Car Dealership Revs Up for Recession : Automobiles: A Ford agency in North Hills finds some success by expanding its sales and marketing efforts.
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 revenue nudged up to $200 million last year from $195 million in 1990, 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, compared to 46% a year ago, according to Boeckmann.
Meanwhile, the slowdown in the economy means Galpin’s used-car sales last year were up 15% from 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 his 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 after Ricart Ford in Columbus, Ohio, according to Automotive News, an industry trade publication. Boeckmann said the results should be similar for 1991 because Galpin sold 10,465 new retail cars and trucks, only 3% fewer than in 1990.
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. He acquired the business in 1968 from founder Frank Galpin after gradually building his stake beginning in 1960.
In addition to Ford, Galpin sells Lincoln, Mercury and Saturn (a General Motors division), and in 1986 Boeckmann opened a Hyundai outlet 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.
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 U.S. fell to their lowest level since 1983, to 12.3 million vehicles, a 12% drop from a lackluster 1990.
Galpin’s competitors have felt the pinch too. In addition to Mission Hills Ford, the casualties include Jim Bess Chevrolet in Canoga Park, Performance Chevrolet in Calabasas and Morrison Chrysler-Plymouth Dodge in San Fernando, which shut their doors during the first half of last year.
