State may get dominant car dealer

By Andrew Gomes
Advertiser Staff Writer

The sale of six Hawai'i automobile dealerships to the largest Mercedes-Benz retailer on the Mainland would bring one of the nation's most dominant car sellers to the local market.

The sale of TheoDavies Euromotors to Las Vegas-based Fletcher Jones Motorcars Inc. and a South Carolina partner would place three Hawai'i dealerships among the nation's 100 biggest. Cutter and Servco are the other two. Deborah Booker • The Honolulu Advertiser

And though the sale of Mercedes-Benz, Jaguar, Land Rover and Porsche in Honolulu and two Big Island Honda dealerships by Hong Kong-based Jardine Matheson Holdings Ltd. would not consolidate the industry, new ownership could bring some changes in terms of competition, service and advertising.

"I think it's going to be very interesting to see what, if anything, changes as a result of a change in ownership," said Nick Cutter, president and chief executive officer of Cutter Automotive Team, which sells about a dozen automobile brands and is familiar with Fletcher.

Fletcher, with operations in California, Illinois and Nevada, was the 19th largest car retailer in the country last year, based on sales of $971 million, according to industry publication Ward's Dealer Business.

Local dealers Cutter Automotive, with $456 million in sales, and Servco Pacific Inc., with sales of $408 million, also made Ward's list, at 64th and 73rd, respectively.

Servco, the local Toyota dealer, actually sold more new cars than Fletcher but was ranked lower based on dollar sales volume. Cutter Automotive, with its broad base of American and import makes including Chevrolet, Ford, Isuzu and Volkswagen, outsold Fletcher in used cars.

Cutter said he would expect Fletcher to increase used-car sales, but beyond that he said it would be difficult to anticipate any changes the company might bring.

In Mainland cities such as Newport Beach, Calif., the location of Fletcher's flagship operation, the company is known as a heavy advertiser, though Cutter said the market there has competing dealers selling the same brands unlike Hawai'i where the Mercedes, Jaguar, Land Rover and Porsche operations are exclusive dealerships.

"That will remain to be seen how they treat this market," he said.

Don Anglin, a retired automotive industry author and editor for publisher McGraw-Hill, said Fletcher devotes more effort to body shop and service operations, but from a consumer's standpoint he wouldn't expect much change in business compared with TheoDavies.

"I think they'll fit right in," he said.

Officials with Jardine and its subsidiaries have repeatedly declined to comment on the pending sale, which coincides with an effort by Jardine to sell its Pizza Hut, Taco Bell and heavy equipment businesses in Hawai'i.

Jardine, a British trading company with hundreds of businesses, is a major automobile dealer with Mercedes operations in Hong Kong, China and Beverly Hills, Calif.

In Hawai'i, Jardine is forecast to sell 1,121 Mercedes cars this year, up from 971 last year, according to industry research firm The Polk Co.

Fletcher representatives have not returned numerous requests for comment. The company sells a variety of makes, including Lexus, Toyota, Ford, Infiniti, Audi, Volkswagen, Honda and Nissan, but sells more Mercedes cars than any other dealer in the nation.

According to Ward's, Fletcher's Newport Beach Mercedes dealership sold 4,751 new cars and 1,692 used cars, making it fourth in sales volume for any single dealership nationwide, with $403 million in sales. The company overall sold 13,453 cars last year, Ward's said.

Donald Keithley, an executive vice president in California for New Jersey-based dealership brokerage firm Bel Air Partners LLC, said both Fletcher and Jardine have sterling reputations as Mercedes dealers.

"You're dealing at the very top echelon where people already in the top markets are looking to expand in those markets," he said.

Keithley said Honolulu, like Beverly Hills and Newport Beach, are regarded as premier Mercedes markets, and is one Fletcher should do well in with strong operations and profits.

Fletcher is partnering with Charleston, S.C., automobile executive Gene Reed, whom Keithley described as another prominent industry veteran.

Reed could not be reached yesterday to elaborate on his role in the acquisition. But he told The Post and Courier newspaper in Charleston that he and Fletcher formed an equal partnership called Jones-Reed LLC to buy the dealerships.

Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.