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Re: Isuzu Corporate News Thread (Company News)
02/05/07 03:59 PM
Wanted: Isuzu dealers (no joke)
Kathy Jackson / Automotive News / February 5, 2007
Link To Story Here
LOS ANGELES -- It may be the most downtrodden, underachieving brand in the United States, but that isn't stopping Isuzu from trying aggressively to sign up new dealers.
Huh? A brand whose 227 dealers averaged just three sales per month last year wants more dealers?
Indeed. And not only that, some entrepreneurs are eagerly snapping up Isuzu franchises.
Isuzu sold just 8,614 light-duty vehicles in 2006, down from 98,066 as recently as 2000. Last year only 15 of its 227 dealers sold 100 or more units. Some observers reckon that Isuzu Motors America is on the verge of pulling out of the U.S. light-duty market.
"I understand, looking at sales figures, how you could say we're in trouble," says Isuzu spokesman Chip Letzgus. "But we have no intention of leaving the U.S. market."
And he says signing up for an Isuzu franchise is a no-brainer for some retailers.
"It does not require a huge investment," Letzgus says. "And we're very easy to do business with."
Letzgus says the company has identified 40 markets where the brand is not represented or underrepresented. Most are on the east and west coasts and in the Midwest. Isuzu wants to add 40 to 50 dealers.
Letzgus says Isuzu has been getting plenty of bites from prospective retailers since launching the drive for new dealers late last year. Since the beginning of the year, two new dealers have been licensed, and Letzgus says a handful of others are in the process.
"Isuzu represents a good profit opportunity for the right dealer," Letzgus says. "It could be a used-car dealer or a dealer without pickups or mid-sized SUVs."
Isuzu has only two products: the five-seat Ascender SUV, based on the Chevrolet TrailBlazer; and the i-series pickup, derived from GM's small-pickup platform.
Rebecca Lindland, of Global Insight's automotive group, had written Isuzu out of her U.S. market forecast after 2009, when GM is expected to kill the Ascender. But she put the brand back in after learning of the new dealer push -- and because Isuzu probably will get a version of the redesigned GM small pickup in 2010.
"They still will only have one model," she says. "I still don't see how they can stay in business unless there are some backdoor deals going on that no one knows about."
Despite the sad-sack sales numbers -- down 29.3 percent in 2006 and off 68.3 percent since 2004 -- Letzgus says Isuzu Motors America was profitable in 2005 and 2006.
Joe Chavara, who owns Ford, Lincoln-Mercury and Land Rover franchises in Orlando, Fla., was the first dealer to sign on.
Another new store will be operated by Phil Petrus in Little Rock, Ark., where Isuzu does not have a franchise.
Chavara has dualed Isuzu with his Lincoln-Mercury store, putting an Ascender in the showroom. He says he has no inside knowledge of plans by Isuzu to expand its U.S. lineup.
"But for us, it's a good fit," he says. "Lincoln-Mercury does not have a small pickup, so one reason was to get the pickups. But our priority is the (Isuzu) service business."
Isuzu makes few demands of its new dealers.
Chavara says the only requirements were that he purchase 30 Isuzu vehicles, put up an Isuzu sign and buy parts and tools. The entire investment, excluding the vehicles, was about $40,000. Other new dealers may be asked to purchase a smaller or larger number of vehicles depending on local market potential.
Chavara's dealership sold three Ascenders in January, and he says he's getting an average of $200 from every Isuzu service customer.
"I don't think they'll abandon this market," Chavara says. "I'm willing to risk the low cost of entering with the potential upside. Most of my business will be on the service side."
Petrus, 55, had remodeled a building on auto row in Little Rock, Ark., and was selling used vehicles when Isuzu's district manager dropped by last year. The manager asked Petrus whether he would take an Isuzu franchise. Little Rock had no Isuzu dealer.
"I just laughed," Petrus says. "I thought, 'Why in the world would I want to be an Isuzu dealer?'
He had been a new-car dealer from 1975 until 1991. With his youngest son in college, Petrus decided to get back in business and began selling used vehicles. He says he didn't know much about Isuzu but saw a Rodeo last year and liked it. Petrus bought it and put an ad in the paper.
"Lo and behold, I had two people fighting over it," he says.
Petrus asked them why they wanted the car. They said they had either owned an Isuzu before or knew someone who had. Petrus then bought an Ascender, sold it quickly and began to think about getting the franchise. "I'm sure I'll get kidded about it," he says.
Petrus ordered his first shipment of 25 cars in January. The investment, excluding the cars, was about $65,000. "I was amazed at the investment," he says. "When I had my other stores, I was used to $1 million or so for anything."
'I've put in millions'
That low cost of entry has riled Jim M'Lady, owner of Jim M'Lady Isuzu in Crystal Lake, Ill.
"They're asking new dealers to come in here with hardly any money," says M'Lady. "I've put in millions."
M'Lady is embroiled in a dispute with Isuzu, which says he isn't selling enough cars or advertising the brand. M'Lady, who also owns a Nissan store, sold only three Isuzus last year. He wants to keep the franchise but handle only service work.
The company has informed M'Lady that he must keep an inventory of at least 60 vehicles, sell at least 20 new vehicles a month and spend at least $15,000 a month on advertising.
"This is crazy," says M'Lady, who says he sold more than 100 Isuzus a month in the early 1990s.
The dispute goes to a hearing in April before the Illinois Motor Review Board.
"I don't think it is fair what Isuzu is doing," M'Lady says. "I'm not selling any vehicles because people don't want them. I want to keep it because of the service. But they want me to sell 20 a month.
Letzgus would not comment on the M'Lady situation but says the new dealers are not getting special treatment. He says each must sign the standard franchise agreement.
Letzgus says: "We are looking for our current and future dealers to put an appropriate amount of energy and focus on selling the cars."
• 04 Rodeo DI • 56k mi, body damage on the 1st weekend I got it.