Driving west along Southwest Canyon Road is a bit like time travel, winding along a starkly vacant auto row that use to be, and then down into a collection of gleaming new showrooms packed with cars that local dealers hope represent what will be. The recession forced Bob Lanphere Jr. to cut his work force by several hundred employees last year. Yet earlier this month, the dealer celebrated the opening of his revitalized Beaverton Honda dealership, moved a mile east up Canyon and expanded from one acre to nearly seven. At the same time, his nearly 50-year-old family business, Lanphere Enterprises, is pushing forward with plans for a similar expansion for Beaverton Infiniti.
Farther south, columns of metal and cement are rising from the dirt next to the Tonkin Family of Dealerships’ Wilsonville Nissan. The Tonkins, who sold or let leases expire on three lots and cut about 15 percent of their work force over the past two years, are now moving ahead with construction of their 15th showroom — the region’s second Audi dealership. “We decided to keep moving forward. Of course, the groundwork was laid in better economic times,” said Brad Tonkin, vice president of the Tonkin group of dealerships. “Still, we are seeing increases in the market and we believe that will continue. … Every month is better than the previous year.”
Northwest dealers who are emerging less scathed by the recession seem to have several things in common: An established customer base more reliable than a churn of new customers, Successful service and parts departments, Strong banking or investor relationships, and the ability to retain their strongest performing employees. Dealers who could, hunkered down, laying off workers, selling sluggish lots, cutting costs such as coffee service and helium balloon decorations and making nice to banks that represented lifelines. Less fortunate dealers watched helplessly as ailing automakers Chrysler LLC and General Motors Corp. yanked their contracts to sell and service their brands.
But 2010 has brought increased sales — growing consistently by double-digit percentages in most cases — and in turn, has dealers talking cautiously about a new start. “Those (dealers) that took care of their customers are doing better,” Lanphere said, “those that relied on their customer base versus those who relied on new customers.” Newport auto dealer Mike Gold relied on his customers when it came to winning his dealership back. Gold received a letter last year from General Motors telling him his contract wouldn’t be renewed, eliminating his flow of new Chevys and certification to do warranty work. He started selling used vehicles and had to whittle his employee count from 55 to 19. Profitability, he said, dropped to zero.
Then he started fighting the automaker. In preparation for entering a federally-mandated arbitration, Gold posted an online 12-question survey asking his customers whether they thought he should get his franchise back. He received 1,000 positive responses. “The guys from GM showed up at our dealership — it was the first time I’d met with them like that in 20 years,” said Gold, who received a letter earlier this month from GM saying that he was the first dealer nationwide to be reinstated as a GM franchise. He’s also the first, he said, to gain two more brands to become a superstore selling Buick, Cadillac, GMC and Chevrolet.
He’s hiring again, looking for technicians and sales people. “We’re back up to 25 and rising,” he said. “It feels really good.” Both Lanphere locations are down the hill from several empty, weedy lots, most vacant since the second half of 2008 when the auto world froze over. “When we quit selling cars, it was a nervous time for everyone. We cut expenses, personnel, our flooring — everything we could to try to maintain the status quo,” said Lanphere, sitting in the new Honda dealership that he’d originally planned to feature Dodge and Chrysler. But last year, Chrysler executives insisted that those brands be sold alongside Jeep on Canyon Road. Bob McGrain wouldn’t sell his Northwest Jeep dealership, Lanphere said, so he sold his Chrysler-Dodge franchise to McGrain and moved Honda. “It wasn’t what we’d planned,” Lanphere said, “but it has worked out well.” Lanphere said he can’t remember the last time he had 500 cars on the lot, as he does now, as well as a full order of vehicles in the pipeline. That, along with a raft of manufacturer incentives and loan financing rates, should bring in customers, he said.
Tonkin is upbeat about the new Audi dealership in Wilsonville, noting that Audi in recent years has become a stronger franchise with a greater variety of vehicles. He expects it will attract younger customers who want to stand out from their Mercedes- or BMW-driving parents. Worldwide, Audi outsold Mercedes in this year’s first quarter. The Tonkins launched Operation Tight Squeeze in November 2008, asking managers from all its departments to wring out savings wherever possible. Cutting coffee services and buying their own makers and bulk beans at Costco Wholesale saved $100,000. Ditching helium tanks and the dealerships’ signature floating marketing tool saved another $100,000.
Tonkin said his company’s size helped buoy it through the downturn. With more than a dozen franchises, the Tonkins and other larger Portland area dealers could afford to slough off straggling brands and refocus on better performers. Franchise was key, Tonkin said, pointing out that while his Dodge and Chevy sales may have cooled over the past year, the company’s Hyundai lot was humming. At the same time, he said, smart capitalization and management helped dealers through this downturn. “There’s a survival instinct among dealers. We’re willing to do whatever it takes,” Tonkin said. “Dealers are eternally optimistic, as a group — the reason for that is that we must rely on ourselves.”
Source: Oregon Live