Used Car Dealerships In Lake Charles La – Located only 30 miles from the Gulf of Mexico, Lake Charles, Louisiana, has a population of less than 72,000. And the small town setting is perfect for New Orleans natives, John F. Stelly, although in the business of selling as many cars as possible.
Stelly, CEO of Paramount Nissan (Number 26 on the list of BE AUTO DEALERS with sales of $ 45.2 million), did something unexpected while the automotive industry was busy fixing it – expanding. In the midst of industrial turmoil, the Stelly business acquired 171 Nissan and 171 Ford, a pair of dealers in DeRidder, Louisiana, which is located about 50 miles north of the Paramount house on Lake Charles.
Used Car Dealerships In Lake Charles La
The company also acquired 15 acres of land in Silsbee, Texas, and built a 14,000 square foot Nissan dealer at a cost of $ 4 million. The difficulties of the automotive industry over the past few years are well documented; sales in 2009 were the lowest since 1982. Although it seems improper to spend millions to expand sales capabilities during the industry’s worst downturn, Stelly’s philosophy is the biggest fish in smaller ponds. The three locations created a 197 square mile triangle that guaranteed excellent Paramount Nissan market penetration, which he predicted would more than double sales for 2011.
Turn to Profitability
171 Nissan and 171 Ford has been a family-owned operation for 45 years. But it was operated by the second generation, which Stelly said might not have the passion for business needed to survive a challenging environment. “In this particular climate, especially last year and the end of ’08, if you didn’t like it and if you weren’t wise, you would fall by the side of the road, â €? said Stelly, 44 years old. “This is not the type of business where it is fun or it is like a second job or second nature. This must be love, and this should be your focus.
Because the dealer is only an hour’s drive from the Stelly’s Lake Charles exhibition hall, common sense might dictate that he will cannibalize his current customer base with acquisitions. However, he will also acquire his closest competitor. “It was amazing. I am my own competitor, which means I cover – from a Nissan perspective – more than 70 or 80 miles of territory by buying these dealers, north and south, â €? he says. “I am the only Nissan dealer from Lake Charles to Shreveport, which covers 150 miles, roughly.”
The bad owner who had trouble contacting Stelly after selling to another party for $ 2 million failed. He checks books and sees locations, which generate around $ 10 million a year, is bleeding money of up to $ 100,000 per month. Stelly offers a sizeable dollar amount for the business (minus dealer inventory) on June 28 and the deal closes on August 12. The agreement also does not include dealer-leased property, which is leased. In the following weeks, Stelly’s team executed a turnaround plan:
– Reducing labor from 40 to 19
– Doubling the number of new vehicles in stock up to 120 to ensure a wide choice
– Maintain around 50 pre-owned vehicles to seize the used car market
– Focus inventory on Nissan’s best-selling vehicles in the area: Altima and Sentra
– Advertisements increase by 50%, with a main focus on local and printed television but also include email explosions that remind previous customers of new incentives
All said, at the end of 2010, Stelly’s new location had recovered almost all investment costs and operated profitably.
Over the Border
Another opportunity for Stelly’s expansion plan came directly through Nissan. The automaker wants a presence in the demographic market that includes Silsbee, Texas, a city near the Louisiana border, and offers Stelly the chance to start a new franchise there. But there are a number of conditions: Facilities must be built according to Nissan’s specifications. So even though basically given franchise rights, Stelly will still face the challenge of building a 14,000-square-foot facility with 15 service rooms.
Paramount Nissan acquired 15 hectares of land for $ 800,000, but that was the easy part. The Nissan brand imaging requirements require that all dealers look almost the same. “They want you to have the right tiles, the right furniture, the right nameplate, the land area, the size of the facility, even the number of parking lots and service bays, â €? recalled Stelly. “We have four or five meetings with architects and people imaging the Nissan brand and the Nissan architecture company. It takes more than nine months for approval. The architectural cost placed Paramount Nissan in a hole for around $ 170,000 before the land was damaged.
Once construction begins, there is continuous supervision. “At each stage of construction, Nissan sent representatives to inspect the cosmetics of the building and whenever they could say,” This must be reworked. ” Fortunately, only small changes have to be made, but fixed costs are increasing, Stelly explained, which acknowledges that new businesses will not be possible if other locations do not operate profitably. He worked with Nissan Motor Acceptance Corp. to help finance construction, which amounted to more than $ 4 million. “Banks only make 80% of commercial loans, so I have to make around $ 1 million in cash.”
Stelly’s success is rare in an environment where the number of minority-owned dealers continues to decrease. “Over the past two or three years we have lost more than 30% to 35% of agencies handling minorities,” said Damon Lester, president of the National Association of Minority Automobile Dealers (NAMAD). And despite stabilization that signals the worst possible “It is likely that a major disaster will occur.” The number of African-American dealers has a significant amount of friction. There are fewer than 300 black [auto] dealers in the country. ”
While the increase in vehicle sales volume shows a positive view that consumer confidence will return, car sales will likely show only moderate gains as long as the unemployment and housing problems remain high. “For us to maintain the number of dealers we have, and increase minority networks, we need access to capital, â €? said Lester. “We still see challenges from banks to lend to car dealers, especially those who do not have equity in their stores and in real estate they have ever had.”
For relatively few who can gain access to capital, such as Stelly, opportunities remain. “Prices for obtaining dealers are always low, so there are many opportunities for growth. In order for us to grow, we must be creative in the way we do business; that means we have to be creative in partnering and using private equity as an additional source to gain access to capital, â €? said Lester. “This is a very good time to buy a shop. Stelly is an example of a dealer who has cash, or access to it, who takes advantage of market conditions.â €?
Stelly benefited from profitable operations that could encourage acquisitions to help penetrate new markets and grow her business. “In the current economic climate, it is difficult for dealers who lack capital or access to capital. And Mr.’s first dealer Stelly at Lake Charles has been so successful for her that it allows her to get additional property and additional business, â €? said Mark Alan Rainey, senior manager, Dealer Network Strategy for Nissan North America. “I would say that as far as its acquisition this year, he fared better than our other minority dealers.”
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