In many respects, 2006 has been a poor year for the automotive sector, both in the HISPANIC BUSINESS 500® and the wider market. The 34 companies in our list's automotive sector combined for a year-over-year decrease – off 3.8 percent – in overall revenues for the first time since 2003. That follows growth of 2.9 percent in 2005 and a sterling 2004, in which revenues jumped 13.9 percent.
Productivity declined for the second straight year in the sector. Dollars per employee declined by 1.7 percent on last year's list [comparing 2005 figures with 2004], and it declined by 6.6 percent in 2006, compared to 2005, to fall to $862,686 per employee on this year's list.
In sectors developed by Dow Jones, the U.S. Automobiles Index is listed among the 10 worst, with shares in the companies that make up the index off almost 7 percent in mid-May even as the Dow Jones Industrial Average was jumping from new high to new high.
The near-death experiences of both General Motors and Ford have shaken up many in the $770 billion U.S. retail auto industry, especially dealers who have placed most of their eggs in the American-made basket. Chrysler's unbundling from its partner Daimler has yet to play out in sales, but the private equity buyer's deep pockets are generally seen as a vote of confidence from America's car lots.
The actual number of cars and trucks sold remains high – the National Automobile Dealers Association reports 2006 was one of the eight best years on record – but much of that was driven by incentives like rebates and low-interest financing that can't be sustained forever.
As a whole, NADA reports, dealerships lost money on new car sales last year, even as used-car sales and revenues from service increased. In fact, for the average dealership, the association says, service provided 77 percent of operating profits. Sales of new cars provided less than 10 percent of profits, even though they make up 59 percent of sales.
In an ironic turnaround, American makes such as Buick are doing well in China, where a growing middle class sees status in models Americans have often ignored. Some innovative American dealers, such as Frank Rodriguez of Orlando, Florida's Greenway Ford, have tapped this – of Mr. Rodriguez's 11 dealerships, three are in Shanghai, the commercial heart of the new China.
Many of these trends are apparent in the No. 1 company in the Hispanic Business 500 auto sector, The Burt Automotive Network. With one-time microbiologist Lloyd "L.G." Chavez Jr. as its CEO, the Centennial, Colorado-based chain continues to do well, growing market share in the declining Denver market. It lands at the No. 2 spot, just behind Brightstar Corp., at the top of the entire list.
Today, the company operates nine dealerships and represents 15 different automotive franchises, including Chevrolet, Ford, Buick/Pontiac/GMC, Subaru, Honda, Mazda, Chrysler/Dodge/Jeep, and Toyota, which helped launch the family dynasty.
With 2006 revenues of $2.065 billion, it's more than three times larger than the second-place company in our list's automotive sector, Ancira Enterprises of San Antonio, Texas. But those revenues are roughly even with its 2005 figures.
Competitive pressures and consolidation are also nipping at the heels of many of America's approximately 21,500 new car dealers, especially as mega-groups operating nationally make inroads. Burt, for example, is a David against some of the corporate-owned retail giants, such as AutoNation of Fort Lauderdale, Florida.
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