For This Car Dealer, the 1-Price Is Right

If someone told Jerry Mullinax Saturn invented no-haggle pricing, he would respectfully disagree.

“My dad (Ed Mullinax) gets the credit for being the first guy that anybody knows of who did 1-price selling – in 1975,” says Mullinax, co-owner of the Mullinax Ford group that owns six stores in Florida, Alabama and Washington state.

It may have been a different story if a competing dealer had not decided to open for business on Sunday.

Ed Mullinax started in the car business as a minority partner at an Ohio Ford dealership in 1968. He bought his own Ford store in Amherst, OH, near Cleveland, in 1970. “(Someone) at Ford said, ‘I don’t think you want that store,’ but it was what he could afford, so he bought it and did great with it,” Jerry recalls.

When a nearby dealership began to sell on Sundays, the elder Mullinax did the same, hoping the competition would prod the other store go return to standard dealership business hours.

“We said, ‘We really don’t want to be open that day, but if we’re going to let’s do something different and put the price out there,’” Jerry Mullinax says.

The 1-price policy started as a 1-day experiment. It was well received by consumers. A month later Mullinax decided to do it for a week, then went back to the regular way of negotiating prices.

“A month later they said, ‘It worked for a day and for a week, let’s do it for a month. Then (it became) a couple months,” Jerry says. It worked so well, “They decided to do it all the time.”

“Up-Front Pricing” is now a Mullinax trademark.

Scrapping No-Stuttering Salesmen Slogan

Mullinax once used an ad slogan “Our Salesmen Don’t Stutter” to promote its price strategy.

The thinking behind the slogan was, “If you ask me what the price is, I can clearly tell you and not have to dance around the issue and say well, um, um,” Jerry Mullinax says. The problem was some employees actually did stutter, and took offense. “My dad didn’t want to make light of the issue.” So the slogan was scrapped.

The group grew to five stores – four in Ohio, one in Florida – before Mullinax sold the network to AutoNation in 1996 for $100 million in stock. The Mullinax group was one of the first acquisitions for AutoNation (then called Republic).

Jerry Mullinax worked for the dealership chain for three years as a district manager overseeing 31 dealerships. “AutoNation is a good company,” he says. “I honored my contract with them, then decided to do something on my own.”

He bought a Ford dealership in Apopka, FL, near Orlando, in 2000 and added stores in  New Smyrna Beach, West Palm Beach, and Kissimmee, FL; Mobile, AL; and Olympia, WA.

Three Mullinax stores are on the WardsAuto Dealer 500 ranking: Apopka (No.187 with 4,573 total new units); West Palm Beach (No.304 with 3,208 total new units); and Mobile (No.311 with 3,301 total new units).

In a WardsAuto Q&A, Mullinax talks about his business, how it has grown and how it works.

WardsAuto: Mullinax has always been a Ford franchise. Why Ford?

Mullinax: My dad was a minority partner in a Ford dealership that started back in 1968. That’s what we knew and grew up with, so that’s what we’ve always done.

When I was a district manager with AutoNation, we would bring the managers in from the same brand. We always found that when we brought the same brands in together, we could have more productive meetings. When you bring a Honda guy in with a Ford guy, you just have a lot of different concerns and issues. It wasn’t as productive as when you brought in all Ford or all Chevrolet guys. They had similar issues that were easier to manage.

WardsAuto: Why expand to Alabama and Washington?

Mullinax: Ford approached me in 2010 and said a previous owner wanted to sell (the Alabama outlet). I knew the store, I knew the area and I thought it would be a good store. It was one of the few markets active in the Ford FDAF (Ford Dealer Advertising Fund) and one of the few markets in our region that Chevrolet actually outperformed Ford in truck sales. I thought that’s not typical. There was a lot of opportunity there. It’s turned out to be a very good store for us.

My banker said, “What about a store in Olympia, WA?” I said, “That’s quite a ways away.” But I went out there, and it’s such a vibrant city and the state capital. It’s turned out to be a good store as well. We’ve only had it for two years, but our volume is ramping up.

WardsAuto: Is it difficult to effectively manage stores from such a distance?

Mullinax: I wouldn’t say it’s easy, but one thing that makes it simpler for us is all store are the same brand. We have very similar issues.

WardsAuto: Do trucks require unusual incentives?

Mullinax: Truck sales are great, but typically they carry quite a lot of incentives. Ford and Chevrolet and Ram compete against each other. They don’t want to lose an ounce of market share so they’ll 1-up each other quite often.

WardsAuto: At one time, some of your stores did not have F&I departments but instead let the salespeople handle that business. Why did that change?

Mullinax: It worked very well for us in 2009 and 2010. But as the volume per salesperson increased, we just couldn’t keep up.

If the salespeople got busy, they wouldn’t present the extended warranties and maintenance plans in the same way they would if they weren’t busy. Sometimes, if they had a really busy month, the paperwork would suffer.

WardsAuto: Describe your flat-fee compensation plan.

Mullinax: If we are the ones setting the prices, we figure the salespeople have no control over the gross anyway. The management sets the price of the car, and it’s the salesperson’s job to sell the value to the customer. We don’t want the salespeople to try to push them up or down.

If the customer wants a Super Duty (pickup), we want to sell them a Super Duty. If they want to buy a Fiesta, we’ll sell them a Fiesta. It’s the salesman’s job to find the right vehicle that works for them. Our job is to make sure we price and manage the inventory for enough gross.

WardsAuto: Is there a different flat fee for Fiesta and Super Duty?

Mullinax: No, they are all the same. We do have volume bonuses. The only thing that changes is if a salesman sells, say, 22 cars, he gets a higher flat fee than if he sells 10. We do pay more on a new than on a used. It’s harder to sell a new (unit), because there’s a whole bunch of others just like it out there. The used are more unique.

WardsAuto: Why don’t you charge document fees?

Mullinax: If we tell you we’re giving you our best price up front, and you see a vehicle on the Internet for $20,000, I don’t want you coming in here and see the price is $20,700 because I added a $700 dealer fee.

If we’re going to be transparent with the customer, we need to do what we say we’re going to do. A dealer can price a car $700 less than us online, because they are going to charge $700 more once (the customer) arrives at the dealership. That does give them a (visibility advantage on the Internet), but the goodwill we generate from not having the doc fee (makes up for it).

WardsAuto: This isn’t affecting your profitability?

Mullinax: No, our grosses are right in line with the regional averages. We don’t make more, but we’re certainly not below.