May 2010, Auto Dealer Today - WebXclusive
Findlay Automotive Launches New VW Store
During one of the worst recessions in the country’s history, many businesses abruptly halted any plans for growth. However, while 2009 may have been a risky year to launch a new dealership, Findlay Automotive Group took the next logical step in growing the company’s footprint by opening their newest store.
Findlay Automotive Group, headquartered in Henderson, Nev., began as Findlay Oldsmobile in Las Vegas in1961, established by the late Pete Findlay. His son, Cliff Findlay, started working at the Oldsmobile store after college and eventually took over the business when his father retired. In 1990, Findlay was awarded a Saturn franchise in Las Vegas, and the business hasn’t stopped growing since.
The December 4, 2009, opening of Findlay Volkswagen in Flagstaff, Ariz., brings the grand total of dealerships to 23, representing 18 franchises and spanning four states. “It’s kind of a mom-and-pop deal that’s grown into a pretty big business,” said Tyler Corder, who left his position as a branch manager for GMAC in 1994 to join Cliff Findlay on the retail side of the car business. Corder is chief financial officer of Findlay Automotive Group and co-owner of Findlay Volkswagen Flagstaff.
Although Flagstaff is about 250 miles away from the group’s roots in Les Vegas, the Flagstaff market was not an unfamiliar one for Findlay Automotive. The group established a presence there in 2008 when it purchased the local Toyota dealership and moved it to the brand-new Flagstaff Auto Park. The Auto Park was a development undertaken by the City of Flagstaff with the hope that multiple auto franchises would locate there, creating a one-stop shopping experience for area consumers. Findlay purchased several lots in the development, and its Toyota store was the first to open in the Auto Park.
The site that is now home to Findlay Volkswagen Flagstaff was originally intended to be a Saturn store. However, rumblings in the industry about an eventual General Motors bankruptcy were getting louder by the day as the end of 2008 approached. Corder said Findlay Automotive began weighing its options and looking at the possibility of not proceeding any further with the Saturn dealership. “The signs were leading that way,” he said. “We made the decision to convert that store to a Volkswagen store in about November of 2008.”
Volkswagen had just awarded Findley the Flagstaff franchise earlier that year. The needs and wishes of Flagstaff residents, Volkswagen and Findlay Automotive conveniently converged to bring about the inception of the new dealership. During the development of the Flagstaff Auto Park, one of the franchises most requested by Flagstaff residents was Volkswagen. The automaker, which is expanding its dealer network in the United States with the intention of doubling its sales over the next few years, had not had a presence in Flagstaff since 2001, and there were no other Volkswagen dealerships nearby. Because it operates Volkswagen and Audi stores in Henderson, Nev., Findlay Automotive had an established relationship with the company and already discussed the possibility of additional points.
Of course, the decision to halt progress on the Saturn store and modify it to house Volkswagen proved to be a very wise and well-timed one. However, it also meant the company would be facing the prospect of overhauling a partially-constructed dealership, a task that would come with its own set of challenges. “We stopped in mid-track, met with Volkswagen, redesigned [the building], and then restarted construction,” said Corder. “It took a year from the time we decided to change it to actually get it to a finished product.”
Fortunately, the size of the facility essentially fit Volkswagen’s criteria. “What it didn’t fit,” he said, “was their image.” Volkswagen dealerships have a signature look to their entry portals, he said, and the building fronts have a lot more glass than a Saturn store. Major changes had to be made, like knocking down walls and changing the shape of the showroom.
Making those changes drove up the cost of the project considerably but the biggest financial challenge, Corder noted, was the change in the credit market. Construction loans and the ability to finance large projects changed dramatically as the real estate market soured and property values plummeted. As a result, it took more capital than originally anticipated to complete the dealership.
With all the expense involved in making these changes and considering the uncertainty of both the U.S. economy and the auto industry, continuing to move forward seemed counterintuitive. After all, other businesses were in survival mode, drastically cutting expenses and halting or scaling back dramatically on any plans for growth. Corder said the decision to keep moving forward was based on a couple of things. “Number one … we think that Volkswagen, if you look at what their plans are for the future … [is] a great franchise and that despite the current economic conditions, long-term, that’s going to be a great investment,” he stated. Also helpful was the fact that Findlay was awarded the franchise, rather than having to purchase it. “When you don’t have to pay blue sky to purchase something,” he said, “that makes it a little bit more economically feasible.”
Findlay was also able to stretch resources a little thanks to the Volkswagen store’s close proximity to the group’s Toyota dealership. Corder said that rather than creating a new business office for the Volkswagen store, it was decided that accounting functions for both dealerships would be handled by the business office already established in the Toyota store. Another advantage to having the stores only a few hundred yards from each other was that the group could centralize the management of its business interests in Flagstaff. General Manager Robby Findlay pulls double-duty, splitting his time between the Toyota and Volkswagen stores.
According to Corder, not much advertising was done in advance of Findlay Volkswagen’s opening. “If you advertise for something that’s [too far] in the future, you’re not sure you’re getting a good bang for your buck,” he said, adding, “You might get someone excited about a car, then they go to buy it [but] you’re not open yet and ready for them.” Findlay Volkswagen is currently employing a few traditional forms of media including radio, newspaper and direct mail, but Corder said the majority of what they do is online marketing and search engine optimization of the store’s Web site and Findlay’s corporate site.
Findlay Volkswagen does not have a business development center (BDC) to handle Internet and other leads. Instead, salespeople set aside part of their day for making follow-up and prospecting calls. Presently, there is one salesperson designated to respond to Internet leads plus a back-up salesperson for overflow. Corder said an additional salesperson may be tapped to respond to Internet leads as the volume of traffic generated online increases.
In terms of unit sales, at this early stage of the store’s operation Corder is not yet quite sure what to expect. “We’ve obviously sold some cars, but one interesting thing about Flagstaff is it’s at [an altitude of] 7,000 feet and it gets very extreme winters, so it wasn’t perfect timing to open in December,” he said. The last week in January, he added, the area was covered in four-and-a-half feet of snow. “That really shut us down … we actually had the store closed for a couple of days … so it’s a little hard for me yet to gauge the sales traffic.”
One area of the dealership that saw terrific performance straight out of the gate was the service department. Upon the store’s opening, the dealership immediately attracted a segment of the population that had been neglected in the market area for some time—existing Volkswagen owners who needed to maintain their vehicles. “Service has been a pleasant surprise in that we immediately had service work,” said Corder. “One of the fears you have when you open a store is, ‘We haven’t sold any cars there yet, so we don’t have any customer base to come in for service,’” he explained. However, “we immediately started seeing people that owned Volkswagens in the market [area] bringing their cars in.”
Although it’s still early in the game for Findlay Volkswagen, Corder is confident the store will be a great success. “We’ve now been operating our Toyota dealership up there for about a year-and-a-half, and it’s been very, very successful for us. So we feel good about the market,” he said. “The last year or two years have been the worst we’ve ever seen in the car business, [but] we think that … the economic climate will get better.” Additionally, he said, “We just think that Volkswagen has a really bright future because of the product plan that they’ve got and their goal of selling more cars … All of that combined tells us that we should be very optimistic.”
Vol. 7, Issue 3