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Fathers & Sons to Expand, Reshape Facilities on Memorial Avenue

Damon Cartelli

Damon Cartelli is set to create the so-called terminal concept on Memorial Avenue.

It’s called the ‘terminal concept.’
That’s the phrase Audi has attached to a relatively new design it is now requiring for the showrooms that will display its growing roster of models. In literature intended for dealers, the look — which, as the name implies, educes an airport terminal — is explained this way: “designed to evoke the racing history of the brand, support the operational needs of dealers, and represent Audi through innovative design and materials, the Audi terminal concept is another physical manifestation of the ethos ‘progressive, sporty, and sophisticated.’”
Damon Cartelli used fewer, less poetic, but still effective terms to describe it.
“It has a certain look; it’s very German … there’s lots of glass, lots of metal, it’s a clean look,” said the president of the Fathers & Sons chain of dealerships, who will be creating that look at a new facility to be built a half-mile or so down Memorial Avenue in West Springfield.
The facility where he spoke with BusinessWest, currently devoted to Audi, Volvo, and Porsche, opened its doors 12 years ago, carved out of the old Coliseum banquet house. Cartelli still considers it state of the art when it comes to dealership look, feel, and amenities, and if he had his druthers, he’d be selling Audis there for a few more decades. But the carmaker, like many others these days, is more or less demanding a dedicated showroom (one that will display only its product) and one that meets a number of design specifications, inside and out.
Thus, Cartelli is taking what he calls a business “leap of faith.”
“What people tell me is that there’s an increase in business any time you build a new facility — you get an inherent lift,” he noted. “But we already have a facility that I believe is high-end and representative of the brand. It’s a tough pill to swallow to build a new dealership, and I have my doubts, but I’m going to trust what the brand tells me and hope that if you build it, they will come.”
But that’s not all. This project is currently being called ‘phase one’ of an initiative that will change the face of a nearly two-block section of the north side of Memorial Avenue and possibly create some new business opportunities for this chain of dealerships.
Indeed, while creating the new Audi dealership on land currently occupied by a Midas muffler location, a tool-supply shop, and a few buildings housing various Fathers & Sons operations and inventory, Cartelli plans to create one and perhaps two other facilities, which on current blueprints are labeled ‘future dealerships.’
And there will be some options with regard to what carmakers’ names eventually go over the door, he said, adding that the list includes models sold at existing Fathers & Sons facilities on Memorial Avenue — Volvo, Porsche, Volkswagen, and Kia — as well as some nameplates not currently sold in Western Mass., including Mercedes-Benz, Infiniti, and Acura, among others.
Meanwhile, the new Audi dealership will provide an opportunity to perhaps better showcase one of the hottest car lines at the moment, one expected to gain additional momentum with new models in the A-3 series, a smaller, less-expensive line, said Cartelli.
“We’re currently selling roughly 20 cars a month,” he said of the Audi brand. “With the new A-3 series coming out, Audi’s projection is that we’re going to almost double that number.”
Demolition of existing buildings on Memorial Avenue will commence within the next month, ground should be broken on the new Audi facility by spring, and the dealership is expected to open its doors by the end of next year, he said, adding that, while this timeline is aggressive, it is also realistic.
For this issue and its focus on auto sales, BusinessWest takes an in-depth look at the plans that will give a new look to that section of Memorial Avenue — and write a new chapter in the intriguing history of this family business.

Driving Force

Audi dealership

‘The terminal concept,’ as seen in an Audi dealership in California.

Before talking about the future, Cartelli first referenced something now considered mostly a thing of the past in this business.
This would be the so-called auto mall, or facility that sells a number of different nameplates under one roof. There are still many operating, he said, including the dealership the Cartelli family fashioned from the Coliseum, which at one time sold four brands — Audi, Volvo, Porsche, and Saab, the last of which is no longer made.
Increasingly, though, automakers want a facility dedicated solely to their models, mostly to reduce (in theory, at least) the odds of a consumer eventually driving away with another carmaker’s product.
“Customers won’t have contact with the other brands, which is something the factory wants,” he explained while discussing the planned new Audi dealership. “It’s funny how this industry went from the auto-mall-type complex where you could stay inside and shop all the brands and compare and go from there, to the dedicated dealership, because the factories don’t want their models to be compared to the others, even though that’s going to happen anyway.”
This was just one of the dynamics that led to the commencement of discussions between Cartelli and Audi nearly two years ago, with the carmaker aggressively stating its case for both a dedicated dealership and that aforementioned terminal concept, and Cartelli agreeing, if somewhat reluctantly, to take that leap of faith.
Memorial Avenue was the logical place to build such a facility, with the existence of other company dealerships and the potential for economies of scale, said Cartelli, who commenced putting together a plan — one that would involve use of existing Fathers & Sons facilities and acquisition of other property with frontage on that street — and then executing it.
He acquired the Midas property last spring, and entered into a purchase-and-sale agreement on the tool-supply shop late last summer. He also hired an architect to work in conjunction with one commissioned by Audi to develop a design.
The emergence of a casino proposal for property in the southeast corner of the Big E complex that virtually surrounds the existing Audi, Volvo, and Porsche dealership added some intrigue to the planning process, and there were discussions with casino developer Hard Rock International about acquiring the Father & Sons site.
But the talks never advanced, and Cartelli, sensing that the casino proposal would be defeated in a referendum — which it was — proceeded with the mindset that Fathers & Sons would keep its existing facility and expand down the street.
Cartelli visited several Audi dealerships in New England that had created the terminal concept, and eventually adopted something similar to others — especially the Wallingford, Conn. store — but still unique in its own way.
Memorial Avenue

Damon Cartelli says the new Audi dealership is part of a bigger initiative that will change the face of a one-block area on Memorial Avenue and provide new opportunities for the company.

