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Photo by Steve Johnson Lithia's Sid DeBoer may have built an auto dealership giant, but his local competitors say they are still thriving in a market that has grown accustomed to car dealer duels. It's not the valley's only ride Competition thrives despite Lithia growth By DAVID PRESZLER The Rogue Valley's new-car dealers have battled for decades, jostling for customers like brothers scraping for rebounds on playground basketball courts. The faces haven't changed much. And the consistent competition has made the businesses strong and the market mature. "We all grew up in the business together," says Gregg Sorenson, who's run Southern Oregon Subaru-Mitsubishi since 1983. But just over two years ago, one brother started one heck of a growth spurt. Lithia Motors Inc. went from a family-owned dealership to a publicly held company. Since its initial public stock offering in late 1996, it's bought 30 dealerships around the West -- including seven in one deal last week. The numbers are impressive: 35 dealerships in 14 cities in five states, one of the nation's 15 largest auto dealership companies and projected annual sales of more than $1.2 billion. Size gives Lithia distinct business advantages: Economies of scale let it cut costs and stockholders' capital makes it easier to expand. Although Lithia is now the equivalent of a 7-footer, the other dealers say they're holding their own on the home court. "I don't see a hell of a lot of impact," says Chuck Butler, who has run Butler Ford-Acura-Hyundai since 1976. "They aren't making it a Lithia town. It's business as usual." The emergence of publicly-traded conglomerates like Lithia nationwide has raised concerns about the fate of independent dealers. But Butler and others here say their businesses are growing. They say Lithia provides stiff competition, but no more than it has in the past. "They've always been so strong anyway," says John Skinner, who has headed Skinner Buick-Cadillac for 24 years. "It really hasn't changed much." Lithia may be traded on the New York Stock Exchange and discussed in national circles, but both the company and its competitors say it's the same Lithia as far as the valley market is concerned. "Lithia still does things the same as they always have," says Bob Godfrey, owner of Dollar GMC Truck & Oldsmobile. "We're still a very traditional dealership," says Lithia chairman and CEO Sid DeBoer, who's been at the company's helm since 1968. "The reality is that the management that's been in place is still there," says Sorenson. And so are most of the market's other major players. A core group of dealers -- DeBoer, Butler, Skinner, Sorenson and Crater Lake Motors owner Jim Coleman -- have been here for decades. The two newest forces are Godfrey, who bought Dollar in 1993, and Dave Mills, who founded Airport Chevrolet in 1990. That stability is one reason Lithia hasn't dominated the market. "We've been here for 50 years and we've got a good customer base," says Coleman, who took over his family's dealership in 1968. "Our business has grown every year. We feel we are able to compete with public companies and private ones by running a good organization." DeBoer and others say running a good dealership, be it publicly or privately owned, is the key. "Only the strong will be able to compete with big stores," says DeBoer. "The ones that don't do it well will fade and that's good for customers." "We've never worried too much about what other people have done," says Mills of Airport Chevrolet. "If you please people, they will buy from you regardless." The franchise system dictates what brand of new cars a dealer can sell and also limits Lithia's market share. It could buy dealerships here, but not until the independents are ready to sell -- and so far, only one of its 30 purchases has been local. James Plummer sold Lithia his Nissan and BMW franchises (one dealership) last year. The valley's independents say they don't intend to sell or fade soon. And DeBoer says he doesn't expect -- or want -- them to. "If a guy wants to work hard and compete, he can compete," he says. "We've got a lot of competition here in the valley. There's plenty of business to go around." And the game continues. U.S. auto dealers driven to change The Washington Post Independent new car dealers are becoming a more endangered species in the United States, largely because of a consumer rebellion that is forcing many of them to change -- or go out of business. Growing consumer demand for faster sales and service -- and simplified pricing -- have opened the door for huge, publicly traded dealer conglomerates, which are putting the squeeze on smaller stores. "What's driving all of this is that consumers are in complete control of the market," says Mark Rikes, president of the Rikes Group, a Los Angeles-based auto retail consulting firm. He says efforts by automakers to sell to customers more directly and the explosion of information buyers can get from Internet and elsewhere is raising their expectations. National Automobile Dealers Association officials concede that their traditional base of dealerships is under fire. They don't argue with the numbers: Fewer but bigger dealerships are selling more cars and trucks than ever. Last year, 22,240 dealers sold 15.5 million cars and trucks in the United States, compared with 31,100 dealers that sold 11.1 million new vehicles in 1968, and 35,000 dealers that sold 7.3 million new models in 1960. Some 200 traditional franchised dealers closed shop last year. But dealership chains continued to grow -- 100 new chains were added for a current count of 2,900, according to NADA's figures. Chain groups now account for 40 percent of all U.S. dealerships. And the top 100 dealership groups now account for nearly 15 percent of all new-vehicle sales. The growth of publicly traded dealerships, such as Richmond, Va.-based CarMax, is the direct result of retailers' need to woo consumers who no longer have product brand loyalty or loyalty to local dealerships, Rikes says. Today's Business Index Mail Tribune Copyright � The Mail Tribune 1999, Medford, Oregon USA