http://money.cnn.com/2008/03/25/news...ion=2008032605

[quote]Survival on dealer's row
A veteran car salesman turns to used cars to stay afloat.
By Alex Taylor III, senior editor

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John Zapp on his lot in Oklahoma City
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(Fortune Magazine) -- John Zapp's car dealerships - a Buick-Pontiac-GMC outlet and a Dodge-Chrysler-Jeep store - sit right on auto dealers' row in Oklahoma City, a mile-long stretch on the north side of town that's home to some 28 lots. All over this region the car business is soft, hurt by a slowing economy, high gas prices, and inventory from Detroit that isn't selling. Zapp and his salespeople watch as customers stream to Toyota and Honda next door. In January his gross profit per unit on new cars at his GM store was about a quarter as much as the Toyota outlet's - and he sold just a third as many new vehicles.

But after four decades in the car business, the 52-year-old salesman has learned that complaining about Detroit's shortcomings doesn't sell cars. "We decided this is all the floor traffic we're going to have, and we just have to do a better job with it," Zapp says. So he has shifted focus at his dealerships to a more lucrative practice: selling used cars.

He picked the right place. Nationally, car dealers sell two new cars for every used one; here on the southern plains, where mild winters ease the wear and tear, the ratio is closer to one to one. That's good for Zapp. All new cars leave the factory in the same condition, making it easy for consumers to comparison-shop, but each used car is different. So while he often makes a gross profit of $1,000 a unit on a new car, he can make twice that on a three-year-old used one.

Zapp has learned that the key to a successful used-car business is turning inventory. He can quickly size up a car's value and get rid of the slow sellers (hello, Chevy Suburban) by adding extras or running ads. Rather than maintaining a stock of 200 vehicles that turns every 60 days, as many dealers do, Zapp keeps 100 or so and turns them in half the time. "Volume is what matters," he says, pausing to send a stream of tobacco juice into a Styrofoam cup. "It keeps inventories clean, salespeople happy, and dealership owners off your back."

The strategy has been working. At his GM (GM, Fortune 500) store in January, Zapp outsold the nearby Toyota (TM) outlet in used cars while keeping just a 27-day supply. Better still, his profit per unit on used cars was seven times higher than on new cars, and used cars contributed 96% of his gross profit on vehicle sales.

Another tactic: Keeping salespeople eager by rewarding them with small cash payments for hitting targets. "Salespeople for the most part stay broke," he says. "If we can put $200 to $300 in their pocket for the weekend, it makes a difference."

On those rare occasions when he gets his hands on a hot new model, Zapp squeezes out every last penny. When four-door Jeep Wranglers were in short supply last year, he charged $500 to $1,000 over the sticker price. And he's looking forward to the arrival of the Dodge Challenger SRT-8, a reengineered version of the 1970s muscle car. He's expecting nostalgic baby-boomers to pay him $15,000 to $20,000 over the $38,000 sticker for the six units he's been allocated.

"The best used-car retailers are always the best new-car dealers," says Earl Hesterberg, CEO of Group 1 Automotive (GPI, Fortune 500), the publicly traded dealer chain that owns Zapp's lots. "If they know they can retail a customer trade-in off their own used-car lot, they can put $500 to $1,000 more into that trade - which makes a lot of incremental new-car deals." That hasn't helped new Pontiac sales, which are a third what they were a decad

 

They gotta stop making ugly cars. I think many American cars have been ugly for decades. I dunno why that is or why they won't stop making ugly cars despite being in a desperate financial situation. I just went to look at Toyota's web site and none of their cars are ugly like most of Dodge's cars are. I've seen Subaru's lineup before, and I know that they don't have ugly cars. I think American car companies must have stupid designers and stupid executives. Maybe the Japanese hired away our best car designers. It's very simple: I won't spend a ton of money to buy an ugly American car.

American car companies need to start making much better looking cars and also capitalize a lot more on their heritage. Make some slick new cars that are inspired by the very best American designs from the past. For one thing I think it'd be cool if they made a new car based on the best of 1950's styling and put some fun two-tone color schemes on it. Also I really like the Nomad station wagons, so they could build a new SUV based on the Nomad's styling and call it Nomad. Also I wouldn't mind new cars based on classic cars like the Duesenbergs. Also I think it would be fun to have a new pick up truck that is styled after a 1940's pickup, with the round, bulging fenders, etc.

