Shifting Gears in Harder Times : Automobiles: Galpin Ford is handling the recession by spending more. The result is profit margins twice the average.

Times are tough in the auto industry, but that’s good news for H.F. (Bert) Boeckmann II, whose huge Galpin Ford dealership in North Hills has been picking up buyers left behind by failed competitors.

Where other dealers are cutting costs to stay alive, Galpin last year doubled its advertising budget to $250,000 per month, including a first-ever radio and television campaign, and it actually added a few people to its crew of 475 employees, Boeckmann said.

Boeckmann said he’s learned from past recessions that cutting back is not always the answer. In a recession, “most business people say, ‘We don’t have a lot of reserves of capital. We need to release people,’ ” Boeckmann said.

“We’ve said, ‘Let’s spend more on advertising. Let’s give the customer more on value.’ In good times we make ourselves very well capitalized so we can prepare for bad times.”

The result: Despite a 50% drop in net profit between 1989 and 1991, Boeckmann says his net profit margin (before taxes) last year was still more than double the current auto-dealership industry average of 1%. Galpin’s revenues nudged up to $200 million last year from $195 million a year earlier, and thanks to the recent demise of competitors such as Mission Hills Ford, Galpin now sells about 57% of all Fords in the San Fernando Valley contrasted with 46% a year ago, Boeckmann said.

Meanwhile, the slowdown in the economy means Galpin’s used car sales last year were up 15% over 1990--and used cars carry higher profit margins than new ones. When drivers keep their cars longer it also means more repair orders for Galpin--up 10% last year.

Overall last year, 70% of Galpin’s business was from new car sales, 17% from used cars and 14% from parts and repairs.

“We’re just not willing to let a customer walk if there’s even a glimmer of profit,” said Boeckmann, 61, who concedes that his gross profits on new cars are down 20% in the recession as buyers are forcing down prices.

That strategy has helped Galpin keep its spot as one of the biggest Ford dealerships in the nation. In 1990, Galpin sold more new retail Ford cars and trucks (excluding fleet sales) than any other dealer in the nation behind Ricart Ford in Columbus, Ohio, according to Automotive News, an industry trade publication. Automotive News hasn’t tallied the 1991 totals yet, but Boeckmann said the results should be similar because Galpin last year sold 10,465 new retail cars and trucks, only 3% fewer than the year earlier.

In the Valley, Galpin’s biggest Ford competitor is Vista Ford in Woodland Hills, which last year sold 4,500 new retail cars and trucks, including Ford, Isuzu and Lexus, General Manager Randy Haddock said.

Among dealers of all makes nationwide, Galpin, founded in 1946, has for years ranked among the top 10 in retail sales (again, excluding fleet sales). The biggest retail dealer in the nation is Longo Toyota in El Monte, which sold 25,426 new and used cars and trucks in 1990.

Boeckmann, a longtime philanthropist and political campaign contributor who served on the Los Angeles Police Commission from 1984 to 1991, started his career with Galpin as a salesman in 1953, when the dealership was still in San Fernando. He acquired the business in 1968 from founder Frank Galpin after gradually building his stake beginning in 1960. Boeckmann’s wife, Jane, owns and publishes Valley Magazine, which chronicles local business successes, civic causes and the area’s social and cultural life.

Today Galpin Ford stretches along two city blocks on Roscoe Boulevard near the San Diego Freeway and covers 19 acres. Galpin also sells Lincoln, Mercury and Saturn (a General Motors division), and in 1986 Boeckmann opened a Hyundai dealership to attract younger buyers.

The Galpin complex includes the Horseless Carriage, a busy coffee shop where customers can sit down for a Crown Victoria Burger or a sandwich while mulling over a deal. Opened in 1966, it is said to be the nation’s first car dealership restaurant.

The restaurant comes in handy, considering the number of customers who stop by to pick over the more than 2,000 cars and trucks in stock.

Galpin’s stock in trade, say industry observers, is its reputation for customer service.

“Bert Boeckmann is just one hell of a car dealer,” said Ted Orme, spokesman for the 19,000-member National Automobile Dealers Assn., based in McLean, Va. “The fact that he, as a Ford dealer in a depressed market, can keep expanding is just remarkable.”

Indeed, last year Ford sold 14% fewer cars and trucks than the year before, for a total of 2.87 million units. And overall, sales of all brands of cars and light trucks in the United States fell last year to their lowest level since 1983, to 12.3 million vehicles, a 12% drop from a lackluster 1990.

Analysts expect combined operational losses for the Big Three auto makers to top more than $6 billion in 1991--a record.

Dealers, of course, have felt the pinch too. In addition to Mission Hills Ford, which closed in August, the list of local casualties includes Jim Bess Chevrolet in Canoga Park, Performance Chevrolet in Calabasas and Morrison Chrysler-Plymouth Dodge in San Fernando, which all shut their doors during the first half of last year.

Most local dealers, including Galpin, reported an upsurge in sales beginning last spring after the Persian Gulf victory, but sales slackened again last fall.

“It was like in October, boom!” Boeckmann said. “From that point to today, things have remained the same.”

Jim Bess, who is still in business with several other car makes, said he plans to spend half as much on advertising this year as he did in 1991 after sales at his Mercedes-Benz, Cadillac, Volvo and Nissan franchises last year dropped 20% contrasted with 1990.

“We didn’t find we were able to move sales dramatically with heavy advertising,” he said.

Bess also laid off 65 employees when he closed the Chevrolet franchise last May and he’s gradually reduced his work force since then to 133 people.

But at Galpin, Boeckmann’s extra marketing push appears to be paying off, according to Galpin salespeople.

“My sales last year were the best in six years,” salesman Chris O’Connell said. But O’Connell said his customers are more savvy than ever. One of the biggest changes he’s observed is a huge increase in leases, which now make up more than 90% of his business contrasted with only 25% four years ago.

Like most successful dealers, Galpin engages in a good deal of horse-trading when it comes to selling a car. But Boeckmann shuns the industry’s most common sales technique, the so-called T.O. method in which salespeople “turn over” customers to sales managers who try to close the deal, usually with a good deal of pressure.

Galpin uses the so-called straight-sell approach, in which salespeople oversee the entire deal.

“It makes it a much more pleasant buying experience,” he said.

Indeed, it was an unpleasant buying experience that got Boeckmann started in the car business as a salesman for Glendale Nash in 1952, when he was a senior at USC. He had agreed to buy a car but when his parents picked it up, the dealer paid them less for his trade-in than the agreed-upon price, Boeckmann said. The car he bought ended up breaking down on a cross-country trip.

“When I went into the car business, I swore no one would ever have to go through what I went through,” Boeckmann said.