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Tee Times Article: A Golf Cart Isn’t Just for Golf Anymore

Golf, or a game similar to golf was first played by the Dutch in 1297, but it wasn’t until the late 1940s that the first golf cart rolled across the links. Before WWII, golfers had to either have a caddie carry their clubs or shoulder the burden themselves and drag them to the next hole. Anyone who has played on a hot Minnesota afternoon in August is reminded why the golf cart was invented.

The first golf carts were gas powered and made for people with disabilities. Then in 1951, Merle Williams founded his Marketeer Company to produce electric golf carts in 1951. Very quickly, competitors began the production of competing electric golf carts; LEKTRO and E-Z-GO in 1954, Cushman in 1955, Club Car in 1958 and even Harley-Davidson got in the game in 1963. I wonder what those carts sounded like?

Some of the firms that began in the industry forty years ago are still around; namely Club Car (owned by Ingersoll Rand) and E-Z-GO (owned by Textron since 1961). In Minnesota, Versatile Vehicles based in Savage, is one of the nation’s largest distributors of E-Z-GO golf cars in the nation.

Founded in 1985 by Mike and Stan Malone, Versatile Vehicles always knew that just selling to golf courses couldn’t sustain the business. So in 1997, the Malone’s sold a 50% interest to Gabby Accad, at the time their general manager. Mike Malone then started to focus his energy on building the Ridges at Sand Creek Golf Course in Jordan, Minnesota and Gabby Accad became the company’s new president and turned his attention to growing the golf cart business. His efforts have paid off nicely.

“When I first started in the business, golf cars were thought to only be for a golf course. Today, our customers use our golf cars for business, the cabin or as personnel carriers. Eighty percent of our retail sales are for non-golf uses like shopping centers, schools, apartment complexes, the DNR and even sports teams like the Minnesota Vikings use an E-Z-GO,” says Accad.

Working with industry leading E-Z-GO has been beneficial to Versatile Vehicles because in 2005, when E-Z-GO decided to close its factory store and service center, they sold the territory to Versatile. Now the company is both a distributor and dealer for the entire state of Minnesota, North Dakota and Western Wisconsin and has locations in Savage and Brainerd.

As the largest manufacturer in the industry, E-Z-GO is also the most innovative. There are now 45 different models available, from the traditional golf cart to people movers and utility cars, industrial vehicles that can carry up to 3,000 pounds and food service carts with built-in coolers. When asked what is the most popular model sold by Versatile Vehicles, Accad said “we have the most requests for a modified golf car where we remove the golf bag rack and add two more seats. It makes a very cost-effective mode of transportation.”

When Gabby Accad first joined the company, a golf cart was just a golf cart. Today they have moved from the golf course into the mainstream. Ever since the National Highway Traffic Safety administration allowed low speed vehicles such as golf carts, to travel up to 25 mph on roads with speed limits up to 35 mph in 1998, golf carts have been slowly moving off the golf course and into people’s garages, with sales to individuals growing each year.

“Increasingly, people are using an E-Z-GO golf cart as a replacement for their second car. We are finding that short trips to the store or working around the house is a perfect use for an electric golf car. A new golf car doesn’t use any gas so it makes it very cost-effective to operate,” says Accad.

If you are in the market for a golf cart, used ones can be found for as little as $1500 while a new one starts around $4500. The batteries last 4-7 years, get 5-15 miles on a single charge and require very little maintenance. Those found on golf courses have a top speed of 14 ½ MPH, while those suited for driving on city streets, typically race along at 25 MPH, but do require an additional investment to make them legal. You will need to add seat belts, safety glass and a license before you hit the road.

When asked what has made Versatile Vehicles successful, like a proud papa Accad says “I know it sounds like a cliché’, but the real reason I think that we’ve been so successful is our employees. They really care about satisfying the customer. It’s what has worked for us for more than twenty years and we’re not going to stop now.”

In today’s challenging economic times, maybe we don’t need to buy that fancy new Toyota Prius Hybrid just to go to the store. A $5000 E-Z-GO golf cart may do the job just as well thank you.

I’ve been a contributing writer for the Minnesota-based publication Tee Times Minnesota Golf & Living magazine. www.teetimespress.com. This article appeared in the June, 2008 issue.

Hey if Chrysler can do it, why can’t Callaway?

Callaway Golf announced the start of a new Gas Giveaway promotion which offers a free American Express® Fill It Up® gas card with the purchase of a new FT-i,® FT-5® or Hyper X™ driver from authorized U.S. Callaway Golf retailers . With the purchase of one of these clubs at authorized Callaway Golf retailers between May 15 and July 15, 2008, consumers will receive by mail up to a $100 card value American Express Fill It Up card to help defray the cost of gas at the pump.

This promotion follows the introduction of a similar one by Chrysler last month. If consumers buy a Chrysler, a Dodge or a Jeep, they won’t pay more than $2.99 a gallon for fuel for the next 36 months. It’s limited to 700 gallons per year (approximately 12,000 miles annually).

What is Callaway Doing Right?

It seems that everywhere you look, golf retailing stinks. Pure plays like Golf Galaxy and Golfsmith are sucking wind big time with no end in sight. Yet, Callaway, the venerable equipment leader, is doing quite well thank you very much. Why?

Unlike Golf Galaxy and Golfsmith who are only located in the United States market, Callaway is an international brand and can shift their marketing focus to countries that are growing like Korea, Japan and China. They can also benefit from currency exchange rates. Things don’t seem to be looking up for Golf Galaxy and Golfsmith, but it does for Callaway. Here are the most recent quarterly results (April/May) for each company:

Dicks/Golf Galaxy — Comparable store sales for Golf Galaxy on a 13-week to 13-week proforma basis decreased 8.8 percent, or 9.8 percent after adjusting for the shifted retail calendar. In contrast, the parent, Pittsburgh-based retailer Dicks Sporting Goods reported net sales of $3.89 billion, up 25 percent from $3.11 billion the previous year. Net income increased to $155 million compared with $112.6 million a year ago.

Golfsmith — For the quarter ended March 29, the company lost $5.4 million , or 34 cents per share, compared with a loss of $4.9 million, or 31 cents per share, a year ago. Revenue grew 2 percent to $79.2 million from $77.7 million, in the year-ago period. Golfsmith said its results came in below its expectations due in part to a decline in rounds played and the challenging economic environment.

Callaway Golf — Callaway Golf posted quarterly earnings that beat Wall Street estimates and said it now sees full-year profits at the low end of its previously forecast range. The company, which has been cutting costs and making its operations more efficient, said first-quarter net income grew to $39.7 million, or 61 cents per share, from $32.8 million, or 48 cents per share, a year earlier. Revenue for the quarter was $366.5 million, up nearly 10 percent. Among other things, Callaway said revenue got a boost from foreign currency exchange rates.

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