The planned 27,000-square-foot facility, not much smaller than the current home to three makes, will include a showroom big enough to display eight cars (the current Audi space can showcase five or six, depending on the models), an eight-bay service area, and a waiting area with most of the amenities that newer luxury-model dealerships boast, from a flat-screen television to leather couches to Internet access.
The new Audi store, which comes with a sticker price of roughly $3 million, will create both more space and flexibility at the existing facility, said Cartelli, adding that Porsche has been pressing for more showroom space there and will get it when the existing Audi showroom is apportioned to the other German automaker, doubling the number of cars that can be put on display. Meanwhile, the existing Porsche space on the lower level of the dealership will be renovated into a service area for Porsche and possibly Volvo.
As for the ‘future dealership’ notations on the early blueprints for the project, Cartelli said time will eventually tell how these will be colored in.
While it is possible that one of the existing dealerships (Volkswagen or Kia) will be expanded and updated into one or more of those slots, a model (or two) currently not sold in this region may emerge as a contender if the circumstances permit.
“You need some luck and the willingness of the factory to recognize that they need a dealership in this area,” he said, noting that, with some nameplates — Cadillac and Mercedes-Benz, for example — the nearest dealerships are in Hartford, and the manufacturers are currently content with that.

Into a Higher Gear
Looking ahead, Cartelli said he’s optimistic that the new dealership will do what Audi believes it will — bring more people to the showroom and, in the long run, sell more cars.
“I hope the building alone gives us some lift,” he told BusinessWest. “But what I’m really relying on is their products, what I see coming, what I believe is coming, the strength of the brand, and the direction they’re heading. All this leads me to make this investment, because if it wasn’t for what I believe is a very strong brand, I would just stay here and say, ‘thanks, but no thanks,’ and continue to sell cars out of this facility.”
As he said, this is a leap of faith, one that he hopes — and expects — will land him in a position to grow the business and drive more opportunities.

George O’Brien can be reached at [email protected]

Autos Sections
Today’s Vehicles Are Loaded with Safety Features

Michael Oleksak

Michael Oleksak says drivers, especially those with children, respond enthusiastically to features like backup cameras, enhanced airbags, and child locks.

Motorists are supposed to keep their eyes on the road. That goes without saying, right?
Yet, think of all the distractions that could cause a momentary lapse in concentration, from bickering kids in the back seat to a sip of coffee to a quick glance at the radio dial. If traffic suddenly slows during one of those moments, an accident can occur.
That’s the idea behind adaptive cruise control.
“It’s a built-in collision-prevention system that maintains a set distance from the car in front of you. It lights up on the dashboard when you’re approaching a solid object faster than you should be,” said Brian Farnsworth, a sales consultant with Marcotte Ford in Holyoke, adding that the system is typically paired with brake support “In addition to giving you visual and audio cues, it fully charges the brakes for you, so when you hit the brakes, they’re ready to respond as fast as possible.”
But that’s certainly not the only high-tech vehicle-safety advance of recent years. Equipment that alerts drivers to hazards while backing up are standard on many models, said Michael Oleksak, general manager at Burke GMC in Northampton.
“The rear-vision camera is a tremendous safety feature for the driveway, if someone has small children,” he said. “It gives you a complete panoramic view of the back, and there’s a backup alarm system, so if you’re backing up, and you get within 30 inches or three feet, it starts to beep, and you also see a light flash. Then, as you’re getting closer and closer, the beeps come more often and also louder.”
Michael Filomeno, Marcotte’s general manager, said many Ford models already feature the backup camera, and the device will be standard on more models next year. Meanwhile, pending regulation from the National Highway Traffic Safety Administration could soon make this technology standard on all vehicles — just one indication of how safety concerns are driving innovation among manufacturers.
“Airbags, anti-lock brakes, things that were big safety features in the ’80s, are pretty standard things now, but they’ve evolved,” Filomeno said. “We have better technology, things like adaptive cruise control, a new generation of airbags — it’s a whole different vehicle than it used to be.”
For this issue and its focus on auto sales, BusinessWest examines what’s new in vehicle safety, and why it matters to dealers and drivers alike.

Something Old, Something New

Michael Filomeno (left, with Brian Farnsworth)

Michael Filomeno (left, with Brian Farnsworth) says even safety features that first appeared decades ago have advanced in recent years.

Of course, safety concerns are nothing new for carmakers.
“While new technologies are greatly advancing safety features, auto manufacturers have had the consumer’s welfare in mind since the automobile’s inception,” notes Greg Fowler in Auto Trends magazine. “Many aspects of today’s vehicles taken for granted were initially included to improve the automobile’s marketability by making it seem less of a daredevil’s toy and more useful to the mainstream public.”
Until recently, vehicle safety features advanced slowly at best. According to Auto Trends, safety glass was first used for automobile windshields in the 1920s, and Buick was the first manufacturer to install a flashing turn signal in 1938. Meanwhile, cars had been on American roads for more than a half-century before seatbelts were introduced in 1949.
The ’70s and ’80s saw airbags and anti-lock braking systems become commonplace, but even those features have come a long way.
“Years ago, a car had two airbags,” Oleksak said. “Now, depending on the vehicle, you might have eight or 10. There’s side curtain and head curtain and side impact.”
Farnsworth added that Ford vehicles recently introduced front knee airbags on both the driver and passenger side, as well as inflatable seatbelts for children in the rear seats of SUVs.
Across the auto industry, in fact, airbags are anything but old hat. Because airbags have been deemed responsible for blunt-force injuries and even deaths, especially to children, over the years, all passenger vehicles since 2006 have been designed with advanced frontal airbag systems, the industry term for a deployment technology that automatically detects the size and position of the passenger and the severity of the crash, then uses that information to vary the force with which the bags inflate.
Oleksak was quick to note that many safety advances of modern times are decidedly low-tech, while others rely on more complex equipment.
“It’s a small thing, but we have child locks you can program though the locking system,” he said. “Another small feature, but very helpful, that you see in a lot of the Chevy trucks is the flasher in the side mirror — when you put the directional signal on, the mirror arrow flashes. Someone up close to you might not see the brake light, but they’ll see your mirror flashing.”
More advanced features do the opposite, alerting drivers to fellow motorists they might not see in their blind spots. That’s the purpose of the lane- departure feature, which alerts drivers when they’re drifting from their lane without a turn signal on, and also warns them when not to change lanes. “Let’s say someone is passing you on the right and is very close to you,” he said. “You see something flash, so you know not to pull over to the right.”
Even the simple act of parallel parking is being boosted by technology. An increasing number of carmakers are offering a feature that detects the size of the parking space, guides the driver into the starting position, and then parks the car automatically, hands-free — which, as it becomes more commonplace, could theoretically prevent many minor scrapes and fender benders.

