It’s been a wild and bumpy ride at Phil Long Automotive Group based in Colorado Springs, CO.
The turbulence lasted more than two years as Jay Cimino, group president and CEO, slashed weak brands and added more lucrative ones. Like other dealers nationwide, the dealer group was battered by the economic storms in 2008 and 2009, as the auto industry faced one setback after another.
The Phil Long group has 10 new-car dealerships and six used-car operations in Colorado (Denver, Colorado Springs and Trinidad) and in Raton, NM, just south of the Colorado border.
Phil Long has been Colorado's largest privately held automotive group for 65 years and was the 10th largest company in the state. The Phil Long group also ranked No.59 on the Ward’s Megadealer 100 list. Individual stores appear on the Ward’s Dealer 500 listing.
Expansion became the name of the game since Cimino joined Phil Long in 1972 as a general manager. But in 2008, the recession hit and the industry was undergoing upheaval. Cimino put on the brakes.
“We had to take a good look at where we were going if we wanted to survive,” he says. “Like a lot of dealerships, we’d grown a little too fast and had to shed brands.”
The company adopted a profit-focused survival mentality.
To adjust, it sold unprofitableand Suzuki stores in Denver and a Kia outlet (one of two) in Chapel Hills, CO. The firm was able to add more profitable , Chevrolet and lines.
In 2009, U.S. auto sales dropped to 10.4 million units, compared with 16 million two years earlier. It caused a lot of panic.
When the numbers looked awful, “too many people gave up on the industry last year,” Cimino says. He didn’t.
“We renegotiated our vendor contracts, sold excess properties, shed brands and discontinued leases on excess properties,” he says. The group also focused on financing revenue and sold an Expo Center property that was a drain.
Cimino and his group of managers also tightened the reins through 2010.
“We focused on service productivity, efficiency and expenses,” he says. Sales, finance, service and other managers all were scrutinized for performance. “We focused on gross per employee and raised productivity.”
There was finally payoff.
The Phil Long group’s annual revenues for 2009 were $425 million. That was the year it lost theJeep franchise. In late December, he was projecting a bump up to $468 million in yearly revenues for 2010.
Cimino’s group managers stuck to the knitting. Their core strategy revolved around finance reform and unprofitable parts of the business. No time has tested them more than the past year.
In some ways, they mirrored the restructuring and bold moves of auto makersCo., Motor Co. and Group LLC. GM and Chrysler accelerated their pace of change once they accepted more than $60 billion in federal funding in 2009 and went through bankruptcy restructuring.
As president, Cimino has played a critical role in expanding operations and diversifying the Phil Long portfolio while building the brand. Phil Long, a former World War II pilot, opened the first Ford store in 1945.
During the GM bankruptcy restructuring in 2009, the dealer group lost five Saturn franchises in addition to the Chrysler-Jeep dealership.
In the down period of 2008-2009, the employee count went from 1,200 to 850. It was a tough time for the entire group, especially Cimino, who hated to see staffers leave.
Cimino converted the five Saturn dealerships into “signature stores.” Under that concept, Phil Long can sell all brands of nearly new used vehicles, including premium nameplates such as like Mercedes-Benz. But it doesn’t sell exotics.
Despite losses, Cimino hasn’t been sitting still. Empire building seems to be part of his DNA.
In December, Ford approached him about taking on a Lincoln dealership for which the auto maker recently supplied a facility plan. This would complement an existing store to be called Phil Long Ford-Lincoln, in Colorado Springs.
Cimino acquired an 81-year-old Chevrolet dealership last summer in Colorado Springs when the dealer was not able to keep the business going alone. He kept the dealer as a partner and her management structure in place. Cimino built on the existing name, calling it Daniels-Long Chevrolet.
“Dealer recognition is important in a small town,” he says.
Also in 2010, he took on the Ford store in New Mexico andTrinidad in Colorado.
These acquisitions usually are businesses that are struggling, and the strategy is to make the owners or managers partners as part of Phil Long. The group’s management team works to integrate the newcomers into the company structure and customer-focused mindset.
“We change their culture into ours,” Cimino says, adding that it may take a little time, but works to everyone’s benefit.
The group’s management structure is centralized in Colorado. But Cimino uses a platform manager concept in running his statewide operations.
|Headquarters:||Colorado Springs, CO|
|2009 Revenue:||$411 million|
|2010 Revenue (projected):||$468 million|
|Number of Dealerships:||10|
|Brands Sold:||Ford, Chevrolet, Toyota,, Isuzu, Kia, , Mercedes-Benz, Audi, Volkswagen,|
His four children also are in the business. Sons Mike and Vince Cimino head up Ford, Lincoln, Toyota andbrand operations. Mike is a group vice president; Vince, general manager of Phil Long Audi.
Daughter Gina Stefanec is president of Kip-Hampden, the company that owns most of the dealership properties. Laurie Yoswa, another daughter, serves as a vice president at Kip Hampden.
Cimino tries to work with the existing owners when acquiring a dealership.
He knows what it’s like to have a business yanked away. In May 2009, he was one of 789 Chrysler dealers to have their dealerships eliminated without warning as part of the auto maker’s government-ordered bankruptcy restructuring.
Cimino was caught on the slippery slope of dealer terminations by Chrysler. His was one of 12 Colorado dealerships originally shut down. Then in December 2009 under a law approved unanimously by Congress and signed by President Obama, dealers won the right to have their cases heard in a neutral arbitration setting.
Cimino’s Chrysler-Jeep franchise was reinstated officially this past June, but then he sued after getting a letter of intent from Chrysler that he and other dealers found onerous and unfair.
Chrysler has since moved all the suits to Michigan federal courts, he says, where the auto maker may have more control. Travel and court expenses are up to the plaintiff dealers.
“We’re fighting to get our franchise back,” says Cimino, who thinks the legal wrangling will go until at least next June.
Of the terminated dealers, he says, “We all talk with each other, but each of us fights our own battles.”
Cimino believes in a stronger-than-ever customer and service philosophy. He began posting advertorials in The Denver Post.
In them, he speaks directly to customers and imparts news updates, sales and service specials and refers people to the company website. He tells of the group’s sales and customer philosophies and periodically offers coupons.
It’s his latest customer outreach tool for an industry he is passionate about.
“We’re still in business, and through this new environment we’re selling more cars and trucks,” Cimino says. “And we are stronger than ever.”