3rd-generation dealer relies on 'no-fuss' strategy
Photo credit: HUDSON AUTOMOTIVE
At the recent opening of his renovated Toyota store in Bristol, Tenn., David Hudson was asked by a factory rep how he succeeds at a time when many other second, third and fourth-generation dealers struggle.
His reply was standard business textbook fare: Find great managers and associates, empower them and give them resources to perform.
Hudson, a modest, 38-year-old third-generation dealer, has become a solid, steady operator during a period of uncertainty for many small dealership groups.
"He'd rather have a decent car guy with outstanding leadership skills" to operate his stores than a high-octane mechanical whiz without a passion to lead, said Andrew Gilleland, general manager of Toyota Motor Sales U.S.A.'s Cincinnati region. "He understands that he isn't going to be at the store every day and therefore needs strong leaders to execute his vision for the dealership."
That vision, Hudson says, is simple: Strive to be a good dealer and stick to the basics.
The post-recession car shopper is more value-oriented than ever -- a cold, hard fact that Hudson has embraced.
You won't find a hair salon or coffee bar at any of Hudson Automotive's stores in Bristol; Madisonville, Ky.; Gastonia, N.C.; or Charleston, S.C. There is no formal corporate mission statement adorning management offices.
The Toyota, Nissan and Chrysler Group stores maintain a comfortable, neighborhood feel -- pictures of Little League teams sponsored by each store, photos of dealer personnel volunteering in the community, service departments that are cleaned daily -- that appeals to no-nonsense buyers and rural families.
"We're no-fuss," Hudson says. "It works for us these days."
David's grandfather, George R. "Hoolie" Hudson, started in the business in 1960 when he bought a Chevrolet-Oldsmobile dealership in Providence, Ky., after several years of operating a used-car lot and selling auto parts. It was a passion as well as a second source of income for the family.
Through the most recent recession, Hudson Automotive remained marginally profitable in 2008 and 2009, and rebounded in 2010 to enjoy its best year ever. It is expected to generate record revenues of $210 million for 2011.
The dealership group's same-store new and used unit sales are up 12 percent through November -- outpacing the overall U.S. market and in sharp contrast to Toyota's 2011 sales performance.
Hudson calls his management style "engaged but flexible." He seeks out honest, hard-working managers who can take a long-term view of the business but also adapt on the fly.
Photo credit: HUDSON AUTOMOTIVE
When the March earthquake and tsunami disrupted new-vehicle shipments from Toyota and Nissan, Hudson quickly shifted emphasis to used cars. Managers canvassed the country for used vehicles. Customers were contacted by phone and encouraged to trade in their vehicles.
He aggressively markets and manages inventory, trains and retrains people, and can be opportunistic with acquisitions. It's a basic strategy that has allowed the company to survive the downturn and be well-positioned to ride the recovery.
"My compensation runs on the high side and varies by store," Hudson said. "We manage to a number and target."
He's also not afraid to embrace manufacturers' image programs, and is spending $5 million to overhaul the Nissan store in Gastonia.
"It's good business to do this so long as a dealer doesn't overspend on the facility or other extravagances," Hudson said.
The Bristol store was acquired in August 2010 and was immediately recapitalized, including the recent $1.5 million improvement. While the local management team was retained, aggressive marketing practices were put in place and inventory was enhanced. The store has generated 890 new and 712 used vehicle sales this year through November.
At the same time, Hudson has avoided high-cost major metro areas to focus on Tier 2 and Tier 3 markets and takes advantage of the Web and the latest technology. The company's lifetime powertrain warranty -- launched in 2008 -- has proved effective at luring customers.
"We've resisted the temptation to reinstate head count and other extras -- balloons, for example -- that were cut during the 2008 and 2009 downturn," Hudson said. "The austerity measures put in place in 2008 and 2009 have become a way of life."
The Nissan store in Charleston was acquired in 2007 and has become the largest Nissan store in South Carolina. It is in contention to become the largest new and used retail store in all of South Carolina with estimated unit sales of 2,500 this year.
It has helped that greater Charleston is booming and adding jobs. Boeing Corp. has opened a $750 million plant in North Charleston to build the 787 Dreamliner.
"We aren't geniuses when things are going well, and we aren't idiots when things go bad," Hudson said. "As painful as 2008 and 2009 were, it helped us become better operators."
You can reach David Phillips at email@example.com.