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There‚Äôs one big change for the mid-level dealer groups on the Ward‚Äôs Dealer Business Megadealer 100 -- more revenue.
In 1999, the mid-level players (Nos. 30 ‚Äď 70) generated almost $18.5 billion in revenue. Total revenue for the segment in 2000 was $20.3 billion ‚Äď a 9.7% increase.
Of course, with 2000 being a record-breaking year for the automotive industry, the increased revenue is not too shocking.
Like last year, however, dealers in the mid-level range are eyeing potential acquisitions cautiously. In fact, none of the mid-level dealer groups on last year‚Äôs list moved into the top 30 range on this year‚Äôs list ‚Äď although, the total number of dealerships in the mid-level group increased from 373 to 418 -- an average of one per dealer group in that range.
Why are the dealers cautious? Finding good staff is one reason, says Jeff Wyler, the president of the Jeff Wyler Automotive Family.
‚ÄúWe‚Äôll grow as far as we can ‚Äď but it‚Äôs dependent on finding the right people to manage the stores,‚ÄĚ he says. ‚ÄúThe quality of our leadership will determine our growth. The money is available, but we‚Äôll be pretty selective with how we do it.‚ÄĚ
His Cincinnati, OH-based company added two stores last year and increased its revenue by 50%. The increase put the group on the Ward‚Äôs Megadealer 100 list for the first time, ranking it at 53rd.
Mr. Wyler gives his son and son-in-law much of the credit for the company‚Äôs success. Both joined him 1995. Since that time, the Wyler group has more than doubled its sales volume.
Mr. Wyler was an ex-factory worker with $10,000 when he purchased a small Chevy dealership in 1973 ‚Äď ‚Äúa week before the Arabs shut off the oil ‚Äď but we survived.‚ÄĚ
A second store was purchased in 1977, and a third in 1980. Now the Jeff Wyler Group has nine stores.
He chuckles when he thinks about how many people have predicted the demise of the dealer.
‚ÄúI have a framed cover of a 1996 Business Week cover with a caricature of a car salesman ‚Äď the title is ‚ÄėDeath of a Salesman.‚Äô‚ÄĚ The story is about how the Internet andposed a threat to the traditional car dealer.‚ÄĚ
Mr. Wyler adds, ‚ÄúOpportunities are magnificent today in the retail industry ‚Äď especially for young people just starting out.‚ÄĚ
For Greg Goodwin, president of Kuni Automotive in Beaverton, OR, it‚Äôs a matter of not having to answer to stockholders as the companies at the top of the list must do.
‚ÄúOf course, we‚Äôre looking to grow, but fortunately we‚Äôre privately financed so we don‚Äôt necessarily have to grow,‚ÄĚ he explains.
Mr. Goodwin is excited, though about the opportunities within the industry for acquisitions. ‚ÄúBut it has to be measured growth,‚ÄĚ he says. ‚ÄúWe‚Äôve been successful because Mr. Kuni has been very patient ‚Äď we haven‚Äôt grown too fast.‚ÄĚ
He took over the reins two years ago after Mr. Kuni retired. Mr. Kuni started the company in 1970 with one Cadillac store; now there are eight stores spread across five states. The company reorganized a couple of years ago by placing equity partners at each store to run the operation.
If Kuni Automotive were to add stores, Mr. Goodwin would look to bothand . ‚ÄúFord is a great company,‚ÄĚ Mr. Goodwin says. ‚ÄúWe are involved in very preliminary discussions with Ford about putting together a Premier dealership. Wayne Kuni, the company‚Äôs founder, has always felt putting luxury brands together is the smart way to go.‚ÄĚ
Without adding any stores last year (Kuni Automotive did add three brands) the Oregon-based group increased its revenue by $46 million and jumped three spots to No. 62 on this year‚Äôs Ward‚Äôs Megadealer 100 list.
Also not adding any dealerships last year was the Chuck Peterson Dealerships group based in Folsom, CA. With the same four stores from last year, the megadealer leaped from 82nd on last year‚Äôs Ward‚Äôs Megadealer 100 list to 61st this year. Revenue increased 47.5%, from $295.5 million to $435.8 million.
Mr. Peterson attributes his company‚Äôs success to a strong economy and strong product coming fromand . ‚ÄúIt was also year in which my people seemed to come together,‚ÄĚ he says.
Despite the great year, Mr. Peterson doubts he‚Äôll buy any stores in the near future.
‚ÄúOnly if I find the right store,‚ÄĚ he adds. But the current economy concerns him ‚Äď the first part of 2001 has been tough. Being in California doesn‚Äôt help either, says Mr. Peterson. With the energy problems, customers‚Äô electric bills are much higher; therefore, they don‚Äôt have the discretionary income to spend on a new vehicle.
What about the converse of buying dealerships? Are dealers in the mid-level range more willing to sell to larger megadealers?
Probably the most notable group to sell last year was the Midway Auto Group. Tom Irwin sold the company to AIG, which is owned by the V.T. Group. Midway was ranked 31st on last year‚Äôs Ward‚Äôs Megadealer 100 list.
Mr. Peterson isn‚Äôt ready to sell, though ‚Äď he still loves going into work. He explains, ‚ÄúWith the dealership, I‚Äôm involved in so many different kinds of businesses ‚Äď advertising, finance, sales, parts and people. I don‚Äôt get bored ‚Äď something is always going on.‚ÄĚ
He started as a factory guy, working for Ford in the finance department in Dearborn, MI. He then transferred to the West Coast and realized dealers were having more fun. So he took a job with Hank Torian at Hayward Dodge (who recently sold to) and became his right-hand man.
After a short stint with Swanson Ford, Mr. Peterson purchased Bennett Ford and has added three more stores since then.
Two years ago, a larger dealer group approached Mr. Peterson and made an offer for his stores. He refused and he‚Äôs glad he did, especially with the way last year went.
Likewise, Mr. Goodwin isn‚Äôt looking to sell. He is enthusiastic about what is going on in the industry today ‚Äď especially in the area of product design. ‚ÄúThe product is great and is a lot of fun,‚ÄĚ he says. ‚ÄúI love cars and it‚Äôs a great time to be in the business. You could almost say there is a renaissance going on the industry.‚ÄĚ
He like the directionis going although the automaker ‚Äúhas done many things that have been challenging. However, we like what is in the pipeline in the way of product and think there are positive things happening at GM.‚ÄĚ