60s. So I’ve always felt an affinity for young people with challenges.”
Learning that autism was the root of his social challenges was a breakthrough, and he’s since considered how he could blend his career with a mission to help kids in similar circumstances. The answer came through a partnership with the Northeast Center for Youth and Families, which maintains a high school in Easthampton for teenagers with developmental challenges.
Specifically, the school, which serves students from all over Western Mass., opened the first high-school program licensed by the Massachusetts Department of Special Education that teaches young people the auto-repair trade in a location where the work actually happens. Students alternate spending a week at the high school, then a week at J.E. Robison, throughout the year.
“As revolutionary as that seems, that’s really how humanity learned all throughout history; they learned trades at the side of a master,” Robison said. “Whether that meant assisting a priest in his duties, clerking for a lawyer, or helping a blacksmith, they learned the trade at the side of a person who did it. We’ve lost sight of that and now teach in a vacuum, in this artificial high-school culture of bullying and things don’t happen in real life. One of our goals is to fundamentally change that.”
Of course, the students still must complete their regular course of high-school study, Robison said as he walked BusinessWest through a small building set aside for the TCS Automotive Program, where students use cutting-edge equipment — much of it donated by Bosch Auto Parts — to work on cars, also mostly donated. In a small classroom, an instructor uses a white board to teach the business side of the auto-repair industry. A full-time special-ed assistant, a school psychologist, and school nurse also staff the program.
“This is the vocational part of the campus. These students will be in academic classes back at the main campus next week, and another shift will be here next week,” Robison explained. “Our students have to meet all the regular Massachusetts requirements for graduation from high school; this is not a program where they learn skills instead of high school — they’re learning a trade in addition to meeting high-school requirements. So it’s a harder program. Interestingly, students in this program are progressing faster than similar students in conventional vocational programs.”
It’s also a more intensive education than a traditional high school, with student-teacher ratios as low as 3-to-1 or even 2-to-1 at times. Robison often takes the students on “rounds” through the facility, much like medical students make the rounds in hospitals. But more often, they’re learning by doing.
It’s not a program for any teenager interested in cars, however. “We are a licensed special-education high school, so you have to have an IEP [individual education plan] in Massachusetts, which qualifies you for special-education services. Parents talk to the school district, talk to our admissions staff, and make sure the students are a fit for our program. We take the people we feel will be successful,” he explained, adding that the program is funded 80% by the state and 20% by each student’s local school district.
“We’re closely overseen by the state,” he added. “In fact, we’re probably more closely supervised than the public schools, which are mostly funded by local tax revenue.”
Available to All
Robison stressed that he wanted to create a program that operates in the public special-ed realm, not a private school.
“It was very important for me to work with public-school students. I didn’t want to create an elite program for wealthy kids; I wanted a program where any kid who needs services, who qualifies, could attend,” he said. “It’s entirely funded by the state Department of Special Education and local school districts. That’s really important. I want to deliver an educational model the public can benefit from, not just those who can afford private-school tuition.”
The school isn’t only for teens on the autism spectrum, however. Massachusetts offers special-education services to children on the basis of problems they have in school, as opposed to a medical diagnosis, he explained. “If you can’t organize yourself to do assignments in class, it might be due to a cognitive challenge, it might be autism, it might be ADHD, they might come from an environment that’s traumatic. Any of these underlying causes might add up to not being able to do tasks in school. We take kids who cannot succeed in a regular school and who are not violent.”
It’s actually discriminatory, he said, to position a school as one that specifically teaches students with autism how to act. “What we can say is, ‘you had a problem in school with completing your assignments; you’ve been sent to the office 10 times for what the teacher described as defiant behavior. You’ve got a problem. We help young people organize their thoughts and help them succeed better. We think we can help you.’ We’re not telling you that you’re marginal, defective, or broken. Whatever the issue, you have these challenges in school, and we have a program we believe can help you.”
Despite the way society has become aware of autism over the past decades, Robison told BusinessWest, stereotypes remain. “But we have a complex where we show our students, and show everyone who supports them, that people who are different can be the stars.
“We are one of the largest service complexes in Massachusetts, and we embrace diversity, and I think many people come to us for that reason,” he continued. “Sure, some people come to us to get their car serviced and know nothing except that we provide service and they want to get their oil changed or their brakes done. But we also have people come in here who want to be associated with people who have a social mission in addition to a commercial mission.”
He’d like to see these students’ interest in cars become not just a mission, but a career opportunity.
