Doing What Dealers Know To Do, But Forget

In tough economic times, with many dealerships fighting for every sale, the Sam Swope Auto Group is doing much more than just “surviving.”

Especially its Honda World store in Louisville, KY.

The Swope group represents 14 brands in the Louisville market. Honda is the group's largest volume brand.

“A lot of people come in saying that they think the car business is slow, but we don't ever say it is, because it isn't,” says John Hill, general manger of Honda World and vice president of the group.

“Our stores are having success this year, and I think it's across the board for the group,” he says. “We have the mindset that we aren't going to let it get in the way of business.”

Honda World sold 3,500 new units and about 2,200 used vehicles, in 2007.

“We are the largest store by volume (in the group), and our store is the largest volume dealer in the state,” Hill says. “Within our Honda zone, we bounce between No.1 and No.2 overall. Our zone covers five states, Kentucky, West Virginia, Michigan, Ohio and Indiana.”

Along with Honda and several import brands, the group is also heavily invested in General Motors Corp.'s Buick, Pontiac, GMC, Cadillac and Saturn nameplates.

They also represent several luxury brands, such as Lexus, BMW, Infiniti and Volvo.

“We haven't made any dramatic changes in 2008, and I couldn't point to any one thing we are doing that's been a home run,” says Richard Swope, president and CEO of the group.

“We've just gone back to the basics of 10-step selling, prospecting, follow-up and all of the things that all dealers know they have to do to be successful. In times when you have a lot of natural traffic, you forget about some of those things.”

The housing market in Louisville, KY has been fairly stable, Swope says. That's helped.

“It hasn't increased in value dramatically, but it also hasn't declined like it has on the coasts and some of the resort areas,” Swope says. “We are very fortunate in that regard, and our economy is still very strong, despite the fact that we have $4 a gallon gasoline.”

Although dynamics of the market have changed with higher fuel prices and such, “we're still seeing a lot of activity,” Swope says. “We are doing everything we can to emphasize the fuel efficiency in everything we sell so we can get traffic across the board, and that's working.”

They have also worked hard to develop the group's Internet presence, but have done it quietly.

“We have very, very strong interactive Web sites and Web pages,” Swope says. “We emphasize pricing our vehicles right on the Internet, so that we can get Internet traffic, and we do as much as we can with search-engine optimization, so that we can come up more frequently than others on search results.

“That's not necessarily anything new for this year,” Swope adds. “We have moved a large chunk of our budget out of traditional media and into Internet presence.”

Swope says they advertise on the local newspaper's Web site, and several other automotive-themed sites as well.

“All of it takes money, and we are trying very hard not to increase our advertising budget. That money has to come from somewhere else,” Swope says. “To some extent, it's coming out of radio; it's coming out of television; and print.

“But we still have a very strong newspaper in this market,” he adds. “It continues to grow in readership, unlike some other markets, so we have continued our presence in the newspaper as much as we could, but we've reallocated some of that money, as well.”

At Honda World, Hill says the ad budget is about the same as it was last year, and compares to the 2006 budget.

“What we've done is redirect it into the ‘e-business,’ to where we have a huge spike in the type of traffic that's coming through the door,” Hill says. “They are now coming through our virtual dealership.”

In addition, the store has done “really well with its fixed operations,” Hill says. “The people who aren't buying cars have to keep theirs longer and keep them going.

“So we want to be the absolute best in that degree and with every opportunity that we can there.”

The Swope group is also having success with selling used cars, largely because of an emphasis placed on the pre-owned vehicle operation.

A favorite saying of Group Chairman Sam Swope, Richard Swope's uncle, is: “We are used-car dealers who happen to have new-car franchises.”

“It's been a philosophy we've operated on since 1952,” says Richard. “We just keep doing what we've always done, and that's going after the high-quality, best used cars we can find.

“We do everything we can to buy those cars off the street, trade for them, go to factory sales — to get the kinds of cars the market will buy.”

It's interesting to try and do that, he says, because everyone wants the fuel-efficient vehicles, so the prices and the values have been driven up in the marketplace.

“It's a good thing, and we see it as a positive,” he says. “We are dealing on that market. We take advantage when the market goes up, and when it goes down.

“We operate on a 30-day turn rate and have a policy where we don't keep any more than 30 days worth of used vehicles so that we can always sell on the same market we are buying on. It works very well for us.”

Richard and Sam Swope are partners, but Sam is the boss, Richard says.

“He continues to give the same kind of guidance that any chairman would give any public held or private company.

“He's involved in quite a few of our management meetings, and when he's not able to be in those meetings he still provides input, over the phone. I talk to him on a regular basis.”

There are no expansion plans in the works, although the group just opened a new car dealership selling the sub-compact Smart car.

“It's the only one in Kentucky,” says Richard Swope. “We opened it in January, and it's doing very, very well. And you might expect that given the gasoline spike in price, there's been an equivalent spike in interest in that vehicle.”