List story

WADE DANIELS Staff Reporter In the first of what is likely to become a regular occurrence, an auto dealership owned by Wayne Huizenga’s Republic Industries is on the San Fernando Valley Business Journal’s list of the top 15 new-car lots. Magic Ford in Valencia, which Republic purchased last year from the lot’s financially distressed previous owner, is ranked in the No. 2 spot on the list with sales of 4,275 new cars sold in 1997. Republic’s presence on the list is likely to expand because it is rapidly acquiring and establishing dealerships in Southern California. In recent months, the company, which owns the AutoNation chain of dealerships, accumulated more than 50 dealerships in the region. Burbank city officials recently said Republic is negotiating for space in a 103-acre development taking shape there. Republic offered no comparative sales figures for Magic Ford in 1996 because it did not own the lot that year, said spokesman Jim Donahue. He refused to comment on sales figures for this year so far, but did say the lot “is not in financial distress.” “I can say that we’re pleased with the lot’s progress,” he said. Jay Gorman executive vice president of the 1,500-member California Motor Dealers Association, said his information suggests little has changed at Magic Ford. “Based on my report, I haven’t seen an increase in sales from (the level posted by) the previous owner,” Gorman said. Magic Ford’s 1997 sales were a far cry from those of No. 1 Galpin Ford, which reported sales of 12,121 new cars in 1997. The North Hills lot is one of two on the list owned by Galpin Motors Inc., which was founded in 1947 and which has been owned by Bert Boeckmann since 1968. His other dealership, Galpin Jaguar-Lincoln-Mercury sold 1,974 new cars last year, placing it sixth on the list. The encroachment of auto superstore chains like AutoNation will eventually become a threat to smaller dealers, analysts say. AutoNation, a group of 38 used-car dealerships around the country, offers no-haggle pricing and a large selection that is difficult for other dealers to match. “As a major company, (AutoNation) has more leverage in lowering borrowing costs to finance dealer inventories. They can significantly reduce their interest rates,” said Cheryl Bostater, an analyst with Chatfield Dean & Co. in Denver. Some Valley dealers deny they are under siege. “They will bring in healthy competition,” said Lenny Schrage, vice president, general manager and chief financial operator of Sage Holding Co., owner of No. 4-ranked Universal City Nissan Inc. “Those companies will be spending a lot of money on advertising, which will increase consumer product awareness. That will benefit us.” Schrage also said he does not feel threatened by auto superstores because he believes the no-haggle concept, favored by AutoNation, will not be well received in the Los Angeles market. “The one-price philosophy might work in some markets, but most dealers here agree that people like to (negotiate) the best deal they can,” Schrage said. The management at No. 7-ranked Star Ford in Glendale has been adapting to an increasingly competitive environment in recent years by improving its parts and service operations. “Five or six years ago, we weren’t competitive in parts and services but now our prices compare with discount places like Jiffy Lube,” said Steve Busjaegger, vice president and general manager of the Star Auto Group, which owns the lot. “This helps attract people who may one day come back to us when they are looking for a car.” The emergence of superstores is another step in the continuously evolving car sales market, and poses no bigger threat to Star’s business than other changes occurring in the marketplace, he said.