Originally created 11/05/01

Auto exec has high hopes for his industry



Business Editor Damon Cline recently sat down with Greg Hodges, the president of the Stokes-Hodges auto group, which owns five car dealerships in Augusta and one in Savannah. They discussed trends in auto retail and competition in the Augusta market.

Q: With the events of September 11 and the already weak economy, I assume selling a big-ticket item such as a car has become difficult. What's been the impact on your business?

A: Actually, what it is doing is making it easier. The manufacturers are so involved now. They've put on factory incentives to help the dealers sell more cars. They put on things I can't do, like 0 percent financing, cash rebates, those types of things that spur the market on. The car manufacturers are offering more incentives than ever before. These are the best incentives I've ever seen in the car business. We're talking pure incentives that the dealer has no input in.

I don't have to pay anything to be involved, so I can sell the car at a low price. It makes it a real win-win situation for the consumer. In fact, it's probably moving people up in the market. People that would normally wait until after the first of the year to buy a car are buying a car now because financially it makes sense to buy one now. It's an unbelievable buyers' market.

The president said we've got to keep America rolling, and the car manufacturers have responded. I don't know how much longer they can do it. How long can you go with 0 percent financing?

Q: You've worked in other markets and you currently operate a dealership in another market. Is there anything that makes Augusta a unique place to sell cars? I would think the transient population we have, what with the Medical College (of Georgia) and the Fort (Gordon), would make for a dynamic market.

A: Augusta is a great car market. We call it a "car town." Augusta is a great car town. Actually, having transient people here is a positive. Things change in people's lives when they become transient -they do things. Usually they buy a car or sell a car, or buy a house and sell a house. Something financial is going to go on, and it typically involves transportation - an automobile.

In other ways, Augusta is not unlike a lot of markets. I know everybody says our market is different, but when I talk to my retail friends in Minneapolis or Miami, I find a lot of similarities. People just want a good car for their money. They are like people everywhere. They want as much value as they can get. And our job as a retailer is to put the financial package together.

Q: The way people were talking a couple of years ago, it sounded like the Internet would either eliminate or dramatically change the car dealership. Obviously, that hasn't happened. What's your take on the Internet in this industry?

A: Selling an automobile is not just providing a product for somebody to buy. It's also about helping them get financed in the most efficient way, showing them all the programs available today because it can be confusing.

With the Internet, you can find cost on any automobile. You can find the cost prices of literally anything. And the cost prices are pretty real with the exception that they don't stay up-to-date with what the manufacturers are offering. So some of the pricing on the Internet doesn't show the total picture.

That's where I come in. I can show them where they can save money on financing. I can show them this bank over here that might be offering a 1/2 percent interest. Or, if maybe they are credit challenged, maybe some things have happened to them through no fault of their own, I can help them get financing through a bank somewhere out in California. The laws have changed to the point where I can offer that kind of financing like it was in our back yard.

That's the kind of thing that a new car dealer brings to the table. People ask me all the time if it is so competitive out there because of all the newspaper advertisements in the classified section with all the prices. It would be if price was the only thing, but it's not. The price of something isn't necessarily what it costs, because you have to get it financed and then you have to get it serviced and you have to take care of the consumer.

All of those variables become a factor when buying an automobile. Price is not the only consideration.

Q: Hasn't the Internet, though, made it more difficult to profit from a deal because the consumer essentially knows all the costs? In many cases, they can tell how much you paid the manufacturer, so they know the retail markup.

A: I think it is a good thing because customers are coming in armed with the information to make a decision, whereas before we would have to educate them. Now they come in knowing the cost of the car, and they dont mind us making a reasonable profit. So now they're coming in prepared to buy.

I think what we're seeing happen in the automobile industry is the consumer knows as much about the product as the salesman in some cases. So the car dealership of the future is going to be a lot more customer friendly.

Q: Since your auto group entered the market with the Acura dealership, you've added a new franchise about every two years. So what's next?

A: Because this is such a people-intensive business, if another franchise did become available, the key factor would be the person running it. The next logical step is to keep our eyes and ears open and grow our people from within so that when that opportunity presents itself, we are ready. In fact, we are ready. We are always looking at other opportunities.

One of the keys to growth is to not grow too fast. We try to keep a level pace with the growth. It just seems like two years is the comfort level.

Q: With the exception of your Honda store in Aiken, all of your dealerships are right here on Gordon Highway. During the last decade or so, many dealers in the southern part of the county have followed the population growth toward Columbia County. If there is another location in your future, where will it be?

A: We are always looking and doing market surveys. For example, in the Aiken market, we had Saturn come in and do a market survey for us. What they'll do is a scientific study where they will research their numbers and determine if an area can support a dealership. We just went through that process and decided that Aiken is not ready for a retail facility.

I know a lot of dealerships are looking at other parts of the city, but Gordon Highway has just worked so well for us. People call it south Augusta but it's really more central Augusta than south. Not that there's anything to be ashamed of about south Augusta. I'm proud of this area.

People don't realize there is a lot of money in south and central Augusta. It is a mature community. The people have money to spend because they aren't choking on a mortgage.

"It's an unbelievable buyers' market ... How long can you go with 0 percent financing?"

"I think (the Internet) is a good thing because customers are coming in ... knowing the cost of the car, and they don't mind us making a reasonable profit."

"I'm proud of this area. People don't realize there is a lot of money in south and central Augusta."

STOKES-HODGES AUTO GROUP

Ownership: Split 50-50 between Greg Hodges and Charleston-based car dealer Ed Stokes

Franchises: Acura, Mitsubishi, Honda, Saturn and Kia

Locations: All metro area dealerships except Honda Cars of Aiken are located on Gordon Highway. The partners also own a Saturn dealership in Savannah.

History: Stokes-Hodges was formed after Mr. Hodges, a longtime employee of Mr. Stokes, decided to start his own dealership group with Mr. Stokes' financial backing. In 1988, Mr. Hodges opened his first Augusta-area dealership, Acura of Augusta. He opened several more dealerships in the area during the next decade and has since expanded to coastal Georgia by acquiring a Saturn dealership in Savannah.



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