“People often have a vision of children who are different and wonder if they can ever grow up and support themselves,” he said. “Our commercial operations here are not subsidized by taxpayers in any way. We are very successful competing in the free market. We have cars here from Montana, Ontario, Virginia, Pennsylvania. Those cars are here because of our reputation, and it started with my fixation on cars and machines, which was characterized as a disability when I was a little boy. We’re kind of the embodiment of the idea that the traits that make a child seem disabled can make a technologist a star.”
If other teenagers in the program find similarly satisfying careers — whether as technicians or working on the retail side of auto repair — then the effort to open TCS will have been well worth it.
“We tell them, ‘this is the stuff you’re going to need to get hired,’” Robison said. “Nobody’s forced to be in this program; they’re here because they want to learn how to do this.
“We have to have teaching strategies to work with autistic people, work with victims of child abuse. But these are also people who just love cars,” he added. “So I see myself in many of these young people, and I’m very proud we’ve been able to make the school come true here.”
Negligible Negotiations
Information Technology Changes the Way Vehicles Are Sold
Sara Holmes says leasing vehicles comprises half the new-car business at Lia Toyota Scion of Wilbraham.
Sara Holmes says the way new cars are sold has changed dramatically in the last decade, largely due to the Internet, which allows people to compare and contrast the price of vehicles.
“Ten years ago, when people came into a showroom, the starting place for negotiations was the window sticker, and the whole process could take several hours. Today, an entire negotiation can be completed in about 20 minutes because people know what they want and how they want to pay for it,” said Holmes, general manager of Lia Toyota Scion of Wilbraham, adding that 80% of sales there are Internet-driven.
Howard Sackaroff agrees. “Years ago, most new-car sales were almost impulse buys. But today, people plan for a purchase and do a lot of research before they even visit a dealer,” said the general manager of Curry Honda and Curry Nissan in Chicopee. “They check safety, fuel economy, and reliability, and sites such as Edmunds or Kelley Blue Book not only provide them with invoices and suggest the amount they should expect to pay, they also give them the value of their trade-in. So by the time consumers show up, they have already made a decision, which makes the process much smoother.”
The trend is reflected at other local dealerships, including Bertera Subaru in West Springfield, where General Sales Manager Mark Noel said the majority of people who visit are ready to make a purchase. “They come to the showroom prepared to buy, as opposed to beginning a search,” he said.
Although customers who have never driven a Subaru may return more than once, he added, “they have already shopped at home, decided what best suits their needs, and gotten the pricing out of the way so the process is a lot shorter and less contentious than it used to be.”
Since price ultimately attracts business, aggressive online marketing programs have become a necessity for dealers. There are many different approaches, such as one used by Curry, where people can choose a specific car, then hit a button on a website to reserve it.
“When that happens, they receive a return e-mail with the lowest possible price,” Sackaroff said. “It lists the features and benefits of the vehicle they have chosen, but they also receive five alternative choices that are similar to the vehicle with their lowest price. It takes negotiation out of the equation.”
He noted that he sets prices weekly or bimonthly based on supply and demand, but admits a small bit of “wiggle room” can remain, and on occasion the price is reduced in the showroom by $50 or $100 — “but that’s it.”
Howard Sackaroff says style changes in new cars typically take place every four to six years.
Noel agrees. “Dealers have always had to be competitive, but competition has increased due to the Internet,” he said. “So, once a person locates the lowest price online, it is really the best price out there. All that is left is negotiating the cost of service plans and the person’s trade-in.”
In fact, Joe Soucy calls the Internet “the equalizer.”
“Manufacturers have bridged the pricing gap between brands, and the days of negotiating a price that is thousands of dollars less than the starting point are gone,” said Soucy, general sales manager for Bob Pion Buick GMC in Chicopee. “Today, people search to find who has the vehicle with the equipment they want at the price they want to pay, and any negotiations that do take place are usually in hundreds of dollars.”
But price isn’t the only consideration. Service also plays into the equation, so local dealers do everything possible to cater to their clients.
“Several weeks ago, a customer was dissatisfied with a new car that developed a transmission problem two weeks after he bought it. In the old days, it would have been repaired under the warranty, but I gave him a new car,” Sackaroff said, adding, “we maintain an advantage based on our reputation and on referrals, so we always try to do the right thing.”
Sales managers concur that excellent customer service is more important than ever before, especially since people who have a bad experience can document it on sites such as Angie’s List and Google, where it can be read by millions of viewers.
