Automotive News - September 8, 2008 - (Page 24) 24 • SEPTEMBER 8, 2008 THE DEALER SPEAKS Sheehy: ‘We are not in business for nostalgia’ ince Sheehy is president of Sheehy Auto Stores, a group of 14 dealerships based in suburban Washington. The company ranks No. 48 on this year’s Automotive News list of the 125 largest U.S. dealership groups. In an import-dominated market, domestic brands make up most of Sheehy Auto’s 23 franchises. The group relies on standardized operations across its dealerships to cut costs and maintain efficiency. Sheehy, 49, discussed the state of his company and the industry with Staff Reporter Donna Harris. How did your family get into selling cars? My grandfather came home from World War II and decided the car business was going to take off with all the soldiers coming home. My father was with him until the early 1960s and then broke away in 1965 to start his own Ford dealership in Marlow Heights, Maryland. He went into the dealer development program with Ford. The store became one of the largest Ford dealerships in the country. I joined him in 1987. What did you do before that? I spent three years selling insurance for Prudential. Then I returned to the Wharton School (at the University of Pennsylvania) for my MBA. From there, I became a marketing manager for General Mills. I worked on Total cereal, Yoplait yogurt and Gold Medal Flour. The night I left General Mills, everyone came to the party in plaid suits. The next day, I was battling 30 salespersons for the next customer to hit the lot. How did you become head of the Sheehy operation? In 1991, I bought a Nissan store in Manassas (Va.) as opposed to coming up through the ranks of the family business. My dad helped me finance it, and I built it from there. Because of my success there, I was able to buy two more Nissan stores, one in 1997 and one in 1998. It was too complicated to run them from the store in Manassas. In July 1998, I entered an agreement with my father to take over the management of the entire operation, and he would bump up to chairman. I couldn’t have gotten any of this done without him. He just celebrated his 80th birthday. The business is changing so quickly. How do you stay on top of it? Standardization is the key. You need efficiencies to survive. The more standardized you are, the bigger you can grow. We are a long way from being there, but we have to talk about it if we are going to be 50 stores. Our accounting is standardized. We have a standardized marketing approach. It is important, particularly to stay legally compliant. The processes have to be in place to check everybody. I have a full-time compliance official. Even with that individual, it is a struggle to keep up across 14 locations. V Why did you leave a good job at General Mills to become a dealer? Small business was just in my blood. I knew I could move up the ranks at General Mills and have a promising career. I just would not have had the risk-reward I was looking for. VINCE SHEEHY Ford) store and added Chrysler-Jeep to the Dodge store in 2007. How is your Lexus dealership doing? Luxury sales are down. The two-income family that’s just getting by right now is pretty conservative. It is easy to postpone decisions. Is the Washington market overdealered? Is consolidation having an impact? This market has been strong for such a long time that many dealers have an emotional tie to their business and made a lot of money over the years. They are not compelled to sell even if it might be the right thing to do. Barring a disastrous economy, it will take five years to right-size this market. I am not wishing that disaster on anybody, including myself. I hope it takes five years and not two. You launched your VIP Club last year. Customers who pay to join get complimentary and discounted services, including cash off another vehicle purchase. Salespeople get a bonus for selling the program. How is it going? VIP has been a resounding success. Fifty-four percent of new-vehicle customers and 43 percent of used-car customers become VIP members. We have had over 5,000 VIP service visits. And a lot of these have not had time to develop — many VIP members are still coming in for their first oil change. How many redeem bonus bucks for their next vehicle? It is relatively early in the program, but we have had between 50 and 60 redeemed. Those are mostly people who had a wreck or something unfortunate. But we also have had VIP members buy a vehicle within a week for a child. Once we get past the two- to three-year mark, we’ll be looking at a tremendous boomerang of customers coming back. Salespeople at Sheehy consider themselves well-paid, but I think the program has helped reduce turnover. You’re coming up on your 10,000th VIP Club purchase. How will you respond? We will do something for that customer. At the very least, we will give them free membership. I want to make a lot of noise. c RAFAEL SUANES/MCT We are not