Big Moves Shuffle Local Car Dealership Scene
YOUNGSTOWN, Ohio – The past year has been a busy one for the area’s car dealers. Construction is almost constantly underway in one form or another as stores remodel, expand or move to new locations. Some dealerships have changed hands, either expanding the reach of known names in the area or bringing new dealers to town.
Toyota and Volvo of Warren moved into a new, larger space closer to the intersection of U.S. Route 422 and state Route 46 in Niles. Power Chevrolet in Calcutta remodeled and expanded its dealership, as did Boardman Subaru. Site preparation began for John Kufleitner’s Chrysler, Dodge, Jeep and Ram dealership on Market Street in Boardman. Dealer Matt Taylor purchased Mel Grata Chevrolet in Hermitage, Pa., and is working on bringing a Kia dealership to that city as well. And Shorkey Auto Group, which operates eight dealerships in the Pittsburgh area, made its first foray into Ohio through the purchase of the Bob & Chuck Eddy dealerships in Austintown.
“I think there are a lot of great dealers in the market and a lot of great competitors,” says Jim Shorkey III, co-owner of Shorkey Auto Group. “You have some big dealers like the Greenwoods, Sweeneys, Preston Auto Group and Boardman Subaru. Competition makes us better. It doesn’t scare me. It motivates me.”
Shorkey says his company has been “looking for growth opportunities for the past few years and we try to be selective about what brands and the locations we look for. A goal of ours was to move outside the Pittsburgh market but at a location that could be supported by our current framework.”
Part of that framework, he says, was the commute from the group’s headquarters in North Huntingdon southeast of Pittsburgh. Aiming for a trip of an hour or two, among the largest markets in that radius were Youngstown and Morgantown, W.V.
“We liked the idea of venturing into Ohio. I had heard that Ohio was dealer-friendly from people we know who operate there. We also looked at market size and the area of responsibility,” he says. “Their sales expectancy – what Chrysler holds us accountable to as a dealer – is around 1,400 new vehicles per year, a number that would scare some other dealers.”
It’s those sales numbers that are driving much of the behind-the-scenes shuffling in the area dealership scene.
At Power Chevy, sales manager Andy Mayle said at the ribbon-cutting for the expanded showroom that he expected sales to increase up to 20%.
Since opening a new, expanded showroom last year, Boardman Subaru has surged in sales, placing consistently near the top of the sales charts.
Toyota and Volvo of Warren opened its new dealership in September 2017, and monthly sales records have been broken consistently, reports partner Tino Merlo. Combined new- and used-car sales are up 38% and the dealership is regularly at the top of the sales charts in Trumbull County.
“For an import dealer – even though most of our cars aren’t imported anymore – to be the No. 1 dealer, we were ecstatic,” Merlo says. “I think that shows the potential here and our potential is even greater. We’re just getting going.”
And for Taylor, the move to buy Mel Grata Chevy came in anticipation of market trends, he says.
“What’s happened to a lot of the other retail business is going to happen in this business,” Taylor observes. “We’re going to see an aggregation of dealer groups, some economies of scale and we’ll compete at a better level. The thought is we either have to get on board with that or go away.”
Making such moves is not cheap. Merlo says the cost of building a new dealership was around $6 million and it took just over a year and a half. At Power Chevrolet, the expansion and subsequent sales boost meant hiring on additional staff. And while Shorkey didn’t disclose the price of buying Eddy Chrysler Dodge Jeep Ram and Eddy Fiat Alfa Romeo – parts of the deal are still being worked out, he says – he made it clear that purchasing an existing dealership takes a large investment of time.
It started with putting out feelers through banks, manufacturers and, in some cases, cold calling dealerships. Eventually, he got in touch with Tim Lamb Group in Granville, who represented the Eddy dealerships and “we worked out a deal pretty quickly.
“Once we had an asset purchase agreement, then we begin working with manufacturers,” Shorkey says. “Everyone has their own process that varies; some are relatively easy, some are more in-depth. Fortunately, with Chrysler, we have a great working relationship” through the auto group’s two Chrysler dealerships near Pittsburgh.
Alongside that, Shorkey Auto Group had to work through state licensing for the dealership and figure out which Pennsylvania employees were willing to relocate to the Youngstown area.
“You have to be comfortable on the money part and the people part before you even entertain the thought of growth,” Shorkey says. “In this scenario, we were comfortable that we could do what we needed to do.”
While Shorkey has acquired dealerships before, it was a new experience for Taylor, who says the process wasn’t as cumbersome as he expected.
“A lot of it was making sure the people who are there understand who we are. When you buy a business, you aren’t just buying the business. You’re buying the people who are there and they’re the ones who made that business,” he says.
Going into the purchase, one of Taylor’s top concerns was attrition, both of customers and employees. It was a reasonable concern, given Grata had owned the Chevy store for more than 30 years.
“We had a few customers who were wary because they had been buying cars from the same place, the same way for 10, 20, 30 years,” Taylor says. “When we get in front of them, we have to prove what we’re doing and earn their business.”
As for employees, the only manager to leave, he says, did so about six months after the dealership changed hands.
“We had one manager who was there 40-plus years and was set to retire in six or seven months and he told us so it wouldn’t come as a surprise,” Taylor says. “I knew some people were going to retire through discussions with the previous owner and employees before we took over.”
The transition to a new dealership wasn’t much of an issue, Toyota of Warren’s Merlo reports, as the construction of a new building allowed everyone to work as usual up until the day came to make the move.
“A lot of times, dealerships get remodeled and you have to work around construction. When we moved, everything was ready,” he says. “The desks were here, the computers were here. When we had to move, we got a lot of people together and just started moving cars down 422.”
Among the new features that’s helped boost sales at the store, Merlo continues, is the property itself. It sits on a hill, making it easily seen from Route 422, and the lot is designed for a car dealership, allowing for more inventory.
“We have almost the same amount of room. … But we designed this [property] to be a car dealership. The old store was a truck garage before it was a dealership,” Merlo says. “We didn’t feel like we could take care of service customers the way we wanted to. We couldn’t take care of sales customers like we wanted to. We didn’t have the technology we have now.”
With the industry putting much focus on customer experience in the store with spacious showrooms and customer lounges, the Toyota and Volvo of Warren partner says such amenities do have a role in the sales process, but are still second to service.
“You can be selling out of a shoebox and if you treat people well, you’ll do well. What the new facility does is it attracts people who otherwise would never come here,” he says. “People want new things. We get people who come in just because they want to check it out.”
Pictured: Last year, Matt Taylor purchased the Chevrolet dealership in Hermitage, Pa., from Mel Grata, who was retiring. Taylor is also working on opening a Kia dealership in the borough.
Copyright 2023 The Business Journal, Youngstown, Ohio.