Dealer cashes in, again, on own clunkers spiffs

Diana T. Kurylko
Automotive News -- August 23, 2010 - 12:01 am ET

Sales at Brian Benstock's Honda and Acura dealerships are soaring because of the cash-for-clunkers program, in which customers get thousands of dollars for trading in vehicles for more fuel-efficient models.

Wait, wasn't that last year?

Benstock liked the federal government's 2009 clunker program so much that he's running his own program this year at Paragon Honda and Paragon Acura in the Woodside neighborhood in the New York borough of Queens.

Instead of destroying the cars traded in, which the federal clunker program required, he's getting lots of used cars -- enough, he says, to make him the country's top Honda and Acura certified used-car dealer. Honda confirmed those rankings.

Benstock is offering customers 20 percent, or $3,800, whichever is less, over the Kelley Blue Book value of their trade-in. Any new or used vehicle on the lot is eligible as long as the purchased vehicle has better fuel economy than the trade-in.

Benstock says he's paying the bonuses even on relatively new trade-ins -- vehicles whose fuel economy was too good to qualify them for last year's cash-for-clunkers program.

The clunkers program, which began last month and runs through August, accounted for about 30 percent of sales at both stores in July and helped boost new- and used-vehicle sales 24 to 36 percent at both stores in the first seven months of 2010. Meanwhile, the Honda brand's U.S. sales rose 8 percent through July, while Acura sales rose 24 percent.

Benstock says the new clunkers campaign has helped make Paragon Honda the country's eighth-biggest Honda new-car dealership in unit sales through July, up from No. 17 in the year-earlier period. He says Paragon Acura was the fifth-biggest Acura dealership through July, up from No. 12 a year earlier.

Benstock says he never planned to sell cars. After graduating from college in 1982, he decided to work as a car salesman for the summer “until something better came along,” he says.

“There were these guys with white shoes and plaid pants selling cars. As a 22-year-old kid, I didn't want to be one of those guys but figured if they're not good and making enough to support a family, what can I do if I am good?”

After three months at Bright Bay Mercury-Lincoln in Bay Shore, N.Y., Benstock says, he was hooked.

“I didn't know at the time we were in a recession or that you couldn't sell cars when interest rates were 18 to 19 percent,” he says. “But I had an annual income of $30,000 and, living at home, I was rich as far as I was concerned.”

Benstock left after several months to go to Paul Singer Honda as a salesman. He became sales manager there in 1986. Singer ultimately sold that store and took Benstock with him to Paragon Honda in 1992.

By 1997, Benstock was a partner. He now owns both Paragon stores, with Paul Singer's widow.

Benstock says he's profitable because of high volume. “My business philosophy is if you want to make a lot, make a little,” he says. “You can make a little many times.”

He's also convinced that buyers want to be in and out of a dealership with little fuss and without lengthy negotiations.

“Most of our arrangements are done over the Internet before the customer comes in,” Benstock says. “We even have the trade-in and finance information, and that gives us an edge over the competition.”

Customers said they wanted better service hours, so Benstock decided to mirror competitors Pep Boys and Jiffy Lube, staying open seven days a week. Service hours on weekends are 7 a.m. to 5 p.m. on Saturday and 9 a.m. to 6 p.m. on Sunday.

Saturday and Sunday have become Paragon's most profitable service days. Says Benstock: “We see license plate frames from all over the metro area -- the dealerships where they purchased the cars that are not open.”

Benstock's promotions, whether longer service hours or cash-for-clunkers programs, are necessary, he says.

He has to come up with creative incentive programs to thrive because of the high cost of advertising in the New York metropolitan area, Benstock says.

This spring, he ran a “Triple Zero” campaign with no money down, no security deposit and no first month's payment.

Benstock knew that this year's clunkers program would work because he ran a similar promotion last year during the government's program to snag those who didn't qualify for the federal program. It was such a success that when the government program ended last August, Benstock continued his through December.

Anticipating a slump in summer sales because of the lingering recession and last year's high sales, he decided to revive his promotion last month.

Benstock says the program has a secondary benefit: He gets more used cars, especially newer models that can be sold as certified used vehicles. He's paying over book value for used vehicles -- but so is everyone in the industry, he says.

Says Benstock: “We wanted this program because we have to buy 10 Hondas seven days a week because of how many certified cars we are selling.”







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