“For us,” Holmes said, “it’s about keeping people happy at the end of the day.”
Although dealers typically make less than $1,000 on a new car, people still enter showrooms who haven’t done any research, don’t believe how small the profit margin is, and become skeptical when they are told there is no room to negotiate.
“We showed a customer a factory invoice yesterday, but he thought it was phony,” Sackaroff said. “So the salesman had to go online and show him the price of cars on Edmunds.”
Noel has had similar experiences. “People don’t always believe the dealer. But showing them a trusted third-party source makes it so much easier,” he agreed.
According to Soucy, one of the things some customers fail to take into account is that destination prices and preparation work are not included in the invoice. “For example, truck steps are installed upon arrival, and the price of a vehicle can differ according to trim levels. But in some instances, people need to shop at other dealers to find they have reached the end of the negotiating road. “
Joe Soucy said customers have a tendency to overstate the value of their trade-in vehicles.
There is room for negotiation, however, when it comes the buyer’s trade-in. Still, dealers say many people are unrealistic. “Some look up what the vehicle would sell for in the retail market as opposed to its trade-in price. And people tend to believe the information they have gathered themselves as opposed to what a dealer tells them,” Noel said.
Holmes agrees. “There are tools online that allow people to play appraiser, and when they get here, they have decided what their car is worth,” she said, adding that emotional attachments can play into the equation. “I have had customers who have named their car. They think, because they love it, it has to be worth more than we tell them.”
Soucy said people also often overestimate their vehicle’s condition. “Everyone thinks their car is in great condition, and that’s what they check off when they visit an Internet pricing site.”
Value also depends on the amount of work a car, SUV, or truck will need before it can be resold. In order for a vehicle to be certified, it must meet stringent requirements, which can include new tires and brakes, in addition to things such as an oil change. “We spend $1,500 on average to certify a car, even if it is very clean when we get it,” Sackaroff said.
Soucy said every discount possible is included in an online price, and the margin of profit is lower on entry-level vehicles than on high-end models. He explained that discounts are what the dealer is allowed to chop off of the manufacturer’s suggested retail price — a figure that is generally lower on cars than on trucks — while rebates are determined by the manufacturer.
“If a model is being closed out, the rebates are usually higher,” he explained. “However, many factors play into discounts and manufacturers’ rebates. And although deals in auto sales are a preconceived notion, people have the belief that a holiday or the end of the year is when they will get the best deal. But that may or may not be true.”
Sackaroff agrees, noting that there is often only $50 to $100 difference in the price, and there may not be much difference in the vehicle other than the model year. “When I was a kid, new cars were always styled differently. But today, styling changes only take place every four to six years.”
In other words, Noel said, “no one has any idea what a manufacturer will offer in six months, so now is always the best time to buy a car.”
People can save several thousand dollars by purchasing dealer demos, which typically have been driven only 5,000 to 6,000 miles and are registered as new cars with full warranties. “They are generally good buys, as we depreciate their price. Plus, we see many people with Hondas and Nissans that have more than 150,000 miles on them, so an extra 6,000 miles doesn’t make much of a difference when they turn them in,” Sackaroff explained.
Holmes agrees. “Demos are discounted below invoice by $500 to $2,000, depending on how popular the car is,” she said, adding that special pricing is also often available to new college graduates and people serving in the military. “Manufacturers are helping young people get started, so college graduates don’t usually need a co-signer.”
Leasing is another option — one that’s becoming more popular, said Holmes, noting that about half of Lia Toyota Scion’s new cars are leased. “Today, most people are budget-conscious, and leasing helps keep payments low,” she added, explaining that new cars offer the latest safety features along with free maintenance, which typically includes oil changes and tire rotations. In addition, a variety of mileage plans can be factored into the price. “But if you drive 30,000 miles a year, a lease may not be the best option.”
However, Soucy thinks leasing is the best way for most people to acquire a new vehicle. “You are only accountable for payments during the lease period, and the bank takes all of the risk,” he said, recalling that, when gas prices skyrocketed, people who leased could walk away from vehicles that got low mileage. “And if the manufacturer stops making the model, the person who leases it is not responsible for the fact that it is worth less when the lease ends. We sign zero-down leases every day.”
All that said, the Internet remains the most significant reason why the car-buying experience has changed, and local dealers told BusinessWest it has been been a boon to business. “It has expanded our market and allowed us to see more people. We have sold cars to people in Florida, Washington, and California,” Noel said, explaining that most people who travel great distances do so because they want a specific used vehicle, as opposed to a new one.
