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Regional sales improve in Dec.; Marhofer upbeat on Hyundai, fights loss of Chevy franchise
By Jim Mackinnon
Beacon Journal business writer
Published on Sunday, Jan 24, 2010
To get a good idea of the turmoil that roiled the auto industry during the deep recession of 2009 — and the hope that was there, too — take a look at Northeast Ohio auto dealer Ron Marhofer.
Start with Marhofer's two Hyundai dealerships. His first one opened in the late 1980s and is part of the Marhofer Auto Mall in Cuyahoga Falls. The second opened in 2005 in Green.
The Korean Hyundai was one of just a handful of makes to post sales gains in 2009 over 2008 in this area. Overall, new vehicle sales in Summit County plunged 19.6 percent in 2009 to 16,474 from 20,478 the previous year. Used car sales were down by a much smaller percentage, 6.3 percent. One bright spot: December new vehicle sales in Summit County and the region were actually higher than in December 2008.
And then there were a couple of other makes in the 2009 Marhofer stable: Saturn and Chevrolet.
General Motors last year decided to kill off Saturn, leaving people such as Marhofer with the ongoing task of finding new business to replace their now-former Saturn dealerships. GM also discontinued
Pontiac, sold off Hummer and might sell or close Saab as part of its plan to return to profitability after its bankruptcy and nationalization by the federal government last year.
Automakers, in particular GM and Chrysler, also forced hundreds of dealerships to close or consolidate across the United States.
GM, as part of those nationwide cost cuts, pulled the plug on Marhofer's Chevrolet franchise and others in the region. Marhofer said he has a strong case to appeal and hopes to get the franchise reinstated this year. The Stow business, at state routes 59 and 91, was Summit County's oldest Chevrolet dealership, dating to 1919.
Marhofer said that even with the recession, losing Saturn and possibly losing Chevrolet, he did not lay off employees. His dealerships have about 275 employees, most of whom are full time.
''We're lean and mean,'' Marhofer said. ''We are maintaining our profitability.''
Marhofer became a Hyundai dealer in 1988, when the carmaker, which entered the U.S. market in 1986, expanded its reach into the Midwest. Back then, Hyundai offered inexpensive cars that soon developed a reputation for poor quality.
That bad reputation disappeared 10 years ago and, along the way, Hyundai expanded its product line so it now ranges from vehicles that start at $10,000 to a high-end sedan at just under $40,000, Marhofer said. The company also intends to introduce an even more luxurious performance car, the Equus, that will sell for $60,000.
Hyundai has greatly improved its products and demonstrated smart marketing, Marhofer said. The company offered its Assurance buy-back guarantee last year for people who lost their jobs and saw its quality rankings climb to near the top in the widely respected J.D. Power surveys, he said.
The best-in-class quality rankings and more contributed to improved sales in 2009, he said.
''I would say it was better than expected,'' he said.
According to information from the Northeast Ohio Automobile Dealers' Association, Hyundai sales rose 5.5 percent to 1,044 in Summit County from 990 a year ago. The only other makes that showed gains for the year in Summit were Kia, Subaru, Porsche, Suzuki and Smart.
''We're taking Lexuses in trade [on Hyundais],'' Marhofer said. ''We have a lot of people coming out of Hondas and Toyotas.''
Exploring options
He also is devoting a lot of time to the other parts of his family-owned dealer network.
Marhofer said his plan is to continue to operate his two former Saturn dealerships by selling used cars while continuing to service Saturns and other makes. The locations continue to employ about 125 people, he said.
''Obviously, I am exploring all options,'' Marhofer said. That includes finding other new vehicle franchises for the Saturn locations, he said.
As for GM's decision to stop him from selling new Chevrolets at his Stow dealership, Marhofer said he has filed for binding arbitration under federal legislation that passed recently to get back the franchise.
''I am preparing to go to a full-blown arbitration,'' Marhofer said. He said he thinks he has a good case for reinstatement because data show Chevrolet sales have not increased at other dealers in the region.
''Nobody has picked up those sales,'' Marhofer said. ''Akron is off more than the nation.''
Positive signs
Dealers in the area are a bit more optimistic now than they were for a good part of last year, said Terry Metcalf, executive vice president of the Akron-based Northeast Ohio Automobile Dealers' Association.
''It was a tough year. It's hard to sugarcoat it,'' he said.
But December sales finishing higher than a year ago was a positive sign for many dealers in the area, Metcalf said. ''The five-county area . . . had a pretty good month'' in both new and used vehicle sales, Metcalf said. ''The optimism I'm hearing from dealers is a good sign.''
In Summit County, December sales rose 3.4 percent to 1,220 new cars and light trucks from 1,180 a year ago.
Metcalf said the Northeast Ohio area was fortunate in that there were relatively few outright closings of dealerships last year, although some dealers were bought out or consolidated with others.
Dealers that lost new vehicle franchises turned to selling used vehicles and promoting service, Metcalf said.
''Successful dealers can't depend on just new cars,'' Metcalf said. ''They have to do it all.''
Jim Mackinnon can be reached at 330-996-3544 or jmackinnon@thebeaconjournal.com.
To get a good idea of the turmoil that roiled the auto industry during the deep recession of 2009 — and the hope that was there, too — take a look at Northeast Ohio auto dealer Ron Marhofer.
Get the full article here.
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