It was a rough 2006 for domestic-brand dealers, not bad at all for certain import-brand retailers. But virtually all dealers interviewed for Ward's ninth annual “Dealers Speak” feature sound different tones of optimism for 2007.
Here's what they had to say:
Advice to domestic auto makers: “Study Toyota”
Ernie Boch Jr.
President & CEO
Boch Automotive
Norwood, MA
Brands: Toyota, Scion, Honda, Dodge, Kia
How was 2006 for Boch Automotive?
Excellent for the imports. Domestics were very difficult. Their sales are down. Ford's product is horrible. GM is still so arrogant that they can't get out of their own way and Chrysler is still searching.
What would you like to tell your manufacturers?
If I could tell them anything I would say: “study Toyota.” As simple as that.
How do you feel about 2007?
I think the imports are going to be great. I think Toyota and Honda will be up 6%-7%. The domestics will continue to lose market share to the imports.
Right now the domestics are producing a pretty good quality car. I think it's the message they're giving the American public. The public is not buying it.
Name a home run for your group in 2006.
Capturing the title of No. 1 Honda dealer on the planet. In 2005 we were second to Norm Reeves Honda Superstore, which has been No. 1 for 12 years, and last January we made an effort to beat him.
What makes a good leader?
A good leader surrounds himself with good people. I want the best and the brightest working with me. If I am the sharpest guy, we've got a problem.
What was the last book you've read?
The Tipping Point: How Little Things Can Make a Big Difference By Malcolm Gladwell.
What magazines do you enjoy reading?
Rolling Stone, R&B, Automotive News, Ad Age, Pollstar and Architectural Digest.
“All things considered, it was still a pretty good year”
Russell Shelton
President & CEO
Shelton Pontiac Buick GMC
Rochester Hills, MI
How long have you been in the business for?
I'm second generation. I've been in business probably 40 years.
What's your secret to good leadership?
Being in business for as long as this company has — we're going into our 49th year in business — I think we have a good (rapport) in the community. I am very active in our community with different organizations and boards I serve on. I believe in giving back to the community.
Was 2006 a strong year for your dealership?
All things considered, it was still a pretty good year. We're in a pretty good area to live and raise a family. We have quite a few GM employees that buy vehicles year after year.
Did you try anything new last year that turned out to be a success?
We picked up the GMC truck franchise just over a year ago and that certainly made a difference in our business.
How does 2007 look?
I would say it would probably be a repeat. Pretty much the same thing.
Which magazines do you like to read?
Just some of the trade magazines, yours being one of them, Anything to do with automobile business certainly.
What would you like to tell the manufacturers?
In our particular base, GM sets the pace and the selling rate, if you will. They control our market. We're in a lease market. About 60% to 70% of our business is leasing and we've kind of gotten away from it. We certainly felt the lack of sales in that department.
Telling the manufacturer a thing or two about vehicle styling
Otis Vann
Owner
Queen City Lincoln Mercury
Charlotte, NC
Have you been in business long?
I've been a dealer for 25 years. I've owned this store about four years.
Many dealers are reporting lower sales for 2006. How did you do?
It was just an average year. Actually, we sold a few more new than we did in 2005.
What do you expect for 2007?
We may be just a little bit better in new sales in 2007, at least for us in Lincoln Mercury, because we have some new products. We have the new SUV, the MKX, and the Mariner SUV.
What does good leadership mean to you?
It's your people skills, your ability to get along with your employees. They have to like you. They have to feel comfortable with you and feel like you've got their back even though you've got to make some tough decisions. People understand business. That's what leadership is all about. For example, people know how (Ford Motor Co. President & CEO) Alan Mulally stands.
Any home runs in 2006?
Absolutely. We started targeting our advertising and business. We only advertise where you could account for it. If it didn't count for a sale, we didn't advertise there. And even though the floor-plan interest rate was higher, we controlled our inventory. Our general manager came up with a system and we actually did cut out inventory cost, which was a huge bonus. We've got away from carrying 175 cars when you're going to sell 40.
