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Dealer revs up with Mini, Fisker vehicles

Rochester Business Journal
February 24, 2012

Changes in the marketplace, rebounding auto sales and anticipated ownership changes have prompted the Dorschel Group to expand its product offerings.
 
At opposite ends of the pricing spectrum, Dorschel has added the $100,000 Fisker Karma and the $20,000 BMW Mini to its repertoire. While the Karma already has landed in Dorschel's larger showroom on West Henrietta Road, the Mini is expected to make its appearance at a new facility down the road in May.
 
Meanwhile, Richard Dorschel-who has spent more than four decades at the company his father started-is preparing to hand over the reins to his son-in-law, Will Trafton, who serves as chief operating officer and has been at the dealership since 2001.
 
The leveraged buyout will be completed in the next six to 10 years, Dorschel said.
 
"I bought this business from my dad in the '70s. We've had a wonderful run," he said. "I've really enjoyed everything I've done. I've enjoyed working six days a week. I've enjoyed working three or four nights a week. And I don't know what I would've done if I hadn't been born into a retail automobile family. I'm one of those guys who found himself exactly where he belonged."
 
Dorschel said the new franchises are in part a result of the generational change happening at his company, as well as shifts in the industry.
 
"Our industry has been through some pretty wrenching situations over the last three years," he said. "The recession wreaked havoc on our industry. I don't know any retail business that can sustain that kind of a downturn."
 
But numbers have improved nationwide in recent years, and data from the Rochester Automobile Dealers' Association Inc. show that the local market has rebounded as well.
 
"Last year was a better year than '10, and '10 was a better year than '09," Dorschel said. "What is happening for the longest time is car prices have plateaued. With the advent of the Internet and a lot of other things, margins have been depressed.
 
"We may be selling as many, if not more cars than two or three years ago, but our margins aren't close to where they were in the late 2000s," he added.
 
Trafton noted that sales at Dorschel were up in 2011. Preliminary figures, pending a review by accountants, show a 13 percent increase in total revenue from $254 million in 2010 to $288 million last year.
 
Last year the company sold more than 8,700 vehicles, Trafton said. Dorschel sold roughly 7,800 new and used vehicles in 2010. The dealership ranked second on the Rochester Business Journal's list of auto dealers in 2011, based on the number of retail vehicles sold in 2010.
 
"The increase is pretty remarkable when you take into account the tsunami last year in Japan," Trafton said. "We are very heavily partnered with Japanese automobile manufacturers."
 
In addition to the two new franchises, Dorschel represents Toyota, Nissan, Infiniti, Lexus, Kia, Volkswagen and Scion.
 
Dorschel employs roughly 465 people at its dealerships and expects to add 15 to 20 with the new franchises.

Fisker and Mini
Trafton expects the Mini franchise to add perhaps 500 new vehicles to annual sales, as well as 200 to 300 used cars. Dorschel likely will sell four to six Karmas a year, though the dealer already has sold seven of the vehicles in the three months it has had the franchise.
 
Fisker will appeal to drivers who own three or four vehicles, Trafton said, and may already have an Aston Martin or an expensive Porsche in the garage.
 
"It'll be an affluent automobile enthusiast," he explained, adding that Dorschel is the only Fisker dealer on the Thruway, so customers will come from Buffalo and Syracuse to buy the car.
 
The Karma is an electric hybrid vehicle manufactured by California-based Fisker Automotive Inc. The company was co-founded by Henrik Fisker, creator of the Aston Martin DB9, Aston Martin V8 Vantage and BMW Z8.
 
The four-door, four-passenger sedan has a manufacturer's suggested retail price of $100,000 to $115,000. The car can be operated in three modes: Stealth mode uses only electric power; sport mode uses the gas generator to recharge the battery pack; and hill mode enables the brakes to help regenerate the battery pack while coasting or braking.
 
The vehicle has a top speed of 125 mph and a total range of 300 miles, or 50 miles in electric mode only.
 
The Karma is unique in its use of environmental features. Its solar roof is capable of cooling the car while it is parked. Seating foam is made from soy-based fiber, and the interior wood is either from sunken logs reclaimed from Lake Michigan or trees that were killed in a California forest fire.
 
"Somebody that buys this car is making a statement about supporting technology that significantly reduces dependence on fossil fuels," Trafton said. "Everything about the car has an environmental consciousness to it."
 
Trafton said the typical Mini customer is someone who does not want to spend an outlandish amount of money on a car but wants something more fun to drive and with more personality than a Honda Accord or a Chevrolet Malibu, for example.
 
"They want something that's different and unique and interesting," Trafton added. "It fits our community well."
 
Most auto companies make cars to appeal to the middle 70 percent of drivers, Trafton said.
 
"Mini intentionally tries to make cars that truly appeal to the other 30 percent; they don't mind if the car doesn't hit the middle target," he explained. "They don't aim to the middle of mainstream."
 
The Mini starts at $20,000 and may top out at $40,000, depending on accessories.
 
"It's a niche vehicle, but I think it's got a little cache to it," RADA president Bradley McAreavy said of the Mini's demographic. "Those people who own those vehicles obviously had to buy them from outside of town, and they'll be able to buy them and service them here."
 
McAreavy said that while the Mini may appeal to drivers who would otherwise have purchased a different brand, both of Dorschel's new franchises will have their own following in Rochester.
 
"Being selected as a Mini dealer was a pretty big deal for us because very few non-BMW dealers have been given the franchise," Trafton said. "So from my perspective it was a real endorsement from the management team at Mini."
 
Dorschel has purchased property at 3875 West Henrietta Road for the new Mini showroom. The $3 million facility is expected to open in May, Trafton said.

Market changes
McAreavy noted that the new franchises here say good things about the Rochester auto market.
 
"Rochester is a pretty stable market. We're not the kind of area that's subject to wild fluctuations in economic cycles," he said. "We're still a little way away from hitting some of those higher cycles we used to see back in 2006 or 2007, but we're getting back there."
 
Trafton said the local market has experienced positive change recently in how some dealers sell vehicles.
 
"There's a really interesting trend toward a no-negotiation, faster, easier buying experience in our industry," he said. "We've done a tremendous amount of work around that over the last couple of years. We basically rebuilt the variable operations-which is the sales department-around aggressively pricing the cars up front and then compensating the folks that work in variable operations on doing a good job on things that are more (about customer service)."
 
The result, Trafton said, is that his average salesperson went from selling 10 vehicles a month to selling roughly 13 a month.
 
"The early results are quite positive," he said. "The traditional negotiation model is a very expensive one to run a company on."
 
The numerous changes in the market-and at the dealership-are exciting, Dorschel said, and despite his intent to retire eventually, he likely will stick around for some time to see the industry continue to reinvent itself.
 
Though he has been known to take the occasional vacation, Dorschel said he does not need a lot of free time, psychologically or physically.
 
"I'm better having a place to be and being responsible for something. Free time for me is non-productive," Dorschel said. "I love what I do. It's all I've ever done. And I really don't know how I would get along without it.
 
"That's a problem for Will. He's going to have a tough time dumping me," he added with a laugh.

2/24/12 (c) 2012 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email service@rbj.net.


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