Humming along

MILWAUKEE — John Bergstrom's new Hummer dealership here is a first of its kind in the nation, looks like an elaborate Quonset hut and costs more than the owner cares to say.

The store also reflects General Motors Corp.'s aggressive efforts to boost Hummer sales with a new dealer network selling a new product, the H2.

Bergstrom anticipates spending less on three more Hummer dealerships he plans to build in Madison, Appleton and Chippewa Valley, WI. He reckons he can save 20% from lessons learned in building the north Milwaukee facility, the first from a General Motors design.

It's done in a military motif intended to complement the rugged spirit of the vehicles that will be sold there, especially the new Hummer H2, a smaller and less expensive version of the original Hummer, now known as H1.

The H2's base price is $48,800, typical price $53,000. That's about half the H1's sticker.

GM has high hopes for the H2. It officially went on sale the same day in July as Bergstrom Hummer's grand opening in north Milwaukee.

It's the first dealership off the blueprints of how General Motors Corp. wants future Hummer dealerships to look. The auto maker acquired the icon brand in 1999.

Costs aside, Bergstrom is delighted with the five-acre facility as well as his role as a pioneer Hummer dealer.

“It was very expensive because it was the first time,” says Bergstrom, CEO of Bergstrom Corp. with 26 dealerships, 19 brands and $650 million in sales. “But we're not revealing the construction cost. We don't want people to think it's an expensive place to do business.”

Top GM executives, impressed with Bergstrom's bet on the brand, attended the store's grand opening. President and CEO Rick Wagoner led the GM officers' corps to Milwaukee.

“This represents a major commitment,” says Wagoner. “The dealership is authentic Hummer. It's bold and fun. It's a great place to try out the product.”

Customers can do those try-outs on the dealership's off-road course, a winding track that features rough roadway, steep grades, rocky terrain, water, mud and moguls.

Says Bergstrom, “We have to be able to show what this vehicle can do on the track. It's almost unbelievable.”

GM will require such courses at all future Hummer dealerships. However the auto maker is not requiring its 139 Hummer dealers to build dealerships from GM's prototype design — yet.

Wagoner says, “Over time, we'd expect to see all dealers build facilities like this one.”

California leads the list of Hummer dealerships with 17 (nine of those in the Los Angeles area alone), followed by Texas with 11 and New York with eight.

GM says its Hummer dealers were selected among top dealers, based on a series of measurements. Those include sales effectiveness and customer service.

The new Hummer dealer network will operate like Saturn's market area approach in which dealers have exclusive sales territories. Before GM bought the brand, AM General had 43 dealerships. Some of those signed up with GM.

For now, five or six more stores like Bergstrom's are planned throughout the country in major markets that can support such an investment, says Wagoner.

“John Bergstrom is a visionary who believed in Hummer from day one,” says Hummer General Manager Mike DiGiovanni. “He put his money where his mouth is. He set the pace. He didn't have to.”

Adds Wagoner, “We're breaking new ground at GM. Nowhere is that more evident than at Bergstrom Hummer. John does things in a first-class way.”

Bergstrom intends to run his new dealership in the customer-focused style he learned as a 10-year Saturn dealer.

“Saturn worked well for us,” he says. “We recently opened our sixth Saturn store. The reality is that treating customers like guests in your home is critical. The days of beating each other up on a deal didn't work. If guests feel they're treated fairly, then everyone is happy.”

He believes that so much that he gives out his home phone number. Family members are versed in how to handle business-related calls they may receive at home.

Bergstrom speaks of himself as a small-town Wisconsin boy from Neenah. He and his brother, Richard, started out there running a small restaurant. Today, Bergstrom Corp. employs nearly 1,500 people at dealerships, a fleet leasing firm and a credit life insurance company.

Bergstrom figures he annually needs to sell 600 new Hummers and 600 used to make the new dealership a success.

Hummers are displayed on rock piles inside and outside the 22,225-sq.-ft. dealership. The main showroom vehicle is on rocks and looks like it's about to be hoisted by an attached wench cable anchored to the 30-foot-high ceiling.

In true military design, ceiling rafters hold big fans with helicopter-like blades spanning 12 feet in diameter.

Nearly 140 tons of steel went into the place that Bergstrom calls an amusement park for grown-ups.

He says, “A visitor told me, ‘I feel like I should pay admission to be here.’ What I wanted him to say was, ‘I want you to buy a Hummer here.’”

Pavlik Design, a Florida firm, designed the dealership. Architect Sven Pavlik has worked with Disney and Neiman Marcus, companies that zero in on the “customer experience.”

Bergstrom recalls his first meeting with designer Pavlik in Fort Lauderdale:

“I was wearing a suit and tie, he had on a t-shirt and blue jeans. He showed me a hand drawing of what the Hummer dealership would look like. But I was impressed.”