Have you read any good books lately?
I read a book about a very prominent attorney, living good, and he ran into this deal where he had to take a case for a very poor girl. It's about his rise and fall.
What about magazines?
I read all the car stuff. And I'm a history freak. History shows whether somebody's decision was good in the long term.
If you could tell your manufacturers anything, what would it be?
Build products that look good. When I bought my house, I drove by and I thought, “Gee, I've got to see that.” You can't build cars with the idea that all we have is performance and the interior looks good. People stop to see something that looks good. When it looks dynamic and fresh, then they'll look at the technology part of it. That's what I'd tell them.
Breaking everything down helps increase revenue
Mario Murgado
CEO
Brickell Pontiac Honda GMC
Miami, FL
How long have you been in business?
Twenty-five years.
Was 2006 a good year for you?
It was an up year for us. We have the different challenges but we were able to surpass the 2005 numbers.
Do you have big expectations for 2007?
We changed a lot of things. We're looking at growth. We believe that if you have a solid foundation, we can grow in good times and bad times. We are looking to have an increase in 2007 over 2006.
What makes a strong leader?
I think there are a lot of key ingredients, but No.1 is communication. If you communicate well, plan well and execute well, and if you keep everyone's focus and intensity, you can help become a better leader and help support those people who produce for you.
Was there a single process you implemented last year that was a success for your dealership?
There are a lot of things, but our biggest is fostering a winning and can-do attitude. We try to break down every avenue of revenue building for our dealership. When you break things down to the smallest denominator, it helps you increase overall revenue. We bring awareness so everyone knows what the responsibility is.
What was the last book you read?
The Millionaire's Mind.
Which magazines do you read?
Wards magazine, Executive News, Auto Aid.
What advice would you give your manufacturer?
If I can say one thing, it's to continue to work and increase the communication and dialogue with their leaders. Never lose focus on the element of emotion.
After “dismal” '06, looking for '07 to be what we're used to
Tarik Daoud
President, CEO & Chairman
Al Long Ford
Warren, MI
How was 2006 for Al Long Ford?
Dismal. Not the year that we are used to. I think there are better years ahead.
Did you try anything new in 2006 that was a huge success?
In one particular area, in service operations, we recently hired someone who was very aggressive and who knows the business well. This man can produce great work and satisfy every customer possible.
How do you feel about '07?
From all the signs that we have seen at the end of December and the beginning of January it looks like maybe 2007 should be a good year for many reasons. (The North American International Auto Show in Detroit) always bring out people who look at the products and make decisions.
What's the secret to good leadership?
I think that I'm a strong leader because of the way that we hire and support our staff. We give them opportunities. We don't like to micro-manage and that has been my philosophy over the past 47 years. As a result, we are one of the very few dealerships that have had stability in their staff. Most of my staff retires from here.
We always treat them as family. We make sure that we give them the things that they need and support their needs. I have an open door policy. They can walk into my office at any time.
Have you read any good books lately?
AIA Detroit: The American Institute of Architects Guide to Detroit Architecture.
Do you read any magazines?
I start with business magazines, Crain's Detroit Business, Wards, of course, and recently I was featured in the Hour Detroit magazine. When I have a chance to do more reading, of course it's the Wall Street Journal and the Detroit News.
What are you thoughts about the manufacturers?
They need to pay close attention to the dealer body, the strength of the industry. Dealers are out front in the public. They know exactly what the public's needs are and I think auto makers should listen to what we have to talk about. A lot of times they do, but these are changing times and we have to change with the times.
“We did OK, but it was just a tough year”
Brian Wilson
President and owner
Jack Wilson Chevrolet
St. Augustine, FL
How did you do last year?
It was a little bit of a trying year. I think GM had some good product but got some bad press. The gasoline spike didn't help. We did okay, but it was just a tough year.
What about 2007?