going to be eight to 10 one-off dealerships. Our operation works under one umbrella. Dealers often offer their general managers a stake in their store to motivate them. You have a different philosophy. We have an all-for-one-and-one-forall philosophy. We encourage managers to be invested in the company, not in an individual store. That’s the glue that holds us together. Two-thirds of our executive managers-general managers and up are invested in the company. The remaining third are working their way toward that. We have a tighter footprint than other dealership operations. We have the ability to manage most of our stores within a two-hour radius. It is easier to pull people together and be a cohesive group. Some of our philosophy is driven by our footprint. If we had stores in Oklahoma and Florida, we would have to have a guy who is a 20 percent owner in that deal. My processes aren’t so good that I can manage a Florida or Oklahoma store. You have 14 dealerships and 23 franchises, about half of them domestic. Which brands are the winners and losers? We are treading water at our domestic stores. All our preparation is to plan for the worst. If it turns out better, then so be it. We can only do so much in terms of getting cars sold. It’s as challenging as I have seen it since I have been in the business. Hopefully, we have enough deep pockets and enough good management. It’s clear to see who the winners are, as the market moves back toward cars and crossovers. The domestics have a lot of work to do to change their mix of products and to improve overall fuel economy. Big bets are being placed on research and development for alternative-fuel vehicles. The market, in the next five to seven years, will determine who guessed right and who guessed wrong. Throw some new foreign competitors in the mix, and it’s going to be an exciting but tumultuous period in the business. How is your brand mix changing? Necessity is the mother of consolidation. We take a cold look at the future economics of each operation. We are not in business for nostalgia. We shut down our Powhatan (Va.) Ford store in 2007. We added Lincoln-Mercury at the Richmond (Va.,
Table of Contents Feed for the Digital Edition of Automotive News - September 8, 2008 Chrysler Financial hikes dealer floorplan fees Back in business? Detroit's best bets for cash: Feds, UAW Document fee suits swamp Missouri dealers Honda's family squabble Used truck prices rebound Ford mulls Lincoln compact Toyota delays RAV4 plan Proposed flex-fuel mandate roils industry Chrysler sues consultant over sourcing Cobalt transaction prices are up $775 since April Nissan looks to Mexico for engineering aid To retain truck buyers, Nissan offers more stuff Press: Chrysler is pushing forward on electric cars Leasing falls to 4-year low GM: Currency shift stalled Astra Dealers say they can sell the Republican ticket Industry loans clash with GOP climate Grand Cherokee will get axles from new plant Makers must resist urge to backslide as gas price dips Times are tough outside the U.S., too Chevrolet does tout its small cars Let natural gas power the fuel cell A crash course in collaboration Dodge wouldn't rush the RamBox Plastics are losing cost advantage Suppliers expect to benefit from tougher CO2 rules 'People just want Ford to go' For now, Honda will skip electric vehicles Toyota, Subaru enter race to market electric vehicles China exports squeezed Study: 15% of wrecked autos got washed titles Mercedes megadealer is bullish on luxury Sheehy: 'We are not in business for nostalgia' Automakers use driving schools as marketing tools Dodge smoothes Ram's rough edges â a little Honda touts leasing while others fall back Alysha Webb Study: Nonprime car loans get longer Dealer CPA group picks leader BMW, Edmunds team up on loan site for consumers Va. Honda dealership loses protest bid Judge throws out deceptive-ads lawsuit against Toyota in Arkansas Mo. dealership's protest gets go-ahead Pa. court throws out suit against Ford, dealership Dealers Ross' interiors company pushes into China, India More than a game Nissan's Tavares: Green conference keynoter Quality group seeks to set consulting standards Personnel Dana to shift HQ by Sept. '09 Tenneco to supply Volvo XC60 BMW gets Siemens conveyors IAC to cut 280 jobs in Sweden Polytec to acquire Peguform Metaldyne to sell Italy operation Federal-Mogul to build India plant Beck, Delphi make pact TRW to supply Chinese sedan Auto profits rise in Russia Black Book expands data Hayes Lemmerz cuts losses Ford: Buyouts are a tough sell GM's party plans include production Volt An ice-cold August for auto sales Big drop in Aug. output Lights, camera . . . Volt? In case the roads get too quiet . . . The Insight rides again Lagonda brand will be back Milwaukee road trip: No old pals, but 1 new lesson Choice of Odell seen as Ford vote of confidence in Volvo Dana sort of wins an award Automotive News - September 