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Local car dealership feeling effects of improved auto sales market

TAMPA — Paul Covell scored a hat trick last month, and he wasn't on the ice with Martin St. Louis or Steven Stamkos.

He was on the showroom floor selling cars for Elder Ford of Tampa.

Much like hockey players who achieve a hat trick by scoring three goals in a game, car salespeople earn one for selling three cars in a day. It's a big deal that comes with a pat on the back and a $100 bonus.

Covell's hat trick was his third or fourth so far this year, the most he has had in recent memory and especially since 2008, when car sales hit bottom during the recession. At one point, his count was zero, but that was because he had been laid off from another dealership and was out of work for a year.

Covell's success mirrors that of auto sellers nationwide. Last month, consumers bought 1.5 million vehicles, up 17 percent from a year ago and the most since 2007. Ford has had 16 profitable quarters in a row.

The rebound has been a bright spot in an otherwise drab economy still feeling the pinch of cautious spending. Longtime car dealers aren't breaking out the champagne, but they are feeling a mood shift.

"It's not gangbusters yet, but it's getting there," said Robert Elder, president of the Elder Automotive Group, which owns Ford and Jaguar dealerships in Tampa and eight others in Detroit. "It's good, but it's still not what it was in 2006."

Customers are buying — and often upgrading. People who used to say no to navigation systems, satellite radio and other add-on features are now saying yes. Employees demoralized by sales that died because of financing are now closing deals.

Elder Automotive saw sales drop by half during the worst of the recession. Construction workers who were a big part of its truck business lost their jobs when the housing market collapsed and stopped buying altogether. People whose homes were foreclosed on no longer had good enough credit to finance a car.

Founded in Michigan in 1967, Elder Automotive survived thanks to its loyal client base and new business from customers disgruntled by the government's bailout of General Motors and Chrysler, said Elder, who leads the company with his brother, Tony, and their mother, Irma, the chief executive officer.

To save money, executives and managers took pay cuts and resumed administrative duties that had been farmed out to other companies. Instead of buying new equipment in the service department, they fixed it. Every purchase was scrutinized.

To keep the staff motivated, the company hosted monthly barbecues, took employees to a Tampa Bay Lightning game and treated salespeople to lunch on Saturdays, a tradition that continues. And unlike a lot of businesses, Elder kept its holiday parties.

Its big test came in 2009 when Elder Automotive acquired Ernie Haire Ford on N Florida Avenue during a bankruptcy auction. Elder said he lost sleep — and hair — trying to figure out how to turn the dealership around amid the slump.

"We believed in Ford and, being from Detroit, we had seen the future products," he said. "We realized things don't always stay down."

The gamble paid off. Revenue from Elder Ford's sales and service departments is up 160 percent since Elder took over and basically had to start from scratch. The dealership added 35 employees and moved forward on plans to relocate to a new, larger facility now under construction across the street.

In August, Elder Automotive had its best month in five years, with revenue of $23 million across all dealerships. Elder Ford alone sold about 180 new and used vehicles.

Elder credits the boost to pent-up consumer demand and quality new vehicles. People who put off buying a car during the recession started spending money again. New models had better gas mileage and high customer appeal. Ford's Fusion midsize sedan became a top seller and in 2010 was the Motor Trend Car of the Year.

Salespeople feel the change in their wallets. Those who used to clock out at closing time now leave late and come in early to finish sales. One recent Saturday was so busy, Elder and the managers had to jump in to help all the customers.

"You didn't have the traffic like this before," said Geoff Patterson, Elder Ford's new-car sales manager. "People are coming in ready to buy."

Low interest rates and a favorable lending environment are making it easier. Banks that were reluctant to finance cars during the recession are now eager to ink a deal. And people with a foreclosure on their credit record — once a kiss of death — can now get loans.

"If you didn't have cash, it used to be hard to buy a car," said sales manager Jason Harrison.

Technology has made customers more savvy. Since the recession, most buyers come to the dealership knowing what they want and how much they want to pay. They've read the reviews online and shopped the Internet for the best price.

All the competition has squeezed the profit margin. Elder Ford's cut on a new $14,000 Fiesta? About $730.

In the past year, Elder Automotive has added six employees in Tampa to field the growing number of online inquiries and set up appointments with salespeople. The dealership gets 900 online and phone inquiries a month, up from 750 just six months ago. And two-thirds of the dealership's leads come through the Internet.

Post-recession, more buyers than ever are coming from out of state after seeing a vehicle advertised online, said general manager Terald Hopkins. They want a car that hasn't been exposed to ice and snow and can often get a better deal on a 4-wheel-drive vehicle in Florida, where the demand is less.

One of the bigger, and surprising, challenges has been finding workers, particularly salespeople. Sales reps don't need a college degree but typically work six 10-hour days per week, and Saturdays are a must. Pay varies based on sales but ranges from about $45,000 a year for a good rookie to well into the six figures for a top seller.

The dealership has done well hiring retired military, recent college graduates and even restaurant servers, Hopkins said. In these boom times for the auto industry, they see more profit in selling cars than steaks and expect the market to get better.

Susan Thurston can be reached at sthurston@tampabay.com or (813) 225-3110, or @susan_thurston on Twitter.

Local car dealership feeling effects of improved auto sales market 09/27/13 [Last modified: Friday, September 27, 2013 6:51pm]
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