City OKs $10,000 Marketing Plan to Aid Car Dealerships : Sales: Officials hope that a group strategy can be devised to prevent closures of more dealerships, additional loss of tax revenue.
Hit by the loss of two major auto dealerships in the past month, the Downey City Council has decided to spend $10,000 to develop a marketing campaign to boost the sales of the city’s 10 remaining dealerships.
City officials took quick action Tuesday night, fearing that the back-to-back failures of Downey Toyota and Paramount Chevrolet have tarnished Downey’s reputation as one of the premier automobile marketplaces in the Los Angeles area. That could lead to more closings.
“It’s like that Dutch guy when the dike was breaking and you had to put your fingers in the holes,” City Manager Gerald M. Caton said. “That’s what we’re doing right now.”
The city will use redevelopment funds to pay an advertising agency, Thayer Keener of Glendale, to come up with a group-marketing strategy similar to those used for years by the Cerritos Auto Square and other groups of car dealers in Southern California.
The advertising campaign would probably promote the large number of dealerships in Downey, as well as the convenience of shopping in a city that is near the Santa Ana, San Gabriel River and Long Beach freeways, said Martha J. Thayer, president of Thayer Keener.
The participating auto dealerships would pool their money to pay for costly advertising, possibly freeway billboards and television commercials that would be difficult for a single dealership to buy.
Caton said the city is justified in spending public funds to help the auto dealers because they help the local economy.
Downey’s share of the auto-sales taxes, about $2.7 million last year, accounts for about 10% of the money the city spends on salaries and other operating expenses. The Toyota and Chevrolet dealerships alone provided the city with more than $500,000 a year in sales-tax revenue.
Toyota and Chevrolet officials have said that they intend to find new dealers to open in Downey. But if that doesn’t happen soon, the city may be forced to cut spending, which could include layoffs, officials said.
Caton said his staff had met several times with local auto dealers in recent months to develop support for a group-marketing strategy. But he said the closure of Downey Toyota and Paramount Chevrolet spurred the city to come up with the money to pay for the study. The defunct dealers had expressed interest in the group marketing plan, officials said.
“If one fails there’s a domino effect on the rest of us,” said Richard S. Hsu, general manager of Downey Acura, who supports a group-marketing plan. “We’d like to stem the tide and reverse it if we can.”
The dealers at Cerritos Auto Square produce one of the most visible and expensive group-marketing campaigns in the area. Their television commercials, featuring actor Jim Varney, who played the lead in “Ernest Saves Christmas,” urge customers to browse through more than 20 dealerships in one location.
The Cerritos Auto Square Dealers Assn., which started its group campaign in the early 1980s, now spends about $2 million a year on collective advertising, a spokesman said.
“Traffic is the key element to an automotive dealer’s success,” said Tom Frey of Morgan-Frey Advertising, the Fountain Valley firm that handles the Cerritos Auto Square. “The more cars we can bring down the better off everybody’s going to be.”
But it apparently will be difficult for the Downey dealers to match the effort of the Cerritos dealers.
In 45 days, when the marketing plan is finished, the city and dealers will have to decide what they can afford.
Hsu, the Acura dealer, said about five other Downey dealers have shown a strong interest in participating. But Hsu said he did not know how much money the recession-plagued dealers could afford to pay for group advertising.
He said he hopes the city will pay for some freeway billboards to get the campaign rolling.
“I’m hoping the city can do something quick,” Hsu said. “Firestone Boulevard used to be the car boulevard. We’re gradually losing that identity.”
Caton, the city manager, said Downey may be able to spend some money on billboards, but not much else.
“This is our way of saying, ‘Hey, we’re willing to work with you,’ ” Caton said. “We’re just not in the financial position to help them with ongoing advertising costs.”
The council voted 4 to 1 to spend the $10,000 for the advertising study.
Councilman Dick Carter said he opposed the proposal because the dealerships have not promised to carry out the marketing plan once it is developed.
“I think this could be pie in the sky,” Carter said. “It would be more prudent to wait until we get a guarantee from the dealerships.”
Community correspondent Suzan Schill contributed to this story.
