By the numbers
* 334 - Number of new cars and trucks sold at Economy Honda
* 1,195 - Number of new cars and trucks licensed in Hamilton County
* 195 - Number of used cars and trucks sold at Economy Honda
* 3,467 - Number of used cars and trucks licensed in Hamilton County
The Great Recession was a tough lesson in economics for auto dealers who suffered a 42 percent plunge in U.S. sales of new cars and trucks.
But one Chattanooga car dealer emerged from the downturn with the best sales month ever for a local dealer. Economy Honda, which revamped its sales approach over the past five years, sold a record 529 new and used cars last month to lead all Honda dealers in Tennessee and Georgia and outsell any other local dealer in May.
The sales record helped the Sonic Automotive-owned dealer achieve its "Operation 500" target set three years ago to retail more than 500 vehicles in a single month.
"We came very close a couple of times last year (in March and May of 2012), but we finally reached our vision last month, which was a huge accomplishment," said Corey Choate, general manager at Economy Honda.
The 26-person sales staff each sold an average of 20.34 cars, which is nearly double the national average for what a typical car salesman does in a month, Choate said. May sales were bolstered by the 40th anniversary sale by the Chapman Road dealership, which has been owned by Sonic Automotive for the past decade.
The dealership was already setting its own internal sales records in each of the previous two years with its "True Price" sales approach adopted in the wake of the Great Recession. The new pricing approach limits price haggling, which Internet-saavy buyers shun in favor of prices at or close to what they know the dealer paid for most cars.
"In going through the downturn that we did in 2008, we realized that we needed to change the way we do our business," Choate said. "In all honesty, when we would haggle for several hours with a customer over the price, there was a lot of pain for them and a lot of pain for us."
U.S. auto sales plunged from 17.4 million in 2005 to a mere 10.1 million at the depths of the Great Recession in 2009. During the past decade, buyers also have turned to the Internet for not only price information and comparisons but also to negotiate car purchases without leaving home.
"With the true price program we created a transparency with our customers to let them know that nobody is paying any less or any more for the car, " Choate said. "In my opinion, that was a major breakthrough for the car business."
In 2008 and 2009, Economy Honda averaged only 30 to 40 vehicle sales each month through referrals from the Internet. In May, the dealership sold 226 vehicles through Economy Honda's Internet department. Most of those sales still involved local car buyers, but many talked about the vehicle and negotiated the sale through online instant chats.
"For probably 150 of our sales last month, the deal was done before the customer even came to our lot and picked the car up," Choate said.
Economy Honda not only cut the initial offering price for car sales, they also reduced service fees.
"We went to Walmart pricing to make sure that our customers knew that we were very competitive in the prices of our service work," Choate said. "We've tried to put the customer first and it's good to know that we made this change, the customer respected that and in return we're getting tons of business out of it."
Contact Dave Flessner at firstname.lastname@example.org or at 757-6340
Dave Flessner is the business editor for the Times Free Press. A journalist for 35 years, Dave has been business editor and projects editor for the Chattanooga Times Free Press, city editor for The Chattanooga Times, business and county reporter for the Chattanooga Times, correspondent for the Lansing State Journal and Ingham County News in Michigan, staff writer for the Hastings Daily Tribune in Nebraska, and news director for WCBN-FM in Michigan. Dave, a native ...