Power Profiles

Arizona Honda – Tucson, AZ – Oct. 18, 2004

ARIZONA HONDA

CONTACT
2114 South Alvernon Way
Tucson, AZ 85711
520/748-7202
www.arizonahonda.net

OWNERS
D.W. Phillips, LLC

BUSINESS PROFILE
10,000 sq.-ft. dealership founded in 1981; moving in November to a 30,000 sq.-ft. building, 1.25 miles away. It will be the first Tier 5 Honda PowerHouse facility in the nation. Exclusively Honda. Largest-selling segment is ATV. Currently 29 employees; will have 40 to 45 at the new facility.

GREATEST CONCERN
The greatest concern of general manager Tom Matte, who has been with Arizona Honda since its inception, is “a dealer being loyal to its OEM, and the OEM being loyal to the dealer. We are about 20 years behind the automobile business; their dealer-OEM relationships are much better.
“A dealer in the car business couldn’t care less if he’s selling X, Y, or Z brand. In our industry, people get very emotional and very adamant about their brand. If you work for a Dodge dealer, you don’t make any money when a Chevy’s sold at one of the owner’s other dealerships. They’re separate entities.
“Our industry is a little infantile in how we treat that. But we feel that with this Tier 4 and Tier 5 PowerHouse program, Honda was the first one to send out the olive branch to dealers, essentially saying, ‘Hey — let’s bury the hatchet. Let’s go into the next millennium by starting to treat each other the way we should.’”

WHAT’S HOT?
The hottest ATVs are the TRX 650 and the TRX 450R, while the sizzling streetbikes are the VTX 1800 and the GL 1800 Gold Wing. The Ruckus is the number-one scooter, while the hot dirtbikes are the CRF 250R and the CRF 50 “We do a lot ‘backyard motorbike’ conversions,” explains Matte.
He adds that Arizona just has small manmade lakes, yet still sells a decent number of Aquatrax PWC. “The new model will have GPS and a compass. Honda has added more colors, but is still offering a turbo and a non-turbo unit, in both two-seater and four-seater. The three-seater G-Scape is also turbo and non-turbo. I’m very happy with the product line — the warranty work and breakage have been very minimal.” Traditionally, Arizona Honda sells a lot of helmets, with HJC and Shoei battling for the holeshot, and tires — specifically Dunlop brand, and ATV type, “mostly OEM replacements,” adds Matte.

CUSTOMER BUYING TRENDS
Matte says his customer base runs the gamut, from Green Valley retirees to University of Arizona college students, “and about 20% are from Phoenix. We’re moving to a freeway exit location on Interstate 10, so people will find us more easily. Customers are much more educated than back in 1981. They know MSRP, and if a dealer raises that by $500, the customer may walk out the door. About 15 years ago we began sticking to MSRP, just like in the car business. We don’t charge freight or setup.”
To meet the growing Internet need, “We have an e-business manager, and he averages just over 20% sales on his contacts.”

ANTI-POWERSPORTS ISSUES
“They’ve been trying to ban ATVs here since the mid-1980s,” says Matte. “At one time in Tucson, a person could ride his ATV — or dirtbike, sand rail, or four-wheel-drive truck — from east to west and north to south via the dry washes. People would find a really cool spot to hang out, and suddenly there’d be 200 vehicles. That would create a dust and noise problem.
About the same time they banned the sale of three-wheelers, the city passed an ordinance: No riding in public or wash areas of any type without the owner’s written permission, and then one could not create a ‘nuisance’ such as dust or noise.”

PARTS AND SERVICE
Arizona Honda has 86’d its parts counter and put in three kiosks. “That put the sales associates out with the customers and kept people from just hanging out,” says Matte.
“Each kiosk has a computer terminal and a printer. The customer can come around and look at a microfiche with the employee. We have quite a few ladies in our PG&A department now who sell everything.”
What else has contributed to the dealership’s success? “Our service manager is well-organized and has been doing this as I long as I have. We have good, efficient service writers. The biggest problem — which a lot of dealers face — is getting qualified and trained technicians. We work with the Motorcycle Mechanics Institute, mail out an employment brochure, and enable folks to apply on our Web site. We’re in a constant mode of recruitment for all departments.”

PROMOTIONAL HOME RUNS
A professional ad agency handles most Arizona Honda promotions. “We hold an open house once a year,” says Matte. “We support the Red Riders, a local branch of the Honda Riders Club. We have rides at the lake with our PWC.
As for media, it’s your typical radio, television, and newspaper — very little television. We do direct-mail pieces two or three times per year.”

WORDS OF ADVICE
“It’s the people — customers and associates,” says Matte. “You create good customers. A guy taught me a long time ago that ‘You want every deal, every day, for every dollar.’ You want business — but you want good business.”
Does he ever give someone the lowest price? “Sometimes you do it because it’s a loyal customer. But it’s like service work — you don’t want to take on what you can’t do in a timely fashion and make the customer happy. All you do is build a bad customer when it doesn’t work.”
As for employees, he says: “Unfortunately there is a high turnover rate in our industry, which I think has to do with management not being trained in how to get good people.
“Plus, some customers are not loyal—therefore, salespeople are not loyal. Well-trained, proficient technicians can go into the automotive because it pays a lot better. I’ve lost service managers to MMI and technicians to different manufacturers and front-line race teams.
“It’s great that the employee is bettering himself, but the dealer has done all the training and education. Now I have to start all over.”

—Julie Filatoff

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