By Jamie LaReau, Crain News Service
HOUSTON (Nov. 25, 2013) — Dan Minner, used-car manager at Sterling McCall Toyota in Houston, knows what it's like to get mobbed.
It happens every year on Black Friday, the day after Thanksgiving and the unofficial start of the Christmas shopping season. That's the day Mr. Minner and his team grab black markers and walk through the used-car lot adorning windshields with special one-day sale prices. For three vehicles the price will be $1.
"There's a crowd following you around, and it can be 50 to 200 people," Mr. Minner said. "If you mark a car $1, they go crazy. But if you mark one that they think is too high, you hear moans and groans."
The dealership's "Slicer Sale" has become a Black Friday tradition in Houston since it debuted in 2008. It draws local TV coverage and crowds that start to form at 5 a.m., waiting for the used-car lot to open at 7.
And it reflects one dealership's solution to a challenge that has vexed auto retailers nationwide: How to draw consumers into car showrooms on one of the busiest shopping days of the year.
"There is so much promotional noise out there you have to make sure your marketing is heard," said Mike Maroone, COO of AutoNation Inc., the nation's largest auto dealership group.
Last year a record 247 million shoppers visited stores and websites nationwide over the Black Friday weekend, up from 226 million in 2011, according to the National Retail Federation. Total spending reached an estimated $59.1 billion.
Day-after-Thanksgiving shoppers at Sterling McCall Toyota are hoping to land one of the $1 vehicles or else get a special price on another of the 180 to 200 used cars marked down that day.
Consumers are allowed to climb inside vehicles they reckon will get a low price and wait until Mr. Minner makes his markdown rounds at 9 a.m. The person in the driver's seat at the time has the first option to buy the car or pass it to the person in the passenger seat.
"The person who is in the driver's seat for the car we mark as $1 is always cheering because they know they just bought a car for a dollar," he said.
This year the dealership has advertised that three vehicles will be priced at $1, 10 under $1,000 and 50 below $10,000. Shoppers can come and browse the inventory before Black Friday.
Typically, 35 to 40 percent of the store's inventory of 250 to 300 used vehicles is sold that day because the cars are "very aggressively priced," said Jerry Bush, Sterling McCall Toyota's general manager.
The sale draws customers to the store for other products and services, he said. Used-car sales on Black Friday are double that of a typical Saturday, and new-vehicle sales are about 30 percent higher.
"A lot of the time it's just curiosity that gets the customers in," Mr. Bush said. "Then they say, 'I don't want a used car; show me a new car.' Activity breeds activity."
Sterling McCall Toyota, situated near a busy highway in Houston, sells about 6,000 new and 3,000 used vehicles annually. It is owned by Group 1 Automotive, the fourth-largest U.S. car dealership group.
The Slicer Sale was born one day in 2008 when Mr. Bush and some of his managers were discussing the Black Friday retail phenomenon. They realized that while a lot of people shopped on that day, not many went car shopping. The dealership wanted a piece of the action.
"We said, 'Let's give them a reason to come to Sterling McCall Toyota,'" Mr. Bush said.
The dealership begins stockpiling used vehicles about 60 days ahead of the sale. All of the vehicles on sale come from trade-ins and are stored behind the dealership until the big day.
Mr. Minner arrives at the store at 5 a.m. on Black Friday to determine the sale prices. Once he decides, he keeps the information to himself until the 9 a.m. markdowns begin.
"No staff, not even myself, know what the price will be," Mr. Bush said. "You've got to keep the integrity of the sale and not be like wink-wink go over and sit in the 1998 Volkswagen because that's going to be $1."
The $1 cars usually are at least 10 years old with 100,000 to 200,000 miles on the clock, Mr. Bush said. The dealership has sold a 10-year-old Chrysler PT Cruiser wagon and a 12-year-old Chevrolet Silverado pickup truck for a buck. Every vehicle passes a safety inspection.
"The first year of the sale was good, the second year was great, and it's been very well received since," Mr. Bush said.
He said the cost is minimal. "Two or three" security guards are brought in for crowd control and extra F&I staff is on hand. The sale is advertised largely through social media and word of mouth.
"We've been tinkering with our advertising every year and tinkering with the amount of cars we have every year," Bush said. "It's been a snowball effect. Customers come in and ask about it all year."
Store managers and Group 1 executives view it as advertising and promotion more than "we're giving away a car," said Pete DeLongchamps, Group 1's vice president of manufacturer relations and public affairs.
"Think about what three cars might cost and factor that into what a TV ad or mass media would cost," Mr. DeLongchamps said. "It's a feel-good, drive-traffic annual event."
This report appeared on the website of Automotive News, a Detroit-based sister publication of Tire Business.