Real-estate wisdom says the most desirable properties have three things in common: location, location and location. That applies to auto dealerships as they stake out sites offering maximum visibility and customer traffic.
Gene Hamilton found just such a spot for his Chevrolet store in 1956 in the Detroit suburb of Warren. That same year, President Dwight D. Eisenhower helped dedicate the General Motors Technical Center just down the road.
When the Tech Center opened, it brought 4,000 potential customers to within a mile of Hamilton Chevrolet. Today, GM employs 20,000 at the sprawling facility.
Location helped Hamilton Chevrolet claim the No.287 slot on the WardsAuto Dealer 500 with 2015 vehicle sales of 3,273 (2,460 new, 813 used) and total revenue of $104.5 million. The store has received GM’s “Mark of Excellence” award for sales and customer satisfaction 10 times since 2002.
In the late 1960’s, Gene Hamilton hired former car detailer Sam Cupp to work with Hamilton’s son, Don. Cupp and the younger Hamilton acquired the business in 1983 and Cupp eventually became CEO.
The entrepreneurial Cupp also started southeastern Michigan businesses Pro Leasing Services, QEK Global Solutions and Annie Ray RV, a recreational vehicle dealership. He founded Winning Futures, a local non-profit that offers student mentoring programs and workshops.
Cupp died in 2012 at age 64. Don Hamilton currently serves as the dealership’s president. Mike Boguth is vice president and dealer-operator of the store with 95 staffers, including 16 new- and used-car salespeople.
Boguth started working at Hamilton Chevrolet as prep manager/head porter in 1978 when the current facility was built. “I had finished my second year of college and took a summer job here and never went back to school,” he says. He became general manager in 1991 and part owner in 2000.
WardsAuto spoke with him about his GM customers, employee retention and doing business in a lease town with lots of GM employee discount programs. Here’s an edited version of the Q&A.
WardsAuto: What’s it like being so close to the GM Tech Center?
Boguth: There’s no argument this is an excellent market area. The challenge is that the GM employee team is very demanding.
They know how the cars have been engineered and how they’re supposed to work, and when they’re not working that way they’re very demanding in the service department. Our goal has always been to rise to the level that’s needed to take care of their complaints. That sometimes poses a challenge because many employees “know somebody.”
But we’re blessed by remaining in this location and treating the customer fully from start to finish. Our goal is to follow the Golden Rule. That’s the anchor of our mission statement and that’s how we try to live and conduct business every day.
WardsAuto: How do you train your employees to respond when customers drop names?
Boguth: We talk regularly about the need to empathize and explain that, while we don’t have the direct access to company engineers they are fortunate to have, we have a lot of tools to track down issues.
Our location near the Tech Center is beneficial because quite often an engineer or a team will come out to the dealership to see an actual repair case first hand.
In rare instances, they will even get permission from the customer, through us, to take the vehicle to the Tech Center to fashion whatever repair is necessary. Sometimes our location can be quite a blessing and help GM get an answer quicker than it would be able to if it didn’t have access to vehicles with perplexing conditions.
WardsAuto: What percentage of your sales is to GM employees?
Boguth: Sixty-five percent of our customers use some type of GM discount.
WardsAuto: How does that affect your profitability?
Boguth: The struggle in new-car profitability has not changed in my 30 years in the sales business. The GM employee discount plan it is voluntary for the dealership, and we always choose to engage in those programs. They pay a fixed amount to the dealership that has not changed dramatically over the years. It’s a lower margin than a non-GM-employee-discount sale would be. We’ve set up our expense structure knowing what that margin is going to be and we’ve succeed in being profitable throughout our 60-year history.
WardsAuto: What percentage of your sales includes extended warranties?
Boguth: There’s not a lot on the leasing side, which is very prevalent in the Detroit area. For non-lease new and used sales, on average about 25% of customers purchase service contracts.
WardsAuto: What percentage of your customers do leases?
Boguth: Seventy-five percent in the new-vehicle department.
WardsAuto: How do you retain the best people?
Boguth: Our people work a five-day week – Monday to Friday. They work late Mondays and Thursdays until 9 p.m.
That schedule still allows them to have a family life, a top reason people stay. We also have a competitive pay and benefit plan. Our philosophy here is not to flood the sales floor, so to speak. We maintain a low salesperson-to-customer ratio. Our average monthly sales-per-salesperson is 15 vehicles, a respectable number. The turnover in our sales department is under 5% a year.