October 5, 2009 - 12:01 am ET
In 1950, Marvin Brown bought a dealership in San Diego intending to sell just Cadillac.
Fast forward to 2008. The dealership has added other General Motors brands, but in 58 years it has remained loyal to GM. That had to change.
With GM on the brink of bankruptcy, the Brown family and partner Dave Grundstrom decided to sell imports -- a major business and cultural shift for the dealership.
"Marvin K. Brown would be rolling in his grave if he thought we were going to have eight franchises," says Grundstrom, co-owner of Marvin K. Brown Automotive Group in San Diego. "But when your main manufacturer goes into a reorganization process, it gets you going to do things to provide for your future."
In April, Grundstrom, 57, opened Mitsubishi and Suzuki dealerships on property next to the GM dealership. Then he struck a deal to sell luxury plug-in hybrids made by Fisker Automotive when it starts production early next year.
The dealership group also sells Cadillac, Hummer, Saab, Buick and GMC. Grundstrom says he wants to keep his 20,000 customers by providing something for everyone, although sales at the Mitsubishi and Suzuki stores are off to a slow start.
"We're a transportation center now," Grundstrom says. "We have to provide for a diverse audience."
Service for survival
Grundstrom says Mitsubishi, Suzuki and soon Fisker will more than make up for the sales decline in GM products and the uncertainty of the Hummer and Saab brands. As part of its reorganization, GM is selling Hummer and Saab.
"We think they're both viable, but it'll be a couple of years before we know their fate," Grundstrom says.
At Hummer's height of popularity in 2003 and 2004, Grundstrom sold about 400 new Hummers annually. Last year, he sold about 40.
Grundstrom, an avid golfer and sailor, is a Marvin K. Brown lifer. He started at the dealership in 1978 in service and parts. He worked his way up to general manager, and in 1993, the Brown family sold him part of the business. Today he is chairman and CEO.
This year Grundstrom was a nominee for the Time Magazine Dealer of the Year award, and he sits on the Saab National Dealer Council. His years of experience, though, provided no protection from the crashing economy and GM's troubles.
In 2003 and 2004, Grundstrom sold about 300 new Saabs a year. Last year he sold about 30, and today he sells none. That's because no Saab inventory is available.
"We just do service for survival," Grundstrom says.
Grundstrom's annual new-car sales for 2005, 2006 and 2007 topped 1,400. Last year they dropped to around 1,000, driven mainly by Cadillac. Grundstrom's goal is to get to 1,500 to 1,600 a year in the next two years.
While Grundstrom sold only 16 new Mitsubishi and Suzuki vehicles in August, he's sure the new brands will help. "It's been difficult launching them now in this economic climate," he says.
Grundstrom is optimistic that once customers get used to the new brands and once the economy recovers, Mitsubishi and Suzuki sales will combine to top 300 new vehicles a year.
The Fisker factor
Grundstrom will be the only Fisker dealer in San Diego. He expects to sell 200 new Fiskers annually starting next year, despite high sticker prices. So far, without marketing, Fisker has taken 35 orders for cars in the San Diego area that will go to Grundstrom's store.
"Fisker looked at the demographics of the current San Diego customer, and 200 is our expected number," Grundstrom says. "Even at $3 per gallon, there are those who want to buy a plug-in hybrid out here."
Fisker's Karma sedan starts at $87,900. Fisker says the car can travel 50 miles on electricity. Past 50 miles, a gasoline engine and generator produce electricity to propel the car. Fisker says it can go up to 300 miles on a tank of fuel.
Grundstrom says Fisker is coming out with a less expensive second model by the 2011 model year.
"We won't see a plug-in hybrid with Cadillac for a number of years now," he says. "This will fill the gap."
Grundstrom is confident Fisker's novelty will attract new customers: "In San Diego we're less than a 10 percent market share for GM. ... "If they come in for Fisker or one of the other brands, we have product for just about everyone now."
You can reach Jamie LaReau at [email protected]