Community Magazine July 2009

40 COMMUNITY MAGAZINE Dealerships Without Showrooms To begin to understand the Legend model, imagine a car dealer… without any cars – none in the showroom and none on the lot in inventory. For some auto buyers, particularly Sephardic Jewish residents of the New York Metro area, such a scenario is not hard to imagine at all, as such dealers have dominated this market for well over a decade. Regency Leasing, which was cofounded by Sasson, is a prime example of how a dealer without cars can thrive in the retail auto market. The company sold and leased tens of thousands of cars, had a remarkably high rate of repeat business and customer satisfaction, and, perhaps the most important metric, remained profitable throughout the economic ups and downs. With Legend, Sasson hopes to improve on this successful formula and increase his advantage over traditional dealerships. The localized showroom-free auto dealer phenomenon came about when leasing – as opposed to financing or outright purchasing – became a popular option in the Sephardic community. For a relatively small premium over financing, leasing offered the benefit of affordable fixed payments, a new car every three years or so (the typical lease term) and the convenience of having someone else worry about getting rid of the old car. By specializing in leasing, dealers like Regency used advantages in flexibility, efficiency, and long term focus to lure – and retain – thousands of satisfied customers. They have been closing at the rate of over 30 per month since 2002. Most of those that stayed open have not been profitable since 2006. And just before declaring bankruptcy, GM sought to close 42 percent of its network by 2010, while Chrysler’s bailout plan called for cutting 25 percent of its own. According to these figures from the National Automobile Dealers Association (NADA), prospects for the nation’s 19,000 or so auto dealerships can be charitably described as gloomy. So why is veteran car dealer Steven Sasson still smiling? And even more, why is he betting his future on the launch of a new dealership, Legend Leasing, in these economically volatile times? Surprisingly, in spite of the national trends and soft economy – and maybe as a result of it – Sasson’s prospects are actually quitepromising.That’sbecausetheprogressive business model for Legend can be aptly described as “Auto Dealer 2.0” – a simple yet ingenious archetype which could revolutionize retail auto sales much the same way Web 2.0 revolutionized the Internet; becoming a standard for struggling US dealers to emulate. D oes the model for Steven Sasson’s new venture, Legend Leasing, represent the future for the nation’s struggling auto retailers?