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March 15, 2010
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Japanese Giant Expands in U.S. By Ted Craig
The biggest used-car dealer in Japan has set its eyes on the U.S. market. Gulliver’s has 450 stores throughout Asia, mainly in its home country. But it just opened its second U.S. store in suburban Los Angeles. Kenichi Hatori started the company in 1994 by buying cars from private parties in Japan. Gulliver’s experienced tremendous growth and executives set their sights on the United States. Gulliver’s executives selected Torrance, Calif., as the first U.S. location for two reasons. California is the nation’s largest car market and Torrance is home to a large population of Japanese immigrants who recognize the brand Gulliver’s started doing what they did in Japan – going to people’s homes and buying their cars. “It worked fairly well, but we needed something else, something bigger,” said Henry Alvarez, marketing manager for Gulliver’s USA. The Torrance store has a 300car capacity. A second store recently opened in Orange County.
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There are also satellite operations in San Francisco and New York. Gulliver’s plans on opening another store this summer if the Orange County location performs as well as the one in Torrance. What makes Gulliver’s USA stand out is almost all the units are sold on consignment for private parties. Gulliver’s offers free appraisals and a sliding scale for consignment fees. If a consumer wants to get $10,000 for a vehicle, the fee is $1,200. The sticker price is then set at $11,200. The only upfront cost is $55 for a state-required inspection. Consumers only pay when the car is sold and can take it off the lot at any time. “It’s kind of a challenge to market because we don’t just market to people buying cars,” Alvarez said. “We market to people selling cars, too.” Gulliver’s advertises the cars it sells all over the Internet – AutoTrader.com, Cars.com, eBay Motors, Craigslist, etc. The rest of the inventory comes from wholesalers. Inventory is at the mercy of private parties, but over the years they’ve gotten an excellent mix of cars, Alvarez said. There’s plenty of Southern California staples like Accords and Camrys, but there are also vintage muscle cars, $100,000 Bentleys and a few motorcycles. They get customers from across the country because of Gulliver’s low prices and unique offerings. The appeal for the consignors comes from the fact that nobody likes selling their car, Alvarez said. “When somebody wants to sell a car, we want to be the first name they think of,” he said. There’s been increased interest in the store in the past few years as consumers downsize to cheaper, more fuel-efficient vehicles, Alvarez said.
Photo by Frank Sacramento TRAVELS: Henry Alvrarez, marketing manager at Gulliver’s USA, sums up the company’s business model with this sign. The operation sells hundreds of cars on consignment each year.
Used Cars Buoy Franchise Groups Used vehicles were the strong point for the large publicly traded groups. in the fourth quarter. Lithia Motors Inc. announced fourth quarter 2009 revenue totaled $419 million, compared to $399 million in the year-ago period, an increase driven primarily by higher used vehicle sales. Same store new vehicle sales increased 1.2 percent while used vehicle retail sales increased 17.9 percent when compared to the prior year. Service, body and parts same store sales declined 2.7 percent compared to the prior year. “Our fourth quarter results were impacted by weak new vehicle sales at our Chrysler stores,” said Sid DeBoer, Lithia’s CEO. “This
was caused by the delay in the release of new products, like the 2010 Ram heavy-duty pickup, and lower advertising and incentive spending by Chrysler, which slowed floor traffic. “In response, we focused on increasing used vehicle sales at the affected locations.” Sonic Automotive Inc. reported a profit in its latest quarter thanks in part to strong used-car sales. Overall used vehicle unit volume was up 18 percent and total used vehicle revenue was up almost 23 percent for the fourth quarter compared to the same quarter last year. Sonic’s gross profit dollars generated by its used vehicle business increased $4.7 million, compared to the prior year period.
IN THIS ISSUE • Snow slows economic recovery, but economists remain positive. – Page 3
• Remarketing pioneer honored at industry event. – Page 8
• Northern dealers combine efforts to beat winter doldrums. – Page 5
• Learn about the newest tools to improve operations. – Page 16
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