We haven't seen much showroom traffic right now but our fixed operations are doing real well. I'm actually optimistic for 2007. GM's got a lot of the bad press behind them and a lot of great product coming out.
How important is leadership?
It can totally change the business. It's the most important thing to making sure you've got long-term stability. In our case, we definitely look for strong leaders.
What was the last book you read?
I continue to go through the Bible.
Do you read any magazines?
I do triathlon, so I read monthly triathlon magazines. It's basically either triathlon or auto related. I'm not much on People magazine or anything like that.
What one thing would you tell GM?
Continue to develop the product and stay on course with what they're doing to try to cut cost. My one concern, and it's a little nit picky, is I wish they'd quick changing the names. I'm glad they stuck with Malibu with this next-generation Malibu, but it's hard to market a new name. I wish they hadn't got rid of Buick LeSabre or Park Avenue.
We are using the Internet more to enhance our business
Ed Fitzpatrick
Owner
Valley Lexus and Valley BMW, Modesto CA
Coliseum Lexus, Oakland, CA
How long have you been in the business?
I've been a car dealer 21 years now. I've loved every minute of it — well, maybe not a few seconds of it here and there.
How was 2006?
It went really well. We improved upon the trials of the previous year. It was a good year.
Do you have any concerns about 2007?
No, the economy seems to be strong. The major weakness may be in housing but it seems that people are turning to remodeling, so construction workers should be working. Internationally, who knows what might happen. But other than that, I'm pretty confident about 2007. As a matter of fact, I'm building a new facility for Lexus in Modesto. I'm moving from my current location because we have outgrown it.
What's the secret to good leadership?
I think a good leader is one that is open to new technology and listens to associates. To me, the associates are the real experts on the day-to day operation of the dealership.
Are you heading out to the National Automobile Dealers Assn. convention?
Oh, I'll definitely be there. It's the best place to see new equipment, new technology, and to see friends in the business.
Will you be looking for anything specifically there?
With the new facility, I want to see what service equipment is out there to enhance our ability to provide service for our customers. I just keep my eyes open to see what may benefit our operation.
What is one process or practice you implemented that was a home run in 2006?
Probably the usage of the Internet. We have to stay abreast of that area of the business.
Have you done any good reading lately?
I don't read books anymore. I listen to them on my MP3 player. It's wonderful. I used to read books all the time but now I listen to them in the car, on airplanes, wherever I go its available. The last book was Cross by James Patterson.
What would you like to tell your manufacturer?
Get feedback from the dealer about processes and products. Just listen to the dealer so that the manufacturers can retain or maintain their elite status.
“Managing floor plan is a main concern”
Carl F. Galeana
Dealer Principal
Galeana Automotive Group
Warren, MI; Columbus, SC; Fort Meyers, FL
Brands: Chrysler, Dodge, Jeep, Saturn and Kia at five stores
What was 2006 like for you?
It was a different year as a Dodge dealer. I don't have to say why.
Because of the Chrysler Group's sales bank?
Because of the sales bank. (See story on page 66 about the Chrysler Group's excess inventory woes.) I'm looking for a smoother year in 2007.
How many vehicles do you think the industry will sell overall in 2007?
I've seen predictions ranging from 16.5 million to the high 15-millions, but I don't think about that. I can't worry about it because I have (five) stores to run.
How do the markets you are in differ from one another?
(Metro) Detroit's market has the best volume. Our Fort Meyers, FL, store has the best profit margins, because we sell a lot of used cars there.
Your biggest concern going into 2007?
Managing floor plan is a main concern, because the interest rates are still up. We won't be carrying the same Dodge inventory levels as last year.
Saturn is a different story, because of all the new product they've been introducing. GM forgot about us Saturn dealers for a couple of years. But then it realized that good, exciting product, coupled with the high level of service and the outstanding customer satisfaction that Saturn dealers provide, creates some real opportunities.
What will be your main efforts this year?
We'll be concentrating more on used vehicles. But as a franchised new-car dealer, it still goes back to wanting to roll the new cars.