Saving Lives
Of greater concern, of course, are serious accidents that cause injuries and deaths, and automakers understand those stakes. For example, the Insurance Institute for Highway Safety estimates that up to 1.2 million crashes could be prevented or mitigated each year if all vehicles boasted some kind of forward collision avoidance system — preferably paired with autonomous braking systems or adaptive headlights, which rotate to better light the car’s path on curves and reduce glare for oncoming traffic.
The institute also credits electronic stability control — a recent innovation that helps drivers correct a swerving vehicle by applying brakes on individual wheels — with reducing the risk of a single-vehicle fatal crash by 50%, which is why it’s now standard equipment across the industry.
Oleksak said car buyers are increasingly aware of newer safety features, and are coming to expect them. “Even on the entry-level Chevy Cruze, you’re getting most of these features. Some are standard, some optional, depending on the model.”
Also popular with GM drivers is OnStar, a satellite service that provides navigation assistance but also features automatic crash response, alerting emergency services of an accident and its location. Drivers can also trigger that response manually in case of, say, a heart attack or a carjacking. Ford has a similar service called Operator Assist.
“That’s one of the features you hope you never have to use, and others, you use all the time,” he said of vehicle-safety devices in general. “Cars have really leaped ahead with safety. Just look at the way they’re designed, with crumple zones, the way the hoods fold. Years ago, in an accident, the hood came back through the windshield. Nowadays, with crumple zones, the hood folds a certain way, so as not to injure a person.”
Safety glass has improved as well, Oleksak noted. “Years ago, the glass was jagged, but now, the windshield breaks into a million pieces, almost like ash.”
Meanwhile, Farnsworth pointed to the roll-stability feature now standard on many Ford SUVs as just another example of safety advances drivers often take for granted. “People don’t always know about it. Our job is to let them know what’s available. And there are so many features now.”
Fowler notes in Auto Trends that safety advances have not only led to fewer accidents, but fewer insurance claims, which can lower insurance rates for everyone. “Cars do not drive themselves,” he notes, “but technological advances are getting us close.”
“Ford’s got a lot of cool stuff people don’t even know about,” Filomeno added. “When they come in, they’re not coming in looking for adaptive cruise, necessarily, but when you show them the car and tell them what it has, they’re really awed by it.”

Joseph Bednar can be reached at [email protected]

Autos Sections
Outlook Brightening for Auto Makers, Dealers

Mike Balise

Mike Balise says manufacturers are building more cars than consumers will buy, which will benefit car shoppers by deflating prices.

The highways are getting a little shinier.

The Great Recession hit many industries hard, and auto dealers were no exception. As consumers put non-necessary expenditures on hold and hung onto their clunkers a little longer, the average age of cars on the road soared past 12 years.

But they couldn’t put off those trade-ins forever, and with the economy showing signs of life and consumer confidence inching up, carmakers and dealers are reaping the benefits.

“New-car sales are hot,” said Mike Balise, vice president of his family’s regional chain of dealerships. “The overall trend in the industry is up; they’re making 16 million cars again.”

In fact, just five years ago, that was the standard number of vehicles rolling off North American assembly lines. But after dropping below 16 million in 2008 for the first time in 10 years, new-car production bottomed out at around 8 million a couple years later. The fact that manufacturers are producing with confidence again bodes well for dealerships in Massachusetts and everywhere else.

According to the Fabricators & Manufacturers Assoc., manufacturers have curtailed production and instead focused on keeping their operations lean while still meeting the rising demand for auto parts — another result of aging cars on the road. They note that the increased production, expected to top 16.7 million units in 2015, will result in higher employment in auto manufacturing as well.

It will also impact the used-car market, Balise said. “You saw used-car values peak in the spring, and they’re starting to come down faster than they normally would because the new-car manufacturers are coming on stronger; they’ll suppress the market in terms of transaction prices.

“As these manufacturers ramp up capacity,” he explained, “they’re building too many cars. They’re talking about building 16 million, and that is true, but they’re only going to retail 14.5 million. The other 1.5 million will go to Enterprise, Hertz, Avis, your fleets, and they only use them six to 13 months. So there are going to be lots of 5-, 6-, 10,000-mile current-year used cars going to auction.”

In short, he said, “new-car sales are brisk, prices are going down, because the capacity to make cars is still greater than the marketplace, and that will lower the prices of cars and lower the value of late-model used cars.”

 

Lease of Their Concerns

Gary Rome, president of the Hyundai store in Holyoke and the Kia dealership in Enfield that bear his name, said he has not yet experienced a huge spike in business stemming from the new manufacturer confidence. “But our service and our parts sales have increased dramatically — about 28%.”

Leases are soaring too, he added.

“That’s the other thing — we’ve seen an increase in leasing from a lot of folks,” he said, noting that, on average nationally, leases account for around 11% of all new-car transactions. At Gary Rome, the number currently approaches 35%.

