Having Fun in Warm California Sun

ORANGE COUNTY, CA – Why would the second-ranked Toyota dealer in the country want to devote much of his time to the 2005 chairmanship of the California New Motor Vehicle Board?

“It's payback to the industry for all the good things that have come my way after I began selling cars in Waterloo, IA,” David W. Wilson says of his board service.

“I never dreamed back in 1968 that I would, or even could, become owner of an 18-outlet dealership group with six Toyota stores that sell almost as many cars as Longo Toyota (the No.1 store on the Ward's Dealer 500),” he says. “The industry has been rewarding, and I genuinely feel an obligation to serve on a board that regulates it.”

David Wilson (right) and fellow California vehicle board members Tom Flesh (left) and Glenn Stevens.

The David Wilson Automotive Group sells five different car lines. It has continued to climb the Ward's Megadealer 100 ladder, finishing 16th on the latest list with revenues of $1.34 billion. His stores also are regulars on the Ward's Dealer 500.

He has enhanced his portfolio by opening six Scion stores, one at each of his five Southern California Toyota dealerships, and one at his Toyota store in Scottsdale, AZ.

“We're on a bit of a roll,” says Wilson, who this year was among winners of the prestigious Time magazine Dealer of the Year award for business excellence and community service.

“We're beginning a $30 million Lexus building over in Newport Beach, for which the land alone cost $30 million,” he says. “It's right across from the No.1 Mercedes-Benz store (Fletcher Jones' Motorcars). Just as we're going after Longo Toyota's sales lead, we'll go after those Mercedes customers who buy from Jones when the Lexus store opens up in 2006.”

Wilson is bullish about the Toyota, Scion and Lexus franchises, forecasting continuing growth for each in volume and market share. The Wilson group sold nearly 60,000 new and used vehicles last year.

“It's not only the great products,” Wilson says. “It's being located primarily in Orange County, where consumers are youthful and upbeat and determined to buy cars with the best long-range values.”

One of Wilson's Orange County stores, located near his flagship Toyota of Orange, is a Ford dealership. Wilson says a lot of Ford owners have gravitated to Toyota for reasons of superior durability and long-term residual values.

“I've always been near the top among Ford dealers,” he says, “and I'm reluctant to say this, but I don't see many of my customers returning to Ford because, in the kind of driving they do on California freeways and mountain roads, they're happy with their Toyotas.”

He compliments Toyota for not overdealering and not brooking poor performers. “If a store becomes redundant, Toyota closes it rather than stringing it along, like the Big Three do,” he says. “Toyota of Anaheim (CA) became a casualty, rather than being kept on as a loss leader.”

Wilson believes in “growing our own people into managerships.” Eleven of his general managers are junior partners in his stores, earning up to 25% of the profits as dividends.

“My oldest general manager is 52 and has been a partner since 1989, Mike D'Amato, at Lexus of Tustin (CA),” says Wilson. “My youngest is my son-in-law, Jay Francis, 36, at the Toyota spread in Scottsdale. That's another growth market – and you learn fast in growth markets that the way to keep key personnel from defecting is to reward them well.”

Wilson has distinct views on the role of the six publicly owned dealership chains that are active throughout the West.

“Public companies have a place,” he says. “But they suffer from inferior customer satisfaction ratings because there's no entrepreneur with his money or his reputation on the line. Whenever a private dealership joins a publicly held group, its performance goes down for that reason. I can't imagine successfully running dealerships that way.”

Wilson's group goal this year is to exceed $2 billion in total sales. “I'd like to buy more Toyota or Lexus stores,” he says, “because Toyota has about $39 billion in cash and is such a juggernaut.”

Asked how he compensates his staffers, Wilson does not duck the question. “I have sales and F&I managers into six figures,” he responds. “They deserve it, so they get it. It makes me happy to pay them what they're worth.”

Wilson was appointed to the California New Motor Vehicle Board by former Gov. Gray Davis in 2001 to fill one of the panel's four dealer slots. He served last year as the only Ford dealer on the panel during the case where Ford Motor Co. blocked dealership chain Asbury Automotive's $88 million bid for Bob Baker's group of dealerships in and around San Diego. Ford didn't want Asbury to acquire a Ford store in the group. The auto maker charged that Asbury's Ford stores elsewhere had “underperformed.”

Like Wilson, Baker had a Ford dealership and also a Toyota store. Wilson says he personally felt bad for Baker. The board's administrative judge upheld Ford's position. Wilson and other board members accepted the judge's ruling. Otherwise, the board's dealer members are barred from voting on matters affecting other dealers and auto makers.

Baker, a veteran dealer and co-founder of the Ford Dealers Alliance, an activist dealer organization, subsequently sued Ford. That resulted in an out-of-court settlement.

Wilson says the contentious case illustrates why more dealership groups have not become publicly traded companies. “It changes your approach to the business so dramatically,” he says.

As for Gov. Arnold Schwarzenegger's proposal to scrap the new motor vehicle board as an “unneeded public regulatory agency,” Wilson has two rejoinders.

“First, the board and the law that establishes it serve the public interest and keep California's 1,600 new-car dealers and the auto makers in compliance with state laws that assure fair and ethical public treatment.”

“Second, Arnold didn't realize the board's budget costs the California public nothing. It's funded by the dealers and the manufacturers.”

The governor has since backed off.

Wilson is a native of small-town Iowa and the oldest of five children whose father was a former rodeo rider.

A youthful-looking 57, Wilson started his auto career as an “oil changer and luber” at a Lincoln-Mercury store in Iowa. Much of his entrepreneurial spirit comes from his mother who, among other things, sold pots and pans at Tupperware-like parties. So did he for a while.

Recalling his humble beginnings in Traer, IA, population 1,000, (until he was age three his family lived in an apartment over a John Deere dealership), Wilson says he might never have become a dealer had he not incorrectly performed a service job at the dealership.

“The oil leaked out and the engine was cooked,” he recalls. “The dealer demanded I pay for a new engine, which I, as a struggling college kid, could not afford. He let me sell cars to pay for the engine. After two years, I became his sales manager.”

Wilson graduated from the University of Northern Iowa with a degree in religion and philosophy. He briefly considered becoming a clergyman.

After graduation he moved West. He started working at a Lincoln-Mercury store there after running up a high dealership repair bill when his car broke down.

“I asked the service manager if employees got a discount. He said, 'Why, do you work here?' I said, 'Not yet.' I walked into the sales office and got a job. “Five years later, I became general manager with a 25% ownership. In 1982, Toyota of Orange took me on as a 25% owner. It's been uphill from there.”

Long active in Boy Scouts and an avid golfer, he chairs a tournament that annually raises $200,000 for scouting. He gave $1 million to his college alma mater to establish a chair for business ethics. In April, Wilson was inducted into the Horatio Alger Assn. of Distinguished Americans at a ceremony in Washington D.C.

He and wife Holly have two children. His adult daughter lives in Arizona. Wilson met Holly as fellow motorists stopped next to each other in a legendary California traffic jam. They struck up a conversation. “I owe our relationship to that traffic jam," he says.