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Dealers scramble for better position; Warden acquisition reflects change in car market.

Dealers Scramble For Better Position

In October, yet another automobile franchise quietly changed hands in central Arkansas when Isuzu, a foreign company whose Trooper is one of the most popular four-wheel-drive vehicles on the market, was sold to Warden Motors by Dick Layton Buick, GMC Truck.

With the car business slowing down nationally, dealers around the country now are looking for ways to increase sales. Although he sold off a profitable line of cars and trucks at a time when imports are becoming more popular, Dick Layton says he wants to focus on American-made products like Buick and GMC. Also, it simply costs more to stock most foreign vehicles than domestic ones.

"General Motors has an interest support program. Isuzu doesn't," Layton explains. "So, I can stock two GMC trucks for the same price (interest payment) as one Isuzu."

The exchange seemed to please both parties, particularly since Warden owner Walter Warden has had his eye on the Isuzu line for quite a while. The sale of the franchise began last August and took a couple of months to close.

With consumer tastes changing rapidly in the car market, Warden had good reason to pick up the Isuzu line. Conventional station wagons have become dinosaurs as car buyers flock in to check out popular truck models, mini-vans and four-wheel-drives.

According to general manager Don Warden - Walter Warden's nephew - the deal will fill a genuine need for his market:

"We have a lot of customers that drive our other products that would come in and say, |I'm getting ready to trade, but I really want a four-wheel-drive vehicle.' It was kind of frustrating because we just didn't have anything to offer."

While Warden is counting on the new Isuzu line to bolster sales and expand his range of offerings, other dealers may be forced to sell off individual car lines or simply go out of business.

According to Brian Westbrook, director of field services at the Arkansas Automobile Dealers Association in Little Rock, the economy is the main factor for business failures, particularly in rural areas.

"New automobiles cost more today than ever, and people can't afford to go out and buy a new vehicle every two or three years anymore," Westbrook explains. "Besides, the quality of vehicles is better today than ever and people don't need a new car as often as they used to."

The AADA has about 300 members in Arkansas although Westbrook notes that 18 dealerships in the state have gone out of business this year and another 18 have either changed hands or sold off one or more automobile lines.

Westbrook says the idea of "mega-dealerships" eventually may catch on in Arkansas. The idea has been popular in larger cities like Dallas and Memphis. Dealers in the state's larger cities, Westbrook thinks, may follow the trend.

"When one person owns five or six lines of automobiles, that person can get more help from the factory financially," Westbrook says.

At Little Rock Dodge, Butch Martindill says that business has been steady throughout the past year:

"This time of year, business naturally slows down, but since we've been here for 20 years, we have a lot of repeat business. Since we are established, we don't have a lot of ups and downs."

Even though others may be experiencing a downturn in car sales because of the predicted recession, Martindill says that his business shouldn't be affected and notes that income from parts and repair work is an important part of his gross income.

"It doesn't matter what the world situation is," Martindill says. "Cars wear out and people have to buy new ones or get them fixed regardless of what is going on in the world."

The realities of competition, however, can really hit closer to home for some dealers. With more dealerships in central Arkansas than ever before, Warden says that landing the Izusu line will help give him an edge.

"I think it's tougher for the dealer now than it ever was," says Warden, who has been with the company since 1980. "You have a lot more nameplates out there now than in the early 80s. The total pie hasn't gotten any bigger, although the imports' share of that pie has gotten bigger."

Dealers experienced a lot of change through the 80s. They were frustrated in the early part of the decade because of a recession. About 1985, the car business made a comeback with a better economy and also because the quality of the products had improved. Now, with another recession on the horizon, Warden is predicting more changes:

"I think maybe you'll see some more consolidation of dealerships - trying to gain on the economic scale. I think that's a natural."

When Warden opened its doors in 1965, Volkswagon was a hot item among American consumers. Seven years later, Warden added BMW's and, in 1976, Subaru's followed.

The Isuzu line includes the Trooper and two cars. The Stylus is a four-door sedan and the Impulse is a two-door coupe. Also included in the truck line is the sporty Amigo, a four-wheel-drive with a convertible top.

Warden says the truck line is especially popular with women.

"There was a lady in for service with an |86 model Trooper with 85,000 miles on it," Warden says. "She said she'd never done anything but change the oil in it. That's good and bad, I guess, because we want the service work, but it's nice to know that it's that kind of vehicle."

Next spring, Warden will welcome other new models into the fold. Subaru is hatching a true sports car - a limited production job in the mid-$20,000 price range. Volkswagon, which has produced the best-selling Jetta, has a new sports car out this year - the Corrado; and a new four-door sedan - the Passat.

Warden says he hopes to move about 300 new Isuzus for 1991 - an optimistic projection - and sales are up slightly for this year over 1989.

"If I listen to what everybody's telling me," Warden says, "It doesn't sound very good (for 1991). Sometimes you're better off if you don't listen to that."

PHOTO : MARKET STRATEGY: Warden Motors adds Isuzu's line to meet customers' changing tastes.
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Author:Tyrrell, Michelle
Publication:Arkansas Business
Date:Nov 26, 1990
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