“People are looking to get more car for less money, which they can do with a lease,” he said, noting that the popularity of the option tends to ebb and flow according to how aggressively car makers are pushing special lease programs. “When manufacturers have inventory and they want to move it, they’ll incentivize the leasing to make it more enticing for customers. And customers are responding to that — interest rates are lower, payments are lower, with little or no money down.”

Retail incentives to buy have steadily decreased since peaking during the heart of the recession, when 0% financing was all the rage.

“In general, the car companies have shown some restraint in discounting,” writes Jim Henry in Forbes. “In fact, average actual transaction prices hit a record [in May] of $28,921, according to J.D. Power and Associates. That is what consumers actually paid, net of incentives. In May 2008, that number was $24,404.”

What they want to pay for, Balise said, hasn’t changed much.

“Mileage, reliability, and safety tend to dominate everything,” he told BusinessWest, noting that gas has hovered close to $4 per gallon for so long that people have made gas mileage a permanent part of their car-buying priorities.

“I think it’s always in people’s minds; they’re always considering it. Even my friends buying things like Denalis and Explorers — one guy in particular tows a racecar, and he was very conscious about a three-mile difference between two choices. For most people, it’s very top of mind, and certainly the manufacturers are producing models with better mileage than ever, lots of great choices.”

That enthusiasm has not, however, crossed over to electric vehicles.

“In general, I think that the tendency toward electric cars is going at a very slow pace,” Balise said, noting that GM has lowered the price of its Volt about 20%.

“Those cars seem to be more peripheral. No one bought the Volt except a few people who wanted to be at the cusp of that technology.  Everyone else, if Chevy showed you a Malibu and a Volt and then showed you the price, 99 out of 100 people are going to choose the Malibu all day long.”

The U.S. government has attached tax incentives to electric cars, but Balise said consumers simply haven’t been responsive to them. “The government is trying to create a market that doesn’t exist. Who wants a car you have to recharge, and that takes three or four hours to recharge?”

Analysts have noticed the same trend. “Increased sales are in store for fuel-efficient cars and trucks, especially compact cars, subcompact cars, and hybrids. Despite fairly steady gas prices, consumers are finally ready to commit to these segments for longer than the length of a gas price spike,” noted Colorado-based Accurate Auto Body in its blog.

“They are not eager to commit to all-electric vehicles, though, so automakers will increasingly concentrate their efforts on plug-in hybrids and hybrids. And for those consumers desiring hybrid technology without the hybrid cost, additional hybrid features will be found in more economical conventional cars as manufacturers upgrade their efforts to meet the government’s corporate average fuel economy (CAFE) standards.”

 

Smart Shoppers

Meeting consumer demands has become more challenging at a time when shoppers are showing up at dealerships with more information and research than ever at their fingertips, Rome said. But he considers that not a negative, but an opportunity to meet their questions with knowledge and attentive service.

“We know that 90% of our customers are going on the Internet to do research, and our job is to provide them with efficient responses that are informative. It’s not unusual for customers to be on the lot at our dealership while using their smartphones to look elsewhere or verify information, to make sure they’re getting a good deal, to look at reviews, to make sure they’re doing business with the right dealership. It’s actually good to see.”

That’s because the Holyoke dealership recently won the Hyundai President’s Award for customer satisfaction, ranking sixth out of 812 dealers in the country. “We’ve seen stability, even in a down market, because of the way we treat our customers,” Rome said, which extends to the company’s charitable involvement in the community. “We have a mantra that we use here: people today come to expect more, so extraordinary is the new ordinary, and people have come to expect an extraordinary experience.”

Across the country, car buyers are increasingly seeking those experiences. According to more than 70 economists and analysts from business, academia, and government who participated in the Chicago Fed’s annual Automotive Outlook Symposium in May, the nation’s economic growth is forecast to be solid this year and strengthen somewhat in 2014; they expect that to translate to 15.3 million new-car sales this year and 15.8 million in 2014, after bottoming out at 10.6 million in 2009.

Truck sales are a particular bright spot. Kenny Veith, partner with Americas Commercial Transportation Research Co., noted at the symposium that, while heavy-duty truck sales are forecast to decrease from 278,700 units in 2012 to 262,300 units in 2013, they are expected to surge to 300,900 units in 2014, while medium-duty truck sales are projected to grow from 188,400 units in 2012 to 197,600 units in 2013 and 213,700 units in 2014.

“For domestic brands, rising pickup truck sales are expected to be another significant factor,” adds Henry in Forbes. “Pickup sales are an important sign of recovery in the housing market. They’re also big-ticket, highly profitable sales in a product segment where the domestic manufacturers still dominate. J.D. Power said it expects full-size pickups to account for 11.4% of industry retail sales, up from 9.7% in May 2012.”

Balise has seen that activity at his own dealerships. “It’s been a really good year for most manufacturers, and trucks are as hot as they’ve been in a long time,” he said.

Rome is confident enough in the industry outlook that he plans to renovate his Holyoke dealership, following a recent renovation of the Kia store in Enfield. “We’re going to reinvest,” he told BusinessWest.

In other words, he keeps rolling along — just like the industry as a whole.

 

Joseph Bednar can be reached at [email protected]

Autos Sections
Sarat Ford Lincoln Has Been a Long-running Success Story

Jeff Sarat

Jeff Sarat says that taking risks has been a family tradition and will continue to drive their future success.

Jeff Sarat says his family’s lengthy history in the auto business — now approaching 85 years, with three generations of leadership — has been marked by what he called “calculated risk taking.”

And as he talked about manifestations of that operating philosophy, he pointed to the ceiling of the family’s Ford and Lincoln dealership on Springfield Street in Agawam, which he serves as president, and, more specifically, the chandelier that dominates it.

The ornate lighting fixture has come to symbolize what was a huge risk undertaken by his father, Jack, in 1989. As he retold a story he’s relayed often, Jeff said that his grandfather, John, who segued from farming into selling and servicing cars in 1929 and kept a firm hand on decision making within the family business, strongly opposed his son’s plans to expand the dealership across Springfield Street from where it was started.

