SEPTEMBER 29, 2014 / DAVID BARKHOLZ
The adage that success is about “location, location, location” certainly applies to Honda of Los Angeles. But that was difficult to see three years ago.
The store, which is booming now, was boarded up and in bankruptcy court in 2011.
Combined new- and used-vehicle sales now are running at 300 a month. That’s 10 times the best month the store achieved before friends Joe Shuster, Ted Bessen and Sean Wolfington bought the assets from bankruptcy court in October 2011.
Their timing was superb. Since the purchase, downtown Los Angeles around the landmark Staples Center has been reborn.
Thousands of residential units have been built. And foot traffic is a constant wave past the arena, restaurants and the dealership, said Shuster, a New York dealership veteran who nearly passed on the purchase because the area had once seemed so desolate.
But the store’s other location — the online one — is equally important. Wolfington, who owns digital ad company Tier10 Marketing, said the store’s name is naturally one of the most popular Google search phrases for Honda shoppers in the region.
A Google search with any combination of the words “Honda” and “Los Angeles” invariably shows the store in the top organic position on the search page just below two or three paid ads on the page, Wolfington said.
With that kind of play for free on the first page of a Google search, he said, Honda of Los Angeles doesn’t bother to buy paid-search ads for the dealership name. To dominate paid search in the market, it would cost the store $2.1 million annually, Wolfington estimated. The top position on organic search also is worth several million dollars of exposure, he said.
Nationally, two of every three visitors to the typical dealership website get there via Google ads or search-page links.
Shuster said the store and URL – hondaoflosangeles.com – are equally valuable at $30 million.
Wolfington was just as effusive. “We are one of the highest volume search terms in all of Los Angeles,” he said. “It’s the online version of being the biggest dealership at the entrance of an auto mall.”
Shuster, 41, admits he had doubts about Honda of Los Angeles and the name at the beginning.
When Shuster, Wolfington and Bessen started exploring the opportunity, the store had been closed for two years and had underperformed. It sold just 30 new and used vehicles during its best month, Wolfington said.
Shuster was eager to own his own store. He had worked as general manager of Hillside Honda in New York for nearly 10 years. Bessen is also CEO of Teddy Nissan in New York.
But the Los Angeles building was in such disrepair and the neighborhood seemed so depressed that Shuster returned to New York after a visit vowing to steer clear. But after some coaxing from his partners and soul-searching, he said he returned and decided to give it a go.
“Nobody wanted the dealership. My first reaction was that you had to be out of your mind to buy it.”
But the partners pulled together the $3 million needed to buy the assets from bankruptcy court and spent another $200,000 to give the building a face-lift, complete with new furniture, Shuster said.
Shuster then had the less-than-bright idea to change the name to Celebrity Honda. After all, the store is in the shadows of the Staples Center, home of the National Basketball Association’s Los Angeles Lakers, Los Angeles Clippers and pro hockey’s Los Angeles Kings.
Wolfington humored his partners until it looked as though they really were going to change the name.
Wolfington then informed them that they were about to make one of the biggest marketing mistakes in the history of auto retailing by squandering the online value they had in the store’s name.
“Sean told us that we’d end up as a case study in marketing classes and textbooks for one of the biggest marketing mistakes on the planet,” Shuster said. “We decided against it.”
With disaster avoided, Shuster turned his attention to upgrading operations at the store. He said he was able to persuade 19 fellow New Yorkers to fill management and sales jobs.
Six of the 19 remain, as the rest went to other jobs or returned home. Honda of Los Angeles has 106 employees today, including 30 salespeople.
Shuster said the area is “wonderfully diverse” and the store’s work force reflects that diversity. He said most of the store’s employees are Hispanic and several were born in Mexico.
And all the while that Honda of Los Angeles has been open under the new owners, residential development has boomed, and the nearby entertainment district called L.A. Live has kept traffic bustling.
Behind the scenes, salespeople are using software from another of Wolfington’s companies, Driving Loyalty. The product finds customers who have equity in their vehicles so the dealership can pitch them new vehicles for the same or lower monthly payments. The process is known as equity mining.
Wolfington said as the dealership rebuilds its customer base, that tool will become increasingly important, though it also is useful today to find customers with vehicle equity who come in for service.
Shuster said the store still has lots of room to grow. The partners are looking to buy a nearby acre of land for a new building to replace the current leased building.
Of the whole experience, Shuster said: “It turned out to be the best investment we could have possibly made.”
Published in Automotive News on September 29, 2014.
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