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April 12, 1999 02:00 AM

PENSKE WOOS DAEWOO'S WARRANTY WORK

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    TROY, Mich.—It may be down—in store count, that is. But Penske Auto Centers Inc. is hardly out of the auto service picture. Less than a month after closing 133 outlets nationwide, Penske is growing its business through a somewhat unique, non-traditional route.

    The company just signed an agreement that allows owners of vehicles made by Daewoo Motor America Inc. to have scheduled maintenance, repairs and warranty work performed at 300 Penske locations across the U.S. Troy-based Penske operates about 655 stores nationwide.

    Daewoo said its ``unique strategy of using company-owned retail stores, franchised dealers and authorized service locations'' is designed to provide its customers with the added convenience of having a sales or service facility located near them.

    The plan calls for 200 Penske centers concentrated in the Northeast and West to be up and running as Daewoo Authorized Service Centers by the end of March, complementing the 61 other Daewoo centers already in operation. As the automaker adds new retail sales locations across the country during the next few months, an additional 100 Penske locations will be added to the mix.

    A Daewoo spokesman told Tire Business the automaker currently operates 16 company-owned dealerships in nine states, is rapidly rolling out its marketing efforts and actively recruiting franchisees in at least six other states. It has a total of about 22 retail stores in the U.S. that each sell an average of about 70 vehicles per month, he said.

    Bill McStay, Penske's vice president of advertising, marketing and communications, said Daewoo approached the firm ``and we thought it was a great opportunity to experiment with a car company going outside of its traditional facilities for service.

    ``We're always looking for something that's innovative and different, and we feel this is a pretty good marketing strategy.''

    The deal ``also opens up an avenue for us to acquire more customers,'' he continued. ``If they come into our outlets for the typical Daewoo every-so-many-miles of service, maybe it will allow us to establish a relationship with the Daewoo car owner so they'll bring it to us for new tires, oil changes and other services, as well.''

    Tire sales comprise about 60 percent of the Penske centers' business.

    Daewoo's director of parts and service, Ben Rainwater, called Penske ``a premier automotive preventative maintenance service provider'' with ``an excellent reputation in the industry.''

    Participating Penske centers will be stocked with Daewoo parts, service publications and special service tools, he said. Penske technicians will receive ongoing service training for Daewoo vehicles and also have direct phone access to the carmaker's Technical Assistance Center.

    Mr. McStay said the automaker ``needed someone with stores strategically located where they are and where they're planning to be.'' While Penske has no other similar deals pending, he laughed and added: ``But I wouldn't mind if Ford or somebody like that would come to us.''

    Daewoo Motor America, located in Compton, Calif., is the U.S. automotive marketing arm of the Korea-based Daewoo Group, founded in 1967 as a small textile importer.

    It has since grown into a global company with 1997 sales of $71.5 billion, placing it 18th in a recent Fortune 500 ranking of global companies. Daewoo's many ventures include trading, domestic and overseas construction, shipbuilding, and manufacturing heavy equipment, home appliances, textiles and other products.

    Although Penske hasn't snared much fleet business in the past three years—``not as much as when we ran Jiffy Lube,'' Mr. McStay said—the company is ``now embracing a pretty aggressive program to go after the large fleet accounts,'' such as G.E. Capital. Two months ago it hired a fleet marketer.

    To boost its menu of preventive maintenance offerings, Penske signed a deal March 15 with Automotive Solutions, a division of MotorVac Technologies Inc., to use the firm's Carbon Tune service equipment. The three-step process includes cleaning the air intake, decarbonizing engine components and adding a fuel conditioner.

    Penske also plans to introduce a new air conditioning service by late May or early June, and will vigorously pursue that business in ``all stores where the states allow us,'' Mr. McStay said. Until now, only one-third or less of Penske's stores have had A/C equipment.

    The new service will feature a machine that evacuates and replaces refrigerant, checks the vehicle's A/C system and diagnoses it. Penske has yet to determine what the service will cost, but Mr. McStay said it likely will be priced in the $129-$139 range, and will include up to 1.5 pounds of refrigerant.

    The company is negotiating with three major equipment suppliers and will select one, he added.

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