But Jack pushed ahead with the plan anyway.

“My father had to have the steel delivered at night so my grandfather wouldn’t know,” Jeff recalled. “When the project was done, my grandfather walked in the building, saw that chandelier, and said, ‘Jack, you built a classy place.’ That was his seal of approval.”

There have been many other examples of successful risk taking over the years, from the Sarat’s family’s expansion efforts into Enfield and Northampton — with Ford dealerships operated by Jeff’s brothers, Chris and Scott, respectively — to aggressive expansion into the commercial truck market (more on that later), to recent endeavors, such as a 10,000-square-foot expansion of the Agawam dealership for a service and repair facility that is truly state-of-the-art.

And there are more on the drawing board, especially construction of a dedicated showroom for the Lincoln car line, with construction slated to begin later this year on the site of the now-closed Taylor Rental facility next door to the Agawam dealership.

Such moves represent risks, but they are becoming increasingly necessary in what is a changing, ultra-competitive auto-sales sector, said Jeff, who shares his father’s and grandfather’s entrepreneurial tendencies and drive for continual expansion.

“We’re always trying to grow the business and make it bigger and better,” he explained. “We’re consistently a top-10 dealer, but I’m not really happy with top 10 — I want to be number one.”

For this issue and its focus on auto sales, BusinessWest turns the spotlight on the Sarat family, their expanding auto group, and their plans to continue that pattern of taking calculated risks.

 

All in the Family

The stock market crash of 1929 was just a few months away when John Sarat, who loved to tinker with the cars being serviced at a local gas station when he wasn’t tending to his vegetable farm, decided to purchase his own gas station in Agawam with a partner.

That venture became increasingly focused on sales, said Jeff, noting that, as the economy went into prolonged freefall, his grandfather had to buy out his partner and somehow slug it out during the Great Depression as a sole proprietor.

He persevered, and his name was still over the door when the next generation, represented by Jack Sarat, started working at the dealership while in grade school, developing a passion for the industry in the process.

“My father never wanted to do anything else,” said Jeff. “He grew up on the lot, pulling weeds, plowing snow, cleaning off the cars … and we were raised the same way.”

The ‘we,’ in this case, are the three members of the third generation who have become involved in the family business — brothers Jeff, Chris, and Scott.

Jeff, the oldest, remembers snow days when the three were in school; before the classmates would head for the sledding hills, they would ride with their father to the dealership to plow and shovel snow, move cars, and handle myriad other assignments.

Along the way, they developed a similar passion for the business and a desire to make it a career.

“Before we built this building in 1989, my father essentially polled us,” said Jeff. “He said, ‘before I go out and spend all this money building a new building, do you guys want to get into the business?’ And we all said ‘yes.’ I was about 14 at the time.”

Today, Jeff Sarat is taking a leadership role in another round of expansion and risk taking that started with a 10,000-square-foot expansion of the service and repair facilities, that gives the Agawam dealership the room and the flexibility to service almost anything on wheels.

“We designed it with six lifts that enable us to pick up anything from a Ford Focus to a Ford school bus or a motorhome — that’s up to 72,000 pounds,” said Sarat, adding that, in response to both recognized need and trends within the industry, the new facility was designed to maximize efficiency and thus save time  and money.

Elaborating, he said the large service bay allows two technicians to work on three lifts each, which means that if a part for a car on a lift is delayed, the technician can move on to the next job on the neighboring lift and not waste time switching vehicles.

“This is unheard of in this industry,” said Sarat. “Nobody gets three bays, especially three monstrous truck bays.”

And such large bays are needed, he went on, because of the company’s growing base of commercial truck sales, which represent a whopping 50% of the dealership’s revenue. This track record for excellence in that category dates back to 1997, when Jack Sarat had an opportunity to purchase 100 heavy-duty pick-up trucks, which represented the last of Ford’s inventory for that model year. With no model changes on the way for 1998, and a more expensive truck with a smaller rebate due in 1999, Sarat’s inventory was soon in demand, and many of those who bought then have become repeat customers.

“They sold like crazy, and by selling those ’97s, we earned more allocation [future new truck allowance per dealership] than anybody ever could,” Sarat explained. “And now we have people come from all over New England because we’ve built relationships; they know we have the trucks they want, and we service them, too.

“Those buyers are a very loyal buyer,” he went on. “You start that relationship with one truck, and before you know it, within a few years, as their business grows, you’ve sold them three, four, or five trucks.”

Next on the to-do list for the company is construction of a new showroom for Lincoln, said Sarat, adding that the dedicated dealership is reflective of another trend in the industry, as carmakers are demanding new and better facilities in which to showcase their specific models.

The new, 20,000-square-foot facility should help Lincoln build brand awareness and counter not only stern foreign competition in the luxury-car category, but also a surging Cadillac, which saw a 33% increase in sales last calendar year.

Lincoln was a hugely popular luxury model decades ago, but has lost significant market share, mostly to the foreign competitors in recent years, and is looking to recapture its place at the top of that category, said Sarat.

“Lincoln is going though a bit of an identity crisis, asking, ‘what do we want to be?’” he told BusinessWest. “They’ve created some new and exciting models and taken some gambles with the Lincoln MKZ. They’ve come out with some new products, and hopefully, Lincoln can regain what it once had. But it’s going to be a tough battle.

“And the new buildings are part of that,” he went on. “You need to make investments in these facilities. The buyers are coming to expect a certain level of size, quality, and convenience, and that’s why we’re separating the two buildings, to give them a unique experience.”

 

Full Tank

As the company remodels both the dealerships in Agawam, Sarat said, it may face a quandary of sorts.

Indeed, there is speculation that the chandelier may not fit with the style and image that Ford is trying to project with its showrooms. In short, its days might be numbered.

