Selling in a slow economy

Across the board, auto dealers have been taking a hit in today’s economy. Gas prices have affected the market. New car sales are slumping. Major manufacturers, such as Ford and GM, have seen double-digit declines.

It isn’t the best time to be an auto dealer in the U.S., some might say.

But Garth Blumenthal sees it differently.

For Blumenthal, the general manager at Fletcher Jones Motorcars in Newport Beach, tough economic times pose risk, but also allow for the greatest opportunity.

“The best time to do something is when everybody is sitting on the sidelines almost doing nothing,” Blumenthal said. “It’s during difficult times we can really differentiate ourselves and gain market shares.”

Fletcher Jones Motorcars is celebrating healthy growth for its business. Newly ranked as Ward’s Dealer Business’ No. 1 dealership, the Newport Beach Mercedes-Benz dealer is planning to expand despite a tough marketplace.

The company’s sales at the half-year mark were $277 million, close to on par with last year’s figures.

And while new car sales were down, the company still outsold all other Mercedes-Benz dealers in the U.S. With the environment being what it is, Blumenthal believes the company’s extra efforts have paid off.

“We had a conscious plan and made a number of changes over the last 18 months,” Blumenthal said. “The key right now is the loyalty factor.”

The business worked hard to increase employee training, emphasizing client relationships. It also restructured the service and parts department.

Also, Fletcher Jones made sure it had the right people in the right places. Blumenthal wanted the reputation and brand of the company to be showcased in everything it does.

“Like in baseball or basketball, if you are only going to have a limited opportunity, you want a guy like Kobe to have the ball,” Blumenthal said. “You can teach people a lot of things and train them, but the thing you can’t teach is attitude.”

It would be easy to attribute much of Fletcher Jones’ success to its location. Newport Beach hasn’t been hit as hard as some economic areas.

The real estate market has been bruised, but hasn’t taken the hits like some Southern California cities, allowing for consumers to invest more at a place like Fletcher Jones.

“Many areas of our economy have been impacted, whether it is housing or mortgage or retail or restaurant or you name it; it has been impacted,” said Richard Luehrs, president of the Newport Beach Chamber of Commerce. “But Fletcher Jones, they appeal to a particular high-end buyer, if you will. People in the higher income brackets may not have been as impacted as others in the economy.”

But 30% of the company’s business comes from clients outside Orange County, a higher figure than most dealers, Blumenthal said.

“That is because of the availability of the product that they have,” Luehrs said. “Let’s say you were comfortable with your income and your sources of income and you wanted a rare Mercedes. You probably are only going to be able to find it at Fletcher Jones.”

Blumenthal doesn’t deny high-end buyers are a big part of Fletcher Jones’ business.

Individuals with money to invest — smart money, he calls it — are starting to get back in the market, both in real estate and car-buying.

He considers that a strong signal the economy is ready to rebound in the next year and that now is a good time to buy a car.

“I think the people out there are a little nervous, but I think it is an excellent time,” Blumenthal said. “I think it is going to cost them more next year.”

The dealer’s success allowed it to be chosen by Mercedes-Benz to take on new dealerships in Ontario and Temecula.

The expansion has been in the works for a few years, and despite the risky market, Blumenthal is confident the openings in the next couple years are a good play.

“It is starting to feel different in the market,” he said. “We are always trying to anticipate the market. Trying to read what might happen down the road. We have to be flexible.”

And the future looks bright for Mercedes-Benz, Blumenthal said. The car dealer has a new E320 Bluetec diesel vehicle coming out in October — it was just approved for sale in California — which was voted the 2007 World Green Car of the Year at the World Car of the Year Awards. New hybrid vehicles will also be debuting in 2009.

“There are a lot of exciting things in the works,” Blumenthal said. “Expect sales up next year.”

HALF-YEAR SALES FOR 2008: $277 million

VEHICLES SOLD IN FIRST SIX MONTHS: 3,977

2007 ANNUAL SALES: More than $611 million

PERCENT OF CUSTOMERS FROM ORANGE COUNTY: 70%

DANIEL TEDFORD may be reached at (714) 966-4632 or at daniel.tedford@latimes.com.