To move the metal, Mike Kahn moves the store

What propels fastest-growing dealership group? Shifting stores to prime real estate

By relocating his stores near freeways and shopping malls, Mike Kahn has made Superior Automotive Group the countryís fastest-growing dealership group. Photo credit: ALYSHA WEBB
LOS ANGELES — Mike Kahn runs what may be the fastest-growing dealership group in America, moving up more places than any other company on Automotive News' latest ranking of the country's largest auto retailers. His secret: relocation, relocation, relocation.

The 48-year-old Southern California native — a former amateur boxer who started out selling bean bag chairs on the street — became a car dealer seven years ago. Kahn's Superior Automotive Group, based in Long Beach, now has seven stores spread across California: four Nissan dealerships, two Toyota stores and a Chrysler-Jeep-Dodge site.

Kahn's MO: Buy prime California properties near freeways and big shopping centers and then aggressively pursue strong new-vehicle franchises to plunk down on the sites.

As a business model, it may not be entirely original. But Kahn seems particularly good at it. When trying to match locations with franchises, he won't be deterred — even by opposition from the likes of Toyota.

"He is a substantial real estate dealer as well as a car dealer," said dealership broker Sheldon Sandler, CEO of Bel Air Partners in Skillman, N.J. "I don't think there are many dealers who have gone to the level of real estate entrepreneurship that he has. He has a broader vision about the relationship between real estate and car dealers than you would ordinarily find."

Mike Kahn
Age: 48
Owns: Superior Automotive Group, Long Beach, Calif.
Number of stores: 7 in California (4 Nissan, 2 Toyota and 1 Chrysler-Jeep-Dodge)
2007 sales: 10,695 new, 4,348 used
Rank: No. 73 on Automotive News list of top 125 dealership groups, up from No. 106 in 2006.
2007 revenue: $506.5 million
Web site:

A keen eye

Kahn, who wears tailored shirts and cuff links covered with diamonds, calls himself an opportunist, with a keen eye for promising retail locations. Indeed, his "my way is by the highway" approach seems to typify an aggressive new breed of dealer.

Kahn describes himself as half real estate pro, half car dealer. He owns commercial and residential properties and hotels and says it is the real estate side of his operations that has "provided the fuel to get through these hard times in the car business."

Superior Automotive's retail sales rose 52.9 percent to 10,695 units last year, helped by the addition of one store. The sales increase boosted Superior from 106th place on Automotive News' 2007 list of the top 125 dealership groups to 73rd. No group climbed as many places on the list last year.

Superior's gross revenue shot up 62.3 percent compared with 2006, to $506.5 million.

Kahn says sales and profits are down this year, but "we're certainly hopeful we will be profitable."

Superior numbers
Mike Kahnís 7-store Superior Automotive Group has been growing fast.
 2007change from 2006
New retail unit sales10,69552.90%
Used unit sales4,34836.30%
Wholesale unit sales3,615NA
Total unit sales18,65883.20%
Revenue$506.5 million62.30%

5 relocations

Five of Kahn's seven stores were relocated after he bought them.

Freeways and auto malls are his favored spots. Kahn says they have visibility and volume. The dealerships are usually shifted over to property Kahn owned before purchasing the dealership.

In 2004 he bought a busy half-mile stretch along Route 60 in the Los Angeles suburb of City of Industry. The property included an Ikea furniture store, a Circuit City electronics outlet and several other retailers. Kahn thought the stores were situated in a perfect spot for car dealerships.

"I told my (real estate) guy to see if we could buy the shopping center for the purpose of relocating all the big-box retailers and creating my own auto mall," he said.

Kahn obtained the property and bought out the leases for Ikea and Circuit City, both of which relocated. After knocking down the vacant big-box buildings, Kahn built a Chrysler-Jeep-Dodge dealership where Ikea had been. A family-owned Honda store landed on the Circuit City site.

When the Chrysler-Jeep-Dodge dealership floundered, Kahn tried to sell the store. There were no takers, so he moved a nearby Nissan dealership he owned into the Chrysler location and put the Chrysler franchise into the smaller Nissan spot. Now sales at the Chrysler stores are rising.

"A lot of car dealers are real estate savvy," Sandler says. "What is remarkable is that he would be executing in this environment. To be doing something like this in these times would be very contrarian. Most car dealers are hunkering down."

Says Tom Longo, managing director of Urban Science, a dealer consultancy in Long Beach: "If you can get great visibility and other auto or retail around it, the more chance you have to be very successful."

Not afraid to fight

That's Kahn's style. And he will fight to secure a great brand when he has a great location for it. He tangled with Toyota and won.

In 2006 Kahn wanted to buy Ron Goode Toyota of Alameda in the San Francisco Bay Area. But Toyota exercised its right of first refusal to sell it to ex-National Football League star Ronnie Lott, a minority dealer, Kahn says.

Kahn sued Toyota and the two sides settled out of court. Kahn eventually got the Alameda franchise. Toyota even allowed him to buy another Toyota dealership last year in San Juan Capistrano, Calif.

Now Kahn is moving Toyota of Alameda to a new building on 6 acres he owns along Interstate 880 in Oakland. The $35 million store, set to open in December has five floors and a four-story glass showroom.

"Cars are kind of like ice cream cones," Kahn says. "They're impulse items. People drive by, they see a dealership, they say let's go by and get some tires. The next thing you know, they're buying a car."

Kahn downplays Internet sales. He says dealers' online sales departments often are unprofitable.

"There are a lot of dealerships with Internet departments that are really acting as fleet departments," he says. "The Internet to me has never been a priority."

Began with beans

Kahn, who is from Long Beach, dropped out of high school after 10th grade and began selling beanbag chairs, among other things, on street corners. His father manufactured the quintessential 1970s fad furniture.

In 1980 Kahn landed a sales job at a Dodge dealership in California. Over the next several years, he changed jobs and dealerships several times. In 1986 he became general sales manager at Toyota of Garden Grove in suburban Los Angeles.

"About five people were fired and five people were hired" the day he took over, Kahn says. Within 90 days, he says, he had almost tripled sales.

Kahn says he ultimately became frustrated with family disputes at Toyota of Garden Grove and quit in 1988. He returned to selling bean bag chairs — through his own company rather than on a street corner.

But by October 1992, Kahn was back in the car business as general manager of a Toyota store in West Covina, Calif., owned by Mike Salta.

Four years later, Salta made Kahn COO of Salta Automotive Group and a partner in five of the group's 14 dealerships. But a 2001 deal for Kahn to buy out Salta fell through, and the two parted ways.

In June 2001 Kahn struck out on his own, purchasing the Nissan dealership in Puente Hills, Calif., a Los Angeles suburb. His most recent purchase, in February 2007, was the Toyota store in San Juan Capistrano.

Kahn sees opportunity in what he calls the industry's "perfect storm." He expects to buy "a few more" stores in the next 24 months. Kahn would like to own a Honda dealership, and another Nissan store would be nice.

"There are probably a lot of dealers that, after they get through this year, are going to say: 'You know, I'm too old for this. I've had enough,' " he says.

But Kahn has barely begun. 

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