News Column

Burt Automotive -- On Top Again

June 2003, HISPANIC BUSINESS Magazine

Tim Dougherty

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For the second consecutive year, Burt Automotive Network is the top company on the Hispanic Business 500. The auto retailer posted 2002 revenue of $1.48 billion, down slightly from $1.49 billion the year before. That small revenue drop was due to the company's closure of two franchises. In fact, according to Burt CEO/President Lloyd Chavez Jr., 2002 was a pretty good year, all things considered.

"The last quarter of 2001 was the company's best ever, which turned what would have been an average year into a great year. It's hard to compare to 2002, when other things were going on the lead-up to the war, uncertainty over the economy, et cetera," he says.

Based in Englewood, Colorado, Burt Automotive Network operates 14 franchises that sell GM, Ford, Toyota, Subaru, Mazda, and Honda products. The company enjoyed fairly strong year-over-year sales growth at most of its dealerships in 2002, though business dipped in the first four months of this year.

One area that has continued to provide growth is Burt's sophisticated Web site (www.burt.com). Mr. Chavez says revenue generated through the site has increased each month this year, even as overall sales declined.

He estimates that 14 percent of company's business last year resulted from visits to the company Web site. That figure may reach 20 percent this year, he says.

"We see it as a driver of new business," Mr. Chavez affirms, adding that 94 percent of the business generated by the company's Web site involves new customers.

"We had fears initially that it would cannibalize our existing business reduce the number of walk-in customers that we'd get. But it hasn't worked out that way."

Burt is currently in the process of devising Spanish-language Web capabilities, which should be complete in a year.

Visitors to www.Burt.com can, among other things, get pre-qualified for a car loan, compare and contrast car models and features, and schedule a service appointment. The site also provides information on commercial sales and leasing and on buyer programs involving partner companies and government agencies.

Burt's embrace of the Internet as a sales and information tool is emblematic of the firm's view of technology generally. The company, which has its own IT department, has already moved some finance and insurance functions to its Web site and has begun migrating its accounting and sales and customer tracking processes to an intranet server.

"Right now the company is locked into a mainframe system. But we think in the next few years it will be Web-based," says Mr. Chavez.

Burt is also big on wireless technology. The company is incorporating wireless capabilities in its new facilities, and some Burt sales staff members are equipped with handheld Personal Data Assistants. Plans call for the latter practice to be extended to sales staff company-wide.

Burt also is utilizing wireless technology in its delivery systems. The company has set up its own transponder so that parts truck drivers and other personnel can communicate via cell phones that work like walkie-talkies.

This increasing emphasis on wireless and computer technologies is taking place as the company undergoes a considerable growth spurt. Burt is adding a 65,000-square-foot Honda franchise, in partnership with Oregon-based Kuni Automotive Group, and is planning new Ford, Lincoln Mercury, Mazda, and Chrysler outlets.

Incorporating wireless technology in the new construction is simply more cost effective, according to Mr. Chavez. He says the new dealerships are likely to mean a healthy boost in revenue this year and beyond.

In the next five-to-seven years, Burt will finish developing a 140-acre site in Parker, a suburb southeast of Denver. The project will result in several more Burt dealerships, including the aforementioned Ford franchise.

Such expansion should help Burt weather the industry's current slump. With sales incentives failing to generate the buzz they once did, some car retailers are feeling hard-pressed to attract buyers. Analysts predict that the Big Three auto-makers GM, Ford, and DaimlerChrysler will be forced to cut production by as much as 10 percent later this year in response to mounting inventories. Ford and GM reportedly have excess inventory of 35 percent, while at Chrysler the figure is 15 percent.

Mr. Chavez acknowledges that the marketplace is becoming increasingly competitive, noting, for instance, that Toyota last year supplanted DaimlerChrysler as the third-largest car manufacturer in the United States.

"After 9/11, the automotive industry was primarily responsible for stimulating the economy and keeping the manufacturing sector going. Now a lot of the sales momentum seems to have cooled," says Mr. Chavez.

Still, he's confident Burt's fortunes will continue to be good.

"The market is going to be reasonably good, but to some degree it will depend month-to-month on quirky things you know, the war just wrapped up, unemployment continuing to rise. People are still trying decide if they want to buy a car," he says.



Source: HISPANIC BUSINESS Magazine


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