If they are, the company will lose a small part of its identity, but there are still plenty of other examples of the calculated risk taking that have enabled this venture to survive and thrive for 85 years.

And there are more to come.

 

Elizabeth Taras can be reached at [email protected]

Autos Sections
With Recession on People’s Minds, Car Dealers Aren’t Just Spinning Their Wheels

Gary Rome hears it — a steady drip-drip-drip of pessimistic economic forecasts for 2008, spurred by everything from fuel and health care costs to the subprime mortgage mess. He knows his customers hear it, too.
“I think people are more cautious, because they’re hearing little tidbits of bad news all the time, which is worse than hearing one large message of bad news,” said Rome, general manager of the Hyundai dealership in Holyoke that bears his name.
“People in general have short memories, so if you tell them bad news once, they forget about it,” he elaborated. “But when they hear it over and over again, it grinds on them.”
Cliff Dexheimer, Rome’s general sales manager, agreed that potential car buyers are being affected by the daily onslaught of economic bad news.
“Consumers tend to be very sensitive to negative news, regardless of whether they have money in the stock market or whether a half-point difference in the prime rate would actually affect them,” he said. “It’s just the temper of the times, and it creates caution.”
That said, Hyundai, which is a make known for low cost, fuel economy, and extensive warranties, is exactly the type of car a dealer wants to be selling at such a time, said Rome.
“We’ve just about shed that stigma from the ’80s and ’90s of Hyundai as a disposable car,” he said, citing favorable quality reports from trade magazines. “So when you can get good quality and twice the warranty, why would you spend $4,500 more for a Toyota or $11,000, $12,000, or $13,000 more for a Lexus? People want to shop with confidence. It’s not an emotional decision today; it’s a rational decision.”
“I’d rather be selling Hyundais today than Lexuses,” Dexheimer agreed.
But Kimberlynn Cartelli, director of Marketing for Fathers & Sons in West Springfield, which sells more upscale cars, has a different take.
“Business is actually pretty good despite the bleak outlook from analysts,” she told BusinessWest. “We can attribute that to a variety of things, including some new products that are generating excitement. We really haven’t been affected by the downturn in the economy.”
Of the cars Fathers & Sons sells, Volvo and Audi continue to be top performers, she noted, while Porsches are also doing well.
“I don’t think the Porsche buyer is as affected by fluctuations in the economy. It’s been our experience that those people buy when they’re ready. They’re not as affected by downturns.” On the other end, Kias are holding steady as well, but “obviously that consumer is a little more conservative and sensitive to the fluctuations. All in all, we’re pretty strong.”
As area dealers told BusinessWest, although cracks are appearing in consumer confidence, so far not too many people are putting off car purchases. But at a sensitive time, they continue to aggressively market themselves, knowing that moods can change quickly.

Engine Trouble
The mood has already shifted in some quarters. Experts predict that sales of domestic cars will drop below the 16 million mark this year for the first time since 1998, a situation exacerbated by a struggling housing industry, troubles in the credit market, and high fuel costs.
“Things have changed drastically for the worse,” wrote George Magliano, director of automotive research for Global Insight, an economic analysis and forecasting company. “There will be nearly no [economic] growth next year. We haven’t seen the worst of the credit crisis or the housing market.”
Joseph Topor III, general manager of Topor Dodge in Chicopee, agreed. “With the credit challenges and the cost of oil getting to $100 a barrel, it has affected people’s disposable income,” he said. “Everyone knows about the subprime housing issues and the credit issues; I don’t know how the general public looks at that, but they hear about it a lot on TV.
“Personally, I think John Q. Public really looks at what’s in his own wallet and bank account, and what his Visa bill is every month, and adjusts spending accordingly,” he continued. “The ones who don’t know much about managing money are the ones now defaulting on credit cards and loans, and that, to me, is extremely frustrating. It’s something that has definitely affected us. I’m seeing a lot more checks coming back returned, and we’ve had to tighten up our credit policies.”
Topor’s take on who is shopping for what type of car mirrors the subprime housing situation, in which people with poor credit and savings were persuaded to buy outside their means.
“The people with the good credit scores, or who have equity in their vehicles, are the folks who are looking at less expensive models. They think, ‘financially, this is what I can afford,’” he said. “The people who come in and say, ‘this is what I want’ are the folks who don’t have a grasp of what it entails, in terms of paying the whole thing off.”
Furthermore, he said, 25 years ago perhaps one in 50 customers were what he called “credit-challenged.” Today, the number is much higher, and that can make it difficult for manufacturer-backed dealerships to compete with smaller lots with less-stringent credit policies.
“I know a guy who sells used cars, and next to him is a buy-here, pay-here lot that can make a decision typically within six hours. But the bank he deals with has a 24-hour turnaround, so he’s losing deals. People think it’s like a drive-thru at Burger King — just walk in and drive out with a car.”

