Lustine Focuses on What it Can Control

The timing could have been better when Lustine Automall completed an $11 million renovation of its Toyota facility in Woodbridge, VA.

The building project gave Lustine the largest U.S. showroom for Scion, Toyota’s youth brand. The construction also provided a spacious truck display area and a new-car showroom half the size of a football field. That was in 2008, as the recession began taking hold.

Lustine is part of LTD Inc., which hearkens back to Lustine Toyota Dodge. The company now sells Chrysler, Dodge, Jeep, Ram, Toyota and Scion brands in its central location.

The group is among the top 10 volume dealers for Toyota in the central Atlantic region, which covers five states. It is No.5 in metro Washington for Chrysler sales.

Lustine Automall weathered the recession by managing tightly without layoffs, even taking on a few new hires here and there, says Jim Giddings, a minority partner who runs operations.

“We hired employees throughout the recession, but what we’re proudest of is that when the recession hit the hardest in 2008 and 2009 we didn’t lay off one employee and did not cut any pay plans,” he says. “But we increased our net profit.”

Burton Lustine, Lou Kairys and Giddings are LTD partners. They all consult on major business decisions. But day-to-day operations are handled through managers, reporting to Giddings, who serves as general manager and vice president. CEO Kairys, now in his 80s, still comes in daily.

In December 2007, Lustine had 218 employees and by April 2012 that had grown to 239. Staffing overall increased 9% since 2009 while the recession was deepening. 

Lustine Automall placed No.55 on the WardsAuto Dealer 500 for 2011. The group reported annual gross profits of $27,297,449, up 29% from the previous year.  Total revenue was $130.2 million.

“The year 2012 has started out even stronger,” Giddings says. “The recession isn’t really over. As far as the economy is concerned, I haven’t seen any long-lasting bright spots.

“We’re going to continue doing what we’re doing – working hard every day and doing the best we can to satisfy our customers.

“You still can’t afford to make a mistake. We can’t do anything about the economy. But you’ve got to watch pay plans and remain competitive.” 

In 2007, the group owned a stand-alone Dodge dealership and was able to purchase a Jeep store. When Chrysler began cutting dealers in 2009, the dealership group expanded more. 

“We were a volume dealer with Dodge and Jeep, so they awarded us the Chrysler franchise and at the time we became known as an Alpha dealer,” Giddings says, referring to a project to bundle Chrysler brands.

In 2008, Alpha morphed into Project Genesis. The effort ratcheted up pressure on dealers to sell all Chrysler brands under one roof and eliminate competing franchises. Ram was carved into a separate brand with Chrysler’s 2009 restructuring.

Chrysler also wanted metro-area stores to boost their sales volume to 1,000 or more units annually. Improving facilities was another push. As auto sales crashed and credit froze, some dealers were reluctant to invest in facilities.

But Lustine’s group spent about $500,000 to renovate and combine joint Dodge, Jeep, Chrysler and Ram facilities, according to Giddings. The group also invested in Auto4Life, a warranty program. That led to 10 additional service stalls in addition to 50 for the refurbished Toyota facility.

Chrysler asked for the upgrade, and Giddings is OK with that. “We needed it, and I believe it has helped sales,” he says.

The auto-retailing industry faces other issues. Giddings points to the True Car online pricing program as a main challenge. TrueCar pits local dealers in similar franchises against one another, he notes. “I think TrueCar is dangerous for the industry.”

Yet, programs such as Auto4Life have helped keep Lustine in the driver’s seat. “Sales took off after bringing in Auto4Life in 2003,” Giddings says. The dealer warranty program is a big marketing advantage. “(It means) we guarantee every new and non-certified used car for life,” he explains. 

Auto4Life provides complete powertrain coverage. The only condition at Lustine is that customers complete recommended maintenance there. While the factory warranty is in effect, it covers everything. After it expires, Auto4Life takes over as wraparound coverage. 

Managers in all Lustine franchises are authorized to resolve customer complaints. If they want to see the boss, Giddings is right there in his glass-enclosed office in the middle of the Toyota showroom.

“We have our strength in that every manager in all the franchises started out in an entry-level position and has been promoted from within. This ensures our employees buy into our philosophy and work ethic,” he says.

As if dealing with a recession wasn’t tough enough, more challenges came in 2010 as Toyota product recalls hit with a vengeance. That was followed by Japan’s tsunami/earthquake-induced inventory shortages of 2011.

“We handled the product recall of 2010 positively and looked for ways to generate income and delight customers,” Gidding says. “We believe Toyota is back and will be a world leader by year-end.” 

Lustine did not sweat the economy, the product shortages or bouts of bad weather last year. “We worried about the things we could control.”

That consists of sales, service and customers. “But Lustine is about more than selling cars. We give back to the community,” Giddings asserts.

This year, Lustine completed a veterans memorial site. A giant U.S. flag flies 24 hours a day over the dealerships. The lit flagpole is surrounded by benches and has public parking. The memorial-site property was donated to Prince William County in honor of war veterans.

“Any and all are allowed to come and view the memorial, have a seat and remember those who unfortunately went before us,” Kairys says.

The Lustine name goes back to 1926. That’s when Phil Lustine met with General Motors executives. They persuaded him to start up a Chevrolet dealership in Woodbridge. Burton Lustine, Phil’s son, took over that operation in the 1970s. It has since been sold.

Lustine Toyota opened in 1977 in Dumfries, VA, and moved to Woodbridge in 1979.

Dealership Profile: Lustine Automall, Woodbridge, VA

Owners: Burton Lustine, Lou Kairys, Jim Giddings

Sells: New and used Toyota, Scion, Dodge, Jeep, Chrysler, Ram brands

Employees: 239

Civic involvement: Committed to local service and charitable contributions, including giving away 100 bicycles to needy children. Gidding serves as Joe Gibbs Youth for Tomorrow trustee. Veterans memorial.

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