The Value Added column in the Nov. 17 Business section should have said that a typical Chevrolet dealership sells 400 units per year, compared with Toyota's 1,800 per year. The column incorrectly characterized those numbers as monthly figures. The column also incorrectly calculated that dealerships earn $150,000 in profit before taxes for every $1 million in sales. The correct figure is $15,000.
Facing Tough Times, Local Car Dealerships Kick Into Higher Gears
When I was growing up in Syracuse, N.Y., in the 1960s and '70s, car dealers were local celebrities. These guys lived in nice houses, sent their kids to private schools, gave away money and were known about town. I was envious.
Their names, TV commercials and jingles are burned into my memory: Pat Bombard Buick. Bill Rapp Pontiac. Koerner Ford. Spector Cadillac. Pepper Auto Sales (Dodge and Plymouth).
Some are still around. Some went out of business, victims of the recurring heart attacks that the U.S. auto industry has undergone over the past four decades. With the Detroit Big Three (General Motors, Ford and Chrysler) now on life support and asking the federal government for assistance that could reach $50 billion or more, I wanted to know how life was for Washington area automobile dealers.
In a nutshell, things are tight, but many dealers are still making money, especially those not tied solely to American brands.
I talked to three dealers: one was Tammy Darvish, vice president of Darcars Automotive Group. Darcars is the biggest local car company, selling more than $1 billion a year in new and used cars at 24 dealership across the region. Darcars is the 16th-biggest dealership group in the United States by revenue, according to Automotive News.
The second was Geoff Pohanka, president of Pohanka Automotive Group. Pohanka, founded by Geoff's grandfather, is up there, too: It's the 40th-largest dealership group in the country with just under $1 billion in revenue. Pohanka's Acura dealership in Chantilly is the busiest Acura location in the world. Geoff's pride and joy is his Lexus dealership, which returns more revenue for the money invested than any other of the 12 sales locations in the Pohanka network.
But before checking in with them I strolled a few blocks from my house to visit Sam Weaver Jr., chief operating officer of Chevy Chase Cars, an Acura and Chevrolet dealership. Anyone who has driven south on Wisconsin Avenue through Bethesda knows the company as Chevy Chase Chevrolet, which was founded by the Bowis family in 1939.
Sam started at Chevy Chase washing cars at age 16. His father worked there 51 years. Sam saved and borrowed and bought 30 percent of the company in 1998. He has a side business selling barbecue sauce online named after a family dog, Mr. Slambeaux. The ashes of one longtime employee are kept on site. Could I make this stuff up?
I get the sense that Weaver and Chevy Chase Cars are betting on Acura sales to drive future growth. Here's why: Two out of three new vehicle sales in Washington are foreign brands. And Chevy Chase is no exception. Out of the 130 vehicles it sells in an average month, 75 are new Acuras, 25 are new Chevrolets and 30 are used cars of all kinds.
"This is definitely a luxury import market," Weaver said.
A typical Chevrolet dealership in the United States sells about 400 vehicles a month. The typical Toyota sells 1,800. My colleague Kendra Marr said the number of dealers is just too large for GM, Ford and Chrysler's shrinking output. GM's old mantra, "a car for every purse and purpose," has become outdated. Now Detroit's Big Three are attempting to consolidate their many brands.
That won't be easy. The dealership network is protected by state laws, and many have invested a lot of money in their franchises. What's more, the automakers depend on them. Dealers buy the cars that sit on their lots and in their showrooms. They provide the revenue through auto sales. That relationship makes it difficult for automakers to dictate the number of dealerships.