Dealership Follows Founder’s ‘3-Legged Milk-Stool’ Philosophy

Larry H. Miller America Toyota in Albuquerque, NM, is part of a family business empire founded by a former auto-parts salesman.

The privately held Larry H. Miller Group of Companies, also known as LHM, owns 55 dealerships representing 20 franchises in seven Western states. The Albuquerque Toyota store run by JR Malouff is the largest of the group’s five New Mexico locations and has been the No.1 volume new-car dealer in the state for the past two years.

The dealership sold 2,303 new and 1,253 used units in 2012 and had total revenue of $109.8 million. It captured the No.157 spot on this year’s WardsAuto Dealer 500, which lists 16 other Miller stores. The Albuquerque dealership is a 9-time winner of Toyota’s President’s Award for customer satisfaction.

The late Larry Miller began his automotive career working at an auto-supply store in Salt Lake City. He hired on after being a customer who bought performance parts for his wife’s ’63 Ford Falcon Sprint convertible that he raced at drag strips in Utah. As a regular customer, he would go behind the counter and pull his own parts. That’s how he first learned the business.   

Following a call to play for a fast-pitch softball team in Colorado, Miller moved to Denver in 1970 where he also worked as parts manager at Stevinson Toyota. He became the first person ever to sell $1 million in merchandise out of a single Toyota store. He purchased his first dealership, Larry H. Miller Toyota, in the Salt Lake City suburb of Murray in 1979.

Today, LHM holds more than 80 businesses and properties that operate in 43 states. Besides dealerships, holdings include the National Basketball Assn.’s Utah Jazz; Miller Motorsports Park in Tooele, UT; and television station KJZZ and KZNS radio, both in Salt Lake City.

Miller Retail Properties consists of 93 Fanzz sports apparel stores in 19 states and 17 Megaplex theaters in Nevada and Utah. But the family never forgets how the business got its start.

“I’m a car guy and I ran dealerships for 10 years,” says Greg Miller, Larry’s eldest son and CEO of the LHM. Gail Miller, Larry’s widow and Greg’s mother, is chairman of the company. Larry Miller died in 2009 at age 64. 

“I love the car business, and for a long time it was our economic engine,” Greg Miller says. “Without question, it’s still one of the most significant contributors to our overall economic strength.”

Malouff and the other general managers from LHM’s “Dealer 55” automotive group benefit from access to each others’ issues, challenges and best practices, as well as department sales statistics broken down on a daily, weekly and monthly basis.

“We can compare ourselves in terms of expenses, ROI, sales, service, and parts,” Malouff says. “There’s a lot of help to be had. If somebody’s not doing well, some of the more experienced general managers and operations managers can be called in to assist and analyze and help figure out how we can get that store to a higher level.

“We try to achieve 5% net to total dollar sales every month.Our profit improvement analysis breaks down how much each department spends on commissions, advertising, supervision and other expenses so we have a total group guideline that we all aim to reach.”

Malouff’s guide is Larry Miller’s original “3-legged milk stool” management philosophy:

“First, we must protect the legal, financial, and moral well-being of the company; second, take care of the customer; and third, have a little fun,” he says. Leaders throughout the Miller realm also have been challenged to improve the lives of fellow workers, customers and members of their communities.

“That’s how we operate,” Malouff says. “We always ask, ‘What can we do today to help people move as high as they want in the organization?’ All of our managers came from within our dealership and five of them have moved on to become general managers at other Larry H. Miller locations.”

Larry Miller’s philosophies still play a powerful role in the way Greg Miller performs his duties as CEO.

“As (my father’s) hard work began to pay greater dividends, he realized he had more than he needed. That’s when the notion of stewardship began to emerge with him,” Greg Miller says.

“He spent a lot of time talking to my brothers and me about all the resources with which we are entrusted as a family. In the big picture, we are just stewards and our job is to take care of it, preserve it and use it to enrich the lives of others.”

The company has made significant donations to the Huntsman Cancer Institute in Salt Lake City, built a 19.7-acre (7.8-ha) campus for the Salt Lake Community College and provides more than 250 full-ride scholarships to employees’ dependents.

In Albuquerque, Larry H. Miller American Toyota helped fund a public-school literacy program and a mobile computer lab for Big Brothers Big Sisters of Central New Mexico.

Greg Miller is guided by his father’s belief that all employees should strive to be a student, teacher and leader.

“My dad always said when the student is ready the teacher will appear,” he says. “If we pay attention, we can learn a lot from every interaction that we have every day, but you can’t keep that knowledge to yourself. You have to let others benefit from it. A good learner and good teacher almost by default becomes a leader.”

Miller says everything he learned from running dealerships is an idea he borrowed from somebody else.

“I stick with the best idea I have on a given topic until a better one comes along and then I shamelessly plagiarize it,” he says. “In my experience, used-car guys have the biggest egos in the dealership – everybody thinks they can buy a car cheaper or sell it for more gross.

“The best used-car managers I’ve known are guys who still demonstrate that willingness to ask for help and continually learn. I hate arrogance. I hate it when guys say, ‘Yeah, I’ve got it, I don’t need your help.’ It drives me nuts.”

LHM is vertically integrated. While Malouff’s main source of consumer auto credit is Toyota Financial Services, he also works closely with LHM’s Prestige Financial Services that lends to higher-risk borrowers.

Total Care Auto, another Miller subsidiary, provides and life and disability insurance for auto loans, service contracts, and extended warranties. “That’s been excellent for service customer retention, which stands at 62%,” Malouff says.

Saxton Horne Communications, founded in 1995 as a media buying agency for LHM dealerships and the Utah Jazz, today is a full-service advertising and communications agency that handles 60% of Malouff’s $80,000 to $100,000 monthly advertising account.

“One of my dad’s greatest accomplishments was taking advantage of opportunities to vertically integrate,” says Greg Miller, describing his father as a classic entrepreneur.

“These companies have all served us very well.”

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