Bergstrom built the new facility in 28 weeks. He sold his first Hummer H2 to David Voss, the owner of a construction company that worked on the dealership project. Voss bought the $53,000 vehicle as a surprise birthday gift for his wife.

The number of women buying Hummers surprises Bergstrom. About 20 of his first 60 Hummer H2 buyers are women, ranging from moms to outdoorsy singles.

“It's funny because the women buy the Hummers without calling home for permission,” he says. “But the men call their wives.”

Some GM Hummer advertising is targeted at women, notes DiGiovanni, citing an upcoming Vanity Fair ad that tells women: “Threaten men at the office in a whole new way.”

Many of Bergstrom's other dealerships sport unusual features. One store has a living room and a fireplace. He spent $230,000 to create a section of his Chevy store that includes a room with Internet connections and PCs where customers can sign on.

“I figured a lot of business people would use it, but what amazes me is how many average people, blue-collar people, are on the Internet in that room,” he says.

The new Hummer dealership took 28 weeks to build, on north Milwaukee land Bergstrom purchased from AutoNation Inc.

He says it was something of a struggle dealing with local zoning laws and site plan reviews.

City officials can get especially skittish about plans to build a dealership modeled after a Quonset hut with an off-road track next to it, a 20 by 10 foot “H” forming an entranceway and vehicles displayed atop big rock piles here and there.

But fighting city hall is commonplace for dealers planning new facilities.

“Just about everywhere we go it's a challenge because cities don't like car dealerships,” says Bergstrom.

Part of it is that many city officials associate dealerships with the images from the 1950s and 1960s.

“Here, they worried about the off-road track at the side of the dealership,” says Bergstrom, who prevailed in a cordial enough way to host the mayor of Milwaukee at the dealership's opening ceremonies.

GM plans to build about 17,000 Hummer H2s this year. Wagoner is typically reluctant to predict sales, but he doesn't rule out selling 40,000 H2s annually.

Although that's not a lot compared to core products selling in the hundreds of thousands, it would significantly increase Hummer unit sales. GM sold only about 1,000 Hummer H1s last year.

It's one thing to try to sell a quirky oversized vehicle for over $100,000. “It's another thing to sell a more viable version for half the price,” says auto analyst Jim Hossack. That's the difference he sees between the H1 and H2.

GM is looking for the H2, the new dealer network and new dealership architectural design to put Hummer on people's shopping lists, not just their name-recognition lists.

The H2 will be a winner, predicts Hossack of Los Angeles-based AutoPacific Inc.

He explains, “I was at my local Chevy-Hummer dealership when the H2 went on sale, and I was astounded by what I saw. They sold four while I was there. Another 10 people were ringed around a floor model, oohing and ahhing.

“Granted, this is Southern California where image is important in a vehicle. What sells well in L.A. might not sell well in Mississippi. But image sells more than just here. I see GM selling a lot of H2s.”

Adds Bergstrom, “An incredible retail environment is important for a vehicle such as the Hummer. It needs retailers committed to doing it right. If we can do that, we can have a great party - and pay off GMAC on time.”

Not bad for a guy who started out running a small-town restaurant

At the grand opening of his new Hummer dealership, someone asked John Bergstrom about a big and bold ring he wore.

“That's from the Green Bay Packers,” said the CEO of a 26-store dealership group with annual sales of $650 million. “I'm on their board of directors.”

What he didn't add - probably from lack of time — is that he's also on the board of directors of eight other organizations. Those include Kimberly-Clark Corp. Midwest Express Airlines, Wisconsin Energy Corp., the Catholic Diocese of Green Bay and the Medical College of Wisconsin.

Not bad for a former owner of a small restaurant in his hometown of Neenah, WI (pop. 23,000), a guy who had to apply three times before he got his first dealership franchise 20 years ago.

He recalls, “Twenty years ago, my brother Dick and I were turned down twice by GM when we sought a franchise.

“We were told we didn't have enough money for a franchise. I thought, ‘If I had the money, I might not want to be a dealer.’ But we were accepted the third time, and GMAC helped us open our first dealership, a Chevy store.”

His subsequent achievements garnered him several awards.

Arthur Young & Co. named him “Entrepreneur of the Year.” Venture magazine recognized him as “Wisconsin Businessman of the Year.” Marquette University honored him as its “Alumnus of the Year.”

Bergstrom is a three-year honor graduate from the Marquette University School of Business.

“The Jesuits taught me discipline,” he says.

In Washington D.C., he won the Herman W. Lay” national award for Outstanding Performance in the American Free Enterprise System. The Sales and Marketing Executives of Wisconsin named him Outstanding State Businessman.

What's the secret of his success?

“We deeply believe in customer satisfaction…and we're risk oriented,” says Bergstrom.
— By Steve Finlay