But showroom managers agree that a dealer’s customer-service reputation can be the deciding factor in where people purchase a vehicle. “People want to buy from salespeople who are knowledgeable and who they feel they can trust,” Holmes said. “It’s all about trust, and when the process is easy, buyers are happier, and we are happier too.”
Sackaroff concurs. “The changes in negotiation have made life easier for me and for my salespeople,” he said. “But you still have to earn your business, and we have earned the trust of the community and the families in it.”
A chart of area auto dealers
Click here to download the PDF
The Next Gear
By BusinessWest Staff July 1, 2014
Carmakers Branch Out as Sales Continue to Increase
Jeff Sarat calls it “pent-up demand.”
Auto-industry analysts have been saying for years that the average age of all cars on the road is hovering at or over 10 years, each year expecting the dam to break and a good percentage of those motorists to trade up for something newer.
It never seems to happen, but Sarat, president of Sarat Ford Lincoln in Agawam, says there are some indications that people are tiring of squeezing another year or two out of the old beater.
“There’s a lot of pent-up demand out there, and I think that’s helping us,” he told BusinessWest. “We just sold a couple a new Lincoln MKZ; they had a 2002 Cadillac — a 12-year-old car. It was time for them. They wanted to buy a new car two years ago, but they held off for a year or two. But they were at 99,000 miles, and it was just time to trade in that car. And that 10-year average is just that — an average. So you’ve got five-year-old cars out there, and 15-year-old cars. That’s old. And that’s really helping us right now.”
What didn’t help, Sarat said, was a remarkably cold winter that suppressed sales industry-wide.
“In January and February, the snow, ice, and freezing temperatures really hit us pretty hard. We hit our numbers, but it was a real struggle. That was happening everywhere, but especially in New England, because of the cold weather,” he explained, noting that the cold even impacted the rail system that delivers products from factories in the Midwest to dealerships in the Northeast. “Everything was stuck. But now, things are back to normal. Ford and Lincoln have a lot of really good programs going on right now, and they’re getting us where we need to be.”
For Damon Cartelli, president of the Fathers & Sons dealerships in West Springfield and Greenfield, the winter was just a bump along what has been a positive road over the past few years.
Damon Cartelli says luxury carmakers like Audi are starting to offer vehicles at lower price ranges — although not necessarily this $180,000 model — to build brand loyalty with younger consumers.
“Business has been really good after we got through January and February, after the cold,” he said. “We were wondering what kind of year we’d have because it was really quiet in January, but we roared back after February, and we expect another year of growth. Quite honestly, 2011 was better than 2010, 2012 was better than 2011, and 2013 was better than 2012 — actually, last year was our second- or third-best year.”
Sarat and Cartelli aren’t the only ones optimistic about the rest of 2014 and beyond. In fact, just five years after the onset of the Great Recession saw U.S. sales bottom out at 10.4 million, online auto-sales resource Edmunds.com expects that number to reach 16.4 million in 2014, not far off the 2000 peak of 17.3 million. In other words, the cold spell looks to be broken, both literally and figuratively.
Lacey Plache, chief economist at Edmunds.com, notes that sales this year are receiving a boost from a higher number of lease returners than in 2013, many of whom will opt to buy instead of leasing again.
“At the same time, the downside risk to sales growth will be lower as the economy and consumer confidence continue to improve,” she adds. “While economic growth will remain modest overall, enough progress has been made that car buyers will be largely undeterred by the next rounds of U.S. fiscal crises.”
Despite the cold start to 2014, Sarat said the first half of the year saw sales about even with a strong 2013. “Now we’re hoping for a bit of an uptick. This month’s shaping up that way, and I think the second half of the year will be a lot better. That’s what I’m hoping, anyway.”
Sales should be helped by Ford’s annual Summer Sales Event, which offers 0.9% financing on many vehicles. “They’re even pushing pre-owned cars now, which helps us move those cars,” he said. “We’ve got some great lease deals, sign-and-drive, the Ford Focus for $199 a month … we’re selling just about every Focus we can get because of that program.”
Rising consumer confidence is helping to move some of the larger vehicles as well, Sarat said. “I remember five years ago, we needed a $5,000 rebate to sell a Ford Explorer; now we sell them with a $1,500 rebate.”