Indicator Lights
Topor said it’s important in these times to stay on top of industry forecasts. For example, last year he heard rumblings about a flat new-car market for his lines, so the dealership focused strongly on the commercial and pre-owned business.
He said providing good service is a must these days — although in an uncertain economy, he notices some customers only bringing their cars in for repair when they absolutely have to, choosing to drive around with issues they would fix immediately in better times.
Cartelli suggested that the most successful car sellers today are dealer groups that can utilize economies of scale in their marketing and purchasing patterns. She compared it to having a balanced stock portfolio: if one franchise is down, another might be up, thereby mitigating some of the highs and lows of the business. “This is especially crucial,” she said, “in a deflating market when decreasing expenses is the only option for small, single-point dealers.”
Another trend Cartelli has noticed is the prevalence of the Internet, which has resulted in savvier car buyers. Many customers research dealer invoices before arriving in the showroom, she explained, while price differences among dealers are smaller than ever. And if price is no longer a major determination of where people will shop, dealers need to come up with other ways to differentiate themselves.
Fathers & Sons has embraced that trend, restructuring its Web site and employing a new Internet service provider, one more skilled at search engine optimization, bringing many more clicks to the site.
“We had used the Internet in the past as a lot of dealers did — as a placeholder — and it wasn’t all that functional; it was more a way to keep up with everyone else and have a Web presence,” Cartelli said. “Since we switched to someone who’s more of a Google specialist, we’ve seen a huge increase in the number of visitors. We used to see 1,200 to 2,000 a month; now we’re seeing that every week because of the enhancements we’ve made.”
That in turn has allowed Fathers & Sons to put more resources into online marketing as opposed to traditional media, which is effective since the dealership is reaching people who are already in the shopping process — and are easier to convert into sales — as opposed to trying to pull people in off the street.
Automation has crept into other parts of the service business as well. Fathers & Sons sends automatic service reminders to customers, while Rome offers an easy-to-use online scheduling form. “Even the most disciplined customer doesn’t want to wait on hold to make an appointment,” he said. “This is another way to make it easier to do business with us.”
“Certain parts of the business are changing,” Topor said. “But it all comes down to how you treat people in the showroom.”
And, increasingly, how to get them there.

Joseph Bednar can be reached at [email protected]

Autos Sections
The Pion Family Has Long Been a Driving Force in the Industry

Don Pion has been around cars and car dealerships for pretty much all of his 52 years.

He has fond memories of cleaning snow off rows of vehicles at a Chevrolet dealership his father worked at in the mid-’60s, and lasting recollections of those intrigue-filled days each fall when the new models would be rolled out.

“The cars would come covered, and the windows to the dealership would be papered over so people couldn’t see inside,” he told BusinessWest, adding that car makers would use such tactics to build curiosity and essentially compel people to visit the dealerships.

Today, of course, there is somewhat less fanfare and much less mystery involved with new models — people can see and read all about them on the Internet, for example — but the basic challenge facing dealers is the same today as it was 35 or 75 years ago, when Pion’s grandfather was selling Mercuries on Memorial Avenue in West Springfield: simply getting people into the showrooms.

And that’s especially true for today’s domestic dealers, said Pion, who is one of them, as the name of the venture that still bears his father’s name — Bob Pion Pontiac, Buick, GMAC — clearly indicates. That’s because those Detroit-based makers, like others, have lost considerable ground to foreign manufacturers in recent years, in large part because they didn’t make cars that could readily capture the attention of increasingly savvy and demanding consumers.

Pion is careful to use the past tense as he makes such comments. Indeed, he believes domestic makers, including Buick and Pontiac, are taking back some of that lost market share through better cars, better warranties, effective marketing, some incentives (0% financing is still available), and especially hard, often fruitful work to simply convince motorists to give domestic nameplates a good look.

Tiger Woods has helped. The sports world’s biggest superstar and perhaps its most prolific pitchman has been associated with Buick for nearly a decade, and he’s succeeded, said Pion, in making a noticeable dent in the long-held perception that Buick is an older person’s car.

“He’s having an impact — people come in and say, ‘I want to see the car that Tiger’s touting,’” said Pion, noting quickly that old perceptions die hard, and it’s still a challenge to get younger audiences to consider Buick.

Meanwhile, Pontiac has come out with some new nameplates like the Solstice (a roadster) and G6, a convertible, that are helping turn back the clock to the ’60s and ’70s, said Pion, when the company made some of the sportiest, most unique, and most popular models on the road — like the GTO, Firebird, and Lemans.

“General Motors is trying to give each franchise its own individual flavor,” he explained, noting that for too long, domestics makers, especially the various lines in the GM stable, mirrored each other’s offerings, creating confusion as well as boredom, which prompted many to consider and then purchase foreign options. “If we can get people into our dealership and they try the products we have — then we’re in the game.”

The task of managing all the change and challenge in auto sales today is now the work of three generations of the Pion family. Bob, now 80, comes to the dealership several days each week. He handles some banking chores, still conducts a sale or two, especially to long-time clients (he recently completed another transaction with a customer he’s been serving since the ’50s), and he remains the face of the company.

Two of Don’s sons (who both call Bob “Gramps”) have leadership roles: Rob is general manager, and Tom is Internet manager/used car manager, and works to ensure that the company’s Web site is accessible, informative, and effective.

In this issue, BusinessWest looks at how the Pion family name has endured for more than eight decades, and why it will be a fixture for years to come. This glimpse into a successful family venture provides an indepth look into the challenges facing all dealers today, and especially those selling domestic models.

Shifting Gears

As he traced the history of the family’s involvement in the auto business — with some help from his father — Don Pion put his memory to the test, recalling the names and locations of many former dealerships, while also tracing family trees and listing a number of makes and models that have vanished from the landscape.

It all started with Bob’s father, Francis X. Pion, who was a partner in a venture called Pynchon Motors, which sold Ford, Mercury, and Zepher models. Francis Pion died when Bob was only 10, but the latter had already acquired a taste for the business (he handled a number of chores around the dealership, much as Don did a generation later) and would eventually make it his career.

Starting in the early ’50s, he sold a number of nameplates, from Chevrolet to Subaru, from GM to MG. In the late ’60s, Pion partnered with Joe Gentile in a venture called Allan Imports in Springfield, which sold MG, Renault, and Subaru. They later sold that venture and eventually opened Hampden Dodge on State Street in Springfield.

In 1977, the partnership dissolved, with Gentile keeping Hampden Dodge and Pion acquiring a struggling Pontiac dealership on Front Street in Chicopee and putting his name on the sign outside. In 1985, he acquired a GMC Truck dealership in Springfield, and eventually took that larger venture to the current location on the corner of Fuller Road and Memorial Drive. In 1995, the business acquired Mathis Olds Buick, and brought the Pontiac, GMC, and Buick franchises under one roof, a channeling method preferred by GM.

