California-based Piercey Automotive Group had planned to open the dealership three years ago, but when the economy soured, plans were delayed.
Piercey operates three other Honda dealerships and one Toyota dealership, all in California. The 40,000-square-foot Freedom Honda has 235 new cars and 70 used in stock and employs 53 people so far.
Piercey Automotive Group President Bill Piercey talked to the CSBJ this week about the new dealership, the challenge to open it and the state of the auto market.
What successful business formulas have worked with your other Honda dealerships that you plan to duplicate at Freedom Honda? What challenges and opportunities does the Colorado Springs market offer?
Our business formula has been consistent. (1) We are only interested in dealerships with high volume potential and use that high volume to provide good value pricing (2) We are extremely customer oriented providing high quality experiences in both sales and service (3) We hire the best people we can find, pay them well and treat them the way we would want to be treated.
Freedom Honda ensures that the customer experience is friendly and transparent. It is the cornerstone of all we do — from designing the dealership to hiring our work force. For example, the service shop allows customers to view their car being serviced and the interior of the dealership is laid out so we can be helpful and available at all times. This model has been highly successful in all the markets we serve.
As far as challenges, the Colorado Springs market is highly diverse — the local community is interested in outdoor activity and is environmentally aware. There is also a high concentration of active and retired military. This can pose a challenge when messaging and marketing our products. We also need to find a way to entice the I-25 corridor, from South Denver to Pueblo, to make the drive to Powers Auto Park to do business with us.
Although there are several challenges, Colorado Springs has a growing base of people with Honda-like buying needs and desires — clean, efficient gas mileage and quality cars with high resale value. Our market entry has included a very thoughtful approach to understanding what drives Colorado Springs — we want to be a company that matters — one that is driven to exist because the community wants us here. We’ll be launching a number of community initiatives throughout the year that call for feedback on how we can support what’s important to Colorado Springs.
What market data indicated the need for a second Honda dealership in Colorado Springs?
Honda surveys all market areas in the U.S. and looks for areas that are under-represented based on numerous metrics including market penetration, number of competitive dealerships and areas with future growth potential. Honda chose this market and asked interested dealers to apply for the franchise. We were pleased to come out on top.
New car sales dipped severely during the recession. Have sales numbers recovered? When do you expect them to?
Currently the market is trending at a sales rate of just over 12 million new vehicles. At the high mark, new vehicle sales reached 17 million. Two main factors drove that high number — (1) The number of domestic cars and trucks sold to fleets (Hertz, Avis, etc.) at high unhealthy discounts to keep plants open and (2) The ability for virtually anyone to get credit.
I believe these two factors created a false market surge to the tune of 3.5 million units. I don’t see sales returning to that level anytime in the near future. A market of 13-14 million is more realistic.
Since Honda never participated in fleet sales, that loss of business didn’t affect us. I believe had the Tsunami not occurred this year, the overall sales would have been much higher for Honda. Industries will soon be back to normal availability. As a new dealer we were awarded a large inventory for opening and have over 235 new cars in stock.
The economy delayed the opening of Freedom Honda by about three years. What unexpected challenges did that create when opening this year?
The delay really had no effect on our business plan and we think we are now opening at an ideal time.