Dodge has to stop doing stupid things like not giving us more of the bright heritage mopar colors for the Challengers.
Over 50% of the 2008 SRT8's were ordered in Hemi Orange. That should be a giant clue for Dodge's stupid executives that we want the bright retro colors.
Seems like they're trying real hard NOT to listen to what we want.

 

Every once in a while, you see a nice concept come out of Detroit, what your talking about (a nice car with 50's styling) Ford did a few years ago with the Ford 40, a coupe styled like a 50's 2 door Galaxy with glass roof. I saw it at the New York auto show and it was real impressive - for a Ford. There have been cars that have been steadily coming out the past few years that have gone back to "vintage" styling,
Jaguar x-Type /XJ
Thunderbird
Mustang
Nissan 350 - not really vintage or retro but back to it's roots
These are the only ones i can think of off the top of my head. What GM did with the SSR & HHR is a joke.
But it seem with all the foreign vehicles americans have been buying over the lsat few decades, detroit is finally making products we may actually want. Dodge has to be given credit where credit is due, they basically brought a car back from the 70's that DIDN'T sell well (compared to competition Mustang & Camaro) but had "something" (style) and just made it as if today was 1970.
No matter how many deposits were took, no matter how many of us knocked down the dealers doors willing to give Dodge money, This car will have a shelf life and that's what companies are concerned about - how long can we build this thing while it makes us MONEY. Chrysler is being cautious now, let's see how this Challenger goes, they've already got Mopar stuff for it that's nice, Colors will come & if they don't - trust me, someone will paint theirs Plum Crazy or Panther Pink (Foose or Trepanier probably has one already to go) but look at it this way,
They could have brought back the Challenger from the late 70's to early 80's, a Cordoba/Charger/300 from the mid to late 70's or the Shelby Charger.
Bottom line - talk with your wallet.

 

I think the current charger needs to look more like the '68-'70 or '71-'74 chargers. If they get it right they could sell twice as many as they do now.

 

Yeah, if they want to sell more, offer a two door charger more reminiscent of the original. They'll be selling tons, and then redesign the rest (non Charger/Challenger/Magnum (while it lasts)/300c) to be more interesting and less "we have to make'em look like something, why not this?"

 

I see most cars, including japanese cars, being offered in only about 5 or 6 bland, boring colors. I think Detroit could sell more cars just by offering a wider selection of colors and more beautiful, interesting colors. I think just that small, simple change could boost their sales significantly.

I think the Ford GT is the most beautiful car ever built. So why don't they build an everyman's version that costs between $20K to $35K. Why can't they use this beautiful body body on a car that doesn't cost over $100,000? I think they're sitting on a goldmine and they're not taking advantage of it. People are tired of the Mustang. Give us a Ford GT that everyone can afford.

That is way too goofy and radical looking. That's not what I had in mind.
I was just thinking of making an updated version of a typical 50's sedan, but a really nice looking one.

 

Yes. Start with the 1952 Hudson Hornet.


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I think the sales numbers on the Challenger and Camaro may be the spring board for a more retro approch to car designs. But understand that CAFE standards and fuel prices will play a big roll in what will be. Don't ask for who the bell tolls... it tolls for the V-8. Buy em while you can boys and girls they won't be around long. Unless someone comes up with a cheap gas substitute, goodbye V-8s. Thats the fact of life. I watch in awe as the first muscle car era faded into the sunset and 6s and small anemic 8s replaced the big boys. Then a new dawn arose and slowly the technology started bringing the HP up and the cubes increased (liters for you young guys). To get us to the point we are at now. But alas the days of our super hero in his soul mobile are numbered so says the super guru. So get em while their hot and drive them often. I saw a Ford GT on GLBlvd. in Kannaplois on tuesday. Red with white stripes and my son saw a 2008 Viper in Concord monday morning 0730. Cool cars and very rare sightings. Its warming up and they are bringing them out.

 

Billionaire.......I have asked that question many years ago. Take a look at my post from 2 years ago:

https://dodgechallenger.com/forums/fb.asp?m=45

 

This was the car i was talking about, not bad if you build off of it, i had the wrong name.
Remember one thing guys, Detroit is playing catch up with Japan & Europe so we're adopting a lot of what has made them strong over the past few decades. A lot of it is benificial and a lot of it is growing pains on how we used to do things.
There is a lot of old designs that they could build off of, and in a sence the aftermarket has answered the call. You can now get a reproduction '55 or '57 chevy body, '69 Camaro or '67 Mustang and build your own.
I agree with the Charger, if they would have made the concept they showed a few years ago (looks like a '68-'70) they would have made a killing even though THAT was a four door But........


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