Bob Pion, who first sold cars at Hampden Dodge and joined his father at the Front Street location in the late ’70s, later went on to be the dealer at Suburban Chevrolet in Southwick in the late ’80s before selling that venture and rejoining the family business in 1989 and becoming dealer in 1992, not long after it relocated.

The company has put down firm roots on Memorial Drive, which may not be in the same category as Riverdale Road in West Springfield as an ‘auto mile,’ or car shopper’s destination, but is an attractive, accessible location, said Pion, that has seen a wave of development over the past several years, with more on the way.

The former Fairfield Mall site, located directly across the off ramp of Turnpike exit 5, has been retrofitted into a home for Wal-Mart, Home Depot, and other retail giants, and there are signs (literally — a large one recently went up on the property) of additional development on a large open tract adjacent to the Parwick Center.

But vehicle traffic is only part of the success formula for dealers, said Pion, adding quickly that facilities must have the cars that consumers want. This is Auto Sales 101, and the reason why domestic makers lost considerable ground to foreign manufactures, from Audi to Toyota; BMW to Volkswagen, over the past 20 years or so.

“GM got into such bland cars,” Pion said of a trend that began in the late ’80s and prevailed, by and large, until recently. “They did everything by consumer groups; they tried to come up with cars that would appeal to the largest numbers of people, but instead they often ended up with cars that didn’t appeal to anyone.”

General Motors is gaining some of that ground back by focusing on quality as well as style, said Pion, and restoring a unique identity to each of the franchises. In the case of Buick, it has reduced the number of nameplates to just three — the Enclave (a crossover SUV), and two sedans, the LaCrosse and Lucerne. The shift from quantity to quality and making cars that can cross generational gaps is making a difference, he said, adding that Buick, makers of what are considered “low-profile luxury cars,” is attracting looks from some who have been driving foreign models.

The same is true for Pontiac, a nameplate steeped in innovation that is returning to those roots with the Solstice, G6, and a G8 model that is in the pipleline.

“I think the pendulum is swinging back the other way,” Pion said of the apparent momentum achieved by some domestic makers. “We are seeing more people driving into the lot in imports who are looking at what we have.”

And this looking is critical, he said, because not too long ago, many people were far less inclined to look because of the gap in quality between imports and domestics. That gap was real for many years, and it is still perceived by many, said Bob Pion.

“Once you lose people to imports, it’s hard to win them back,” he told BusinessWest. “You can’t just tell them your product is as good or better than the others; you have to prove it to them.”

Economic Engine

As he talked about auto sales in the 21st century, Pion began with a discourse on the Internet and what it has — and hasn’t — done.

Specifically, it hasn’t spelled doom for individual dealers, as many predicted it would by putting so much information in consumers’ hands, because most people still want to see and drive a car before they buy it, he said.

But it has made consumers more knowledgeable when they walk in the doors, he continued, noting that most people know essentially what they want and how much they should be expected to pay when they get to the dealership. This phenomenon, coupled with reduced flexibility on price and, recently at least, less to differentiate models on the market, leaves dealers forced to find new ways to stand out.

In general, it comes down to making the buying or leasing experience as simple and painless as possible.

“There are no real lemons out there anymore that are just horrible cars; for manufacturers to be in business today, they have to build something that’s competitive in the marketplace, or they have no shot,” he said, noting that this phenomenon has changed the landscape for all dealers. “Today, so much of it comes down to the experience; we have to make it as non-stressful and as enjoyable for the customer as we can make it.

“Most people equate it to going to the dentist,” he said of the car-shopping experience. “They just don’t like to do it. And it shouldn’t be that way; it should be a fun thing to go pick out a new car. It’s exciting, you’re going to spend a lot of money … you should get something you like.”

Efforts at Pion to make visits to the dealership less painful and stressful center on a team effort, he continued, adding that it starts with the initial contact in the showroom and continues long after the purchase is completed, through interaction with those in service, parts, and other departments.

“People are the biggest thing in any business, but certainly in the automobile business — it truly is a people business,” he explained. “You can have a good product and be in a good location, but if the person you come into contact with when you first walk into the dealership turns you off, everything we’ve done to get you here has gone away; it doesn’t matter anymore.”

Meanwhile, dealers must make maximum use of the Internet, he said, noting that this means making sites as accessible, informative, and user-friendly as possible. To that end, the company is constantly updating its site, adding new features, and linking with online entities such as Vehix and AutoTrader.

Looking back at 2007 and ahead to the balance of 2008, Pion said the former was a good year (better than ’06) and for all those reasons listed above. Maintaining such momentum will be challenging, in part because of the economy but also non-stop press coverage, much of it speculative in nature, that is sowing doubt and caution among consumers.

“Industry-wide, as far as our manufacturers are concerned, the product is better, and if all things were equal, we’d see an uptick in business,” he said, “but the big concern is the economy.

“You can’t turn on the TV or open the newspaper without reading about whether we’re in a recession or whether we’re heading toward a recession, and all that takes a toll,” he said, noting that talk of a downturn often becomes a self-fulfilling prophecy. “We’re in an area where unemployment is still good, and conditions are better than they are in many other areas. Still, our business is one where people have to feel comfortable about today and the future, because they’re paying over time. And many don’t feel as comfortable as they once did.”

Drive Time

Standing in his showroom amidst SUVs, hard-top convertibles, and sales desks dominated by computers, Don Pion noted that much has changed in this industry since he started selling cars — not to mention when his father and grandfather began their careers.

But the more things change, the more they stay the same, he said, noting that it’s still all about getting people into the showroom, be it through paper over the windows, the time-honored newspaper ad, an engaging Web site, or a TV ad featuring Tiger Woods.

After that, it comes down to the art and science of the sale — an experience that has driven four generations of the Pion family to succeed.v

George O’Brien can be reached at [email protected]