Near-Death Experience Changes Dealer Group

After surviving a punishing recession, Joe Cardinale, founder, majority owner, and president of the Cardinale Automotive Group based in Seaside, CA, says, “We didn’t go bankrupt, though we probably should have.” 

California and Arizona, where Cardinale operates 15 dealerships, saw some of the highest home-foreclosure rates in the country. Car sales in California fell by about 800,000 units between 2007 and 2009 and nearly 300 dealers in the state went out of business, according to the California New Car Dealers Assn.

The Cardinale Automotive Group’s near-death experience cemented Joe Cardinale’s resolve to change the way he ran his business. Principles that had served the group well in the past remained, like developing relationships where everybody wins and maintaining an unwavering minimum target of 20% net to gross.

But instead of waiting for business to fall into his lap, as had happened in the boom years, Cardinale insisted that his dealers begin to aggressively pursue customers.

“We decided at that point that we would no longer be market-driven, we would be a management-driven company,” he says. “Coming into 2008, we were all rich and good-looking. You didn’t have to do anything but open the doors and people would come in, and we sold cars.

“Then the world changed, and we said if and when this happens again, we’re going to be ready, and our people are going to be working every day to bring customers into their stores.”

In the Cardinale culture, “management-driven” means taking destiny into one’s own hands, no matter what is happening elsewhere.

“We don’t pay much attention to general market conditions, we’re focused on our commitment to our defined goals,” Cardinale says. “We make our own weather; if it’s gloomy for everybody else and we need to make sunshine, then that’s what we do.”

To reach these aggressive targets, each sales associate is required to hold 20 verifiable phone conversations and schedule a minimum of two in-person appointments each day. They are also graded regularly on their performance in CRM, sales and telephone training, and interaction with mystery shoppers. In return for that commitment, Cardinale says he “will invest in our people with continuous improvement training and support that will enable them to write their own financial future.”

The group‘s general managers also are held to a high standard.

“There’s no gray area here. It’s not like taking some dog that doesn’t want to cross the street,” Cardinale says. “We tell the GMs coming in if you’re not aligned with us, if you’re not management driven, if you don’t have the ‘everyone wins’ attitude, if you are satisfied with anything less that 20% net to gross – we love you but you just can’t work for us.”

Today, Cardinale sales have surpassed pre-recession levels, due in large part to robust demand for used cars. The group sold 11,120 new and used vehicles in 2012 and is on track to a 32% increase in 2013.

Unit sales in 2012 at the two Cardinale Harley Davidson motorcycle dealerships in Salinas and Monterey, California have soared 285% over the previous 5-year average.

“We hit every one of our BHAG,” Cardinale says, referring to the concept of “Big Hairy Audacious Goals” that was introduced in the 1994 book, Built to Last: Successful Habits or Visionary Companies.

Three Cardinale stores are listed on the WardsAuto Dealer 500 with combined 2012 total revenue of $200 million: GMC-Nissan-Audi in Monterey, CA (No.314); Hyundai-Volkswagen in Corona, CA (No.411): and Mazda in Mesa, AZ (No.417).

The group also operates Toyota and BMW franchises in California.  

An unconventional revenue opportunity came on line in late 2011 when Cardinale hired Javier Gomez to launch and lead the Cardinale Vehicle Supply Group, which today accounts for up to 6% of the company’s annual revenue.

Gomez had worked in the vehicle supply industry that acquires products for OEM testing, focus groups, and photo shoots. The Cardinale Automotive Group had supplied vehicles for Gomez’s clients.

While Cardinale valued Gomez’s reputation in this esoteric corner of the auto industry, Gomez was drawn to him as a like-minded entrepreneur.

“What impressed me about the Cardinale group was that I could get a general manager on the line and we could work out (a vehicle loan),” Gomez says. “The key to our success is that they ‘get it.’ It’s thinking outside the box and not putting the blinders on because this is completely outside the traditional realm of sales and service.”

Gomez leverages relationships with hundreds of dealer partners across the country to provide vehicles for between 300 and 500 events per year, ranging from TV commercial shoots to extended multiple city ride and drives. Since the cars typically accumulate very few miles during an event, they can often be returned to dealers’ new car stock.

Cardinale is a devout Christian who does not hesitate to say that his organization is a “God-first company.”  

Through the company’s self-funded “Blessed to Serve” foundation, employees in every region feed at least 100 needy people per week and provide job training and coaching in life skills.

“Through active participation in the program, it’s highly likely that they’ll have proven themselves enough to where we can endorse them with other employers in the area,” Cardinale says. “They’re also invited to join Bible studies.”

Cardinale says it’s not difficult to apply Christian tenets to the car business.  

“You’re either who you are or you’re not. We’ve got guys that want to go back to using the rough language or not taking care of their customers or beating up their employees. Christ wouldn’t want that in any way, shape, or form,” he says.

He adds, “This business, like any business, can’t be just about lining the owner’s pockets. If that’s the only thing you’re about, you can’t get anybody too fired up to come to work for you.”

Cardinale’s employees are required to keep up on their reading, but not just product brochures and training manuals. Recent assignments have ranged from The Greatest Salesman in the World by Og Mandino to Ed Young’s Outrageous Contagious Joy to The Art of War by Sun Tzu.  

“The books focus on personal enlightenment and they provide tools and that help you be a better wife, husband, mother, father,” Cardinale says. “How have these transformed our business? All the things that keep organizations from being able to move quickly – communications breakdowns, ego, pride – we erode those every day.

“We go into conversations empty…no agenda or angle. We’re not trying to be right and make somebody else wrong. If there’s a successful idea, how do we apply continuous improvement and make it better?

“The vast majority of what we read are not business books, they’re life books.”

Company Profile

What: Cardinale Automotive Group

Based: Seaside, CA

President and Founder: Joe Cardinale

Locations: 15 dealerships in California and Arizona

Rankings: Three stores on the WardsAuto Dealer 500; No.100 on the WardsAuto Megadealer 100.

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