LINCOLN MERC AN EMBATTLED SPECIES?

Well, it's doing terrific in this Texas town SAN ANTONIO, TX- LincolnMercury an embattled species?

Not in this home of the legendary Alamo, where North Park LincolnMercury has led the L M list on the Ward's Dealer 500 for the second year in a row, and the only consonants in "Alamo" are "L" and "M."

"Lincoln Navigator and Mercury Mountaineer have been real attractions for the core LincolnMercury market here," says North Park's general manager, Billy Vaughan. "And we're looking for incremental sales when the new Lincoln Blackwood pickup/SUV goes on sale in late spring."

Owner loyalty to Lincoln and Mercury products is enduring in this 900,000 pop. market, explains Mr. Vaughan, 43, who began his career as a North Park salesman (like the owner, Clarence J. Kahlig II).

A high military presence hereabouts, combined with the attractive downtown canals and tourist destinations like the Alamo, have made "San Antone" home to a lot of retirees and trendy young careerists.

North Park first displaced Carlisle LM as the Ward's 500 leader for the brand in 1998. Carlisle, now an AutoNation dealership in Clearwater, FL, had dominated the LM continent on the roster for most of the 1990s. But it succumbed to the Texas store's record $132.4 million in total revenues, good enough for 66th place on the list.

Then in 1999, the Navigator took off and North Park registered $142.5 million on the revenues side with a peak of 3,198 new-unit sales and 2,772 used. Mercury Grand Marquis and Mountaineer SUV sales also contributed to the upturn, which put the Texas dealership 78th on the 500 list.

"Doing so well is a tribute to our 34 salespersons," says Mr. Vaughan. "Nearly all have worked only at this dealership, and we have a very rewarding commission-based compensation plan. The low turnover enables the sales staff to keep their customers loyal to the brands."

North Park stands out in other respects. It was one of the first dealerships in Texas to win the new "Lincoln Premier Experience" (LPE) award. This resembles Ford Division's Blue Oval plan that has engendered controversy over its two-tier pricing system wherein a 1.25% invoice bonus is paid to certified Blue Oval dealers, who are judged on customer satisfaction, facilities, sales penetration and numerous other categories.

"We'll be watching closely how the Blue Oval pricing issue sorts out," notes Mr. Vaughan. "Our group owns a Ford-LincolnMercury-Jeep store in New Braunfels, TX (20 miles north of San Antonio) and a Ford-Mercury store in southwest Texas at Eagle Pass, so we're involved in Blue Oval, too."

Also on the group's franchise holdings is North Park Lexus, next door to the LM store and one of the few Lexus points so owned and located. North Park Lexus also landed on the 1999 Ward's 500, in 487th place, with $72.3 million in revenues. The group also has a San Antonio Subaru store in a separate location.

"How we got the Lexus store is a good story," says Mr. Vaughan. "We weren't a charter Lexus dealer, but we had Toyota. Lexus had gone in 1990 to B.J. (Red) McCombs, the San Antonio and Austin megadealer with all the Ford and GM franchises. " But Red (owner of the San Antonio Spurs and a Forbes 400 billionaire) decided he'd rather sell Toyotas than Lexuses, so we changed franchises. We're not crying about it, but a swap like that is unusual."

Mr. Kahlig, 53, joined North Park LM after it was founded in 1970 as a satellite for the downtown Mail LincolnMercury dealership. By 1973 it grew so fast that Ford made North Park into a full-fledged dealer development facility and closed the downtown store.

Rising to general manager, Mr. Kahlig bought out the store in 1983. A long-term renovation plan was launched for a building that was the old-fashioned "big box" style. A three-story parking garage was built, followed in 1995 by a renovated and expanded sales and service structure and an enlarged body shop with a pre-delivery prepping department.

Internet has come to North Park LM (www.NPLM.com) with a firm commitment. A three-person dedicated team handles on-line traffic and sales in-house. Mr. Vaughan says the new FordDirect.com initiative has significant potential.

"Consumers haven't been sold yet on factory-run web sites," he declares. "The concept of having Ford dealers own 80% of FordDirect, while at the same time helping to run it, should give shoppers more confidence in using the Internet. The pilots Ford is starting in California will tell us a lot more."

North Park is planning for a brisk Lincoln and Mercury future into 2001, says Mr. Vaughan, despite 2000 sales only "even" with 1999 and possible implications of the Mercury brand being phased out in Canada.