The Fathers & Sons family of dealerships runs the gamut from its Kia store to its higher-end Porsche, Volvo, Audi, and Volkswagen showroom, and across the board, Cartelli said, sales have been brisk.
“Kia has remained a very strong brand for us. The only problem is getting a sufficient amount of product to satisfy demand,” he noted. “Same thing with Audi — it’s a great brand for us, but we haven’t had enough product to fulfill demand. But with Volkswagen, we do have a good mix of products, so there’s not a concern. And Volvo is coming on strong right now.
“It’s a perfect storm right now, when all cylinders are firing, when we have good sales with all the franchises” he added. “There are lot of times when we have a couple up and a couple down, but when all are clicking at the same time, those are special years.”
Despite a greater willingness to spend, however, buyers are still on the lookout for fuel efficiency. “That’s an overriding thing for all manufacturers. Everyone is trying to figure out how to make cars as nimble as possible while keeping the fuel efficiency high,” Cartelli noted, adding that European manufacturers have also been investing in lighter but stronger metals that boost both performance and fuel economy. “It seems like an oxymoron, but it’s not.”
However, Sarat said people are becoming used to high gas prices, figuring that’s the new norm.
“The last time gas approached $4 per gallon, everyone wanted economy cars, asking, ‘what’s the fuel efficiency?’ I hate to say it, but the general public is used to gas at $3.65 per gallon,” he told BusinessWest. “I know the tank on my truck is 35 gallons, and when I fill it up, it hurts. Yet, people are not mentioning that anymore. It’s in the cormer of their mind, but it’s not the top reason they’re buying or trading.”
What they are looking for is technology. “Connectivity for smartphones is really starting to catch on across all brands,” Sarat said.
Jim Motavalli, who blogs about cars for the New York Times, sees the industry entering an age when budget cars won’t have to be spartan. “Automakers, particularly American ones, have discovered the low end of the market, once ceded to Japan, Korea, and Europe. That means great deals on entry-level cars such as the 2014 Chevrolet Spark or Ford Fiesta,” he writes. “And because there’s fierce competition for the youth market, both have access to the latest high-tech gadgets, through MyFord Touch or Chevy’s MyLink.”
And while driverless cars are still the stuff of science fiction — you can’t sit in the back seat and play with your phone, Motavalli notes — autonomous vehicles will dominate by 2040. “What we’re going to see is a gradual increase in the sophistication of in-car safety equipment. Soon you’ll take it for granted that your car prods you to stay in your lane, warns you when you’re going to hit somebody or go off the road, parks itself, and even takes over for short stretches in traffic jams.”
While automakers work to develop this next generation of high-tech vehicles, Plache notes that the used-car market will soon see a surge in off-lease vehicles and older trade-ins, which is good for budget-conscious buyers. “Growing inventories could mean more deals to attract car buyers, which will appeal to the deal-seeking mentality prevalent since the recession.”
The quest for bang-for-the-buck also means buyers will be increasingly drawn to leasing, she adds. “In general, more car buyers will arrange funding through dealers, with leases and dealer financing supporting over three-quarters of transactions as the share of sales from other funding sources, such as cash and loans from third-party lenders, declines further. Regardless of how they pay, buyers will be less tolerant of the traditionally long-winded negotiations in the dealership, preferring instead to lock in the price and as many other terms of the deal as possible before arriving.”
Meanwhile, luxury automakers are reaching out to consumers with lower-priced models, like Audi’s A3, priced around $30,000.
“That has been a perfect mix for our market demographics, being a personal car, a starter car, if you can call it that,” Cartelli said. “It’s got front-wheel drive, leather, and sunroof, all standard, and it’s $32,000 with all-wheel drive.”
The idea, he said, is to develop brand loyalty with consumers earlier in their lives, so they eventually move up to the A5 or A6. “It puts on the shopping list. It opens the door to a lot more people we can talk to, where before, we just didn’t have a model that fit into that range.”
Other luxury names are doing the same thing, including the Mercedes CLA class, a Porsche crossover SUV, and a Maserati mid-size sedan. At the same time, Plache writes, value brands like Hyundai and Kia are continuing to push the upper price envelope with high-end sedans.
In other words, manufacturers are looking to provide something for everyone.
“If you’re thinking of buying a new car in 2014, the trends are mostly positive. The auto market has gotten incredibly competitive,” Motavalli notes. “That means they’re fighting for market share, and using just about any advantage to get your attention — and your dollars.”
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