8, 2008 Automotive News - September 8, 2008 - (Page Introducti) Automotive News - September 8, 2008 - Detroit's best bets for cash: Feds, UAW (Page 1) Automotive News - September 8, 2008 - Detroit's best bets for cash: Feds, UAW (Page 2) Automotive News - September 8, 2008 - Toyota delays RAV4 plan (Page 3) Automotive News - September 8, 2008 - Cobalt transaction prices are up $775 since April (Page 4) Automotive News - September 8, 2008 - Cobalt transaction prices are up $775 since April (Page 5) Automotive News - September 8, 2008 - GM: Currency shift stalled Astra (Page 6) Automotive News - September 8, 2008 - GM: Currency shift stalled Astra (Page 7) Automotive News - September 8, 2008 - Grand Cherokee will get axles from new plant (Page 8) Automotive News - September 8, 2008 - Grand Cherokee will get axles from new plant (Page 9) Automotive News - September 8, 2008 - Grand Cherokee will get axles from new plant (Page 10) Automotive News - September 8, 2008 - Grand Cherokee will get axles from new plant (Page 11) Automotive News - September 8, 2008 - Let natural gas power the fuel cell (Page 12) Automotive News - September 8, 2008 - Let natural gas power the fuel cell (Page 13) Automotive News - September 8, 2008 - Plastics are losing cost advantage (Page 14) Automotive News - September 8, 2008 - Plastics are losing cost advantage (Page 15) Automotive News - September 8, 2008 - Suppliers expect to benefit from tougher CO2 rules (Page 16) Automotive News - September 8, 2008 - 'People just want Ford to go' (Page 16A) Automotive News - September 8, 2008 - Toyota, Subaru enter race to market electric vehicles (Page 16B) Automotive News - September 8, 2008 - Toyota, Subaru enter race to market electric vehicles (Page 16C) Automotive News - September 8, 2008 - Toyota, Subaru enter race to market electric vehicles (Page 16D) Automotive News - September 8, 2008 - For now, Honda will skip electric vehicles (Page 17) Automotive News - September 8, 2008 - For now, Honda will skip electric vehicles (Page 18) Automotive News - September 8, 2008 - For now, Honda will skip electric vehicles (Page 19) Automotive News - September 8, 2008 - Study: 15% of wrecked autos got washed titles (Page 20) Automotive News - September 8, 2008 - Study: 15% of wrecked autos got washed titles (Page 21) Automotive News - September 8, 2008 - Mercedes megadealer is bullish on luxury (Page 22) Automotive News - September 8, 2008 - Mercedes megadealer is bullish on luxury (Page 23) Automotive News - September 8, 2008 - Sheehy: 'We are not in business for nostalgia' (Page 24) Automotive News - September 8, 2008 - Sheehy: 'We are not in business for nostalgia' (Page 25) Automotive News - September 8, 2008 - Sheehy: 'We are not in business for nostalgia' (Page 26) Automotive News - September 8, 2008 - Sheehy: 'We are not in business for nostalgia' (Page 27) Automotive News - September 8, 2008 - Automakers use driving schools as marketing tools (Page 28) Automotive News - September 8, 2008 - Dodge smoothes Ram's rough edges â a little (Page 29) Automotive News - September 8, 2008 - BMW, Edmunds team up on loan site for consumers (Page 30) Automotive News - September 8, 2008 - BMW, Edmunds team up on loan site for consumers (Page 31) Automotive News - September 8, 2008 - Judge throws out deceptive-ads lawsuit against Toyota in Arkansas (Page 32) Automotive News - September 8, 2008 - Pa. court throws out suit against Ford, dealership (Page 33) Automotive News - September 8, 2008 - Dealers (Page 34) Automotive News - September 8, 2008 - More than a game (Page 35) Automotive News - September 8, 2008 - Personnel (Page 36) Automotive News - September 8, 2008 - TRW to supply Chinese sedan (Page 37) Automotive News - September 8, 2008 - TRW to supply Chinese sedan (Page 38) Automotive News - September 8, 2008 - Auto profits rise in Russia (Page 39) Automotive News - September 8, 2008 - Auto profits rise in Russia (Page 40) Automotive News - September 8, 2008 - Auto profits rise in Russia (Page 41) Automotive News - September 8, 2008 - Auto profits rise in Russia (Page 42) Automotive News - September 8, 2008 - Auto profits rise in Russia (Page 43) Automotive News - September 8, 2008 - Auto profits rise in Russia (Page 44) Automotive News - September 8, 2008 - GM's party plans include production Volt (Page 45) Automotive News - September 8, 2008 - GM's party plans include production Volt (Page 46) Automotive News - September 8, 2008 - An ice-cold August for auto sales (Page 47) Automotive News - September 8, 2008 - An ice-cold August for auto sales (Page 48) Automotive News - September 8, 2008 - Big drop in Aug. output (Page 49) Automotive News - September 8, 2008 - Dana sort of wins an award (Page 50) Automotive News - September 8, 2008 - Dana sort of wins an award (Page 51) Automotive News - September 8, 2008 - Dana sort of wins an award (Page 52)
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