Young dealer relies on his resilience
Texas retailer overcomes hurricane, termination
Nicholas Parks: South Dallas Hyundai store offers a new opportunity.
Nicholas Parks knows what lousy luck is all about, but the young dealer does not know defeat.
In the depths of the recession, Parks took over a downtrodden Dodge store in Alvin, Texas, and turned it around. When Hurricane Ike obliterated the showroom, he rebuilt the store, only to have it close for good in 2009 when Chrysler went bankrupt and began terminating dealers.
Now Parks, 33, is trying his luck again, this time with a Hyundai store in South Dallas.
"We didn't have time for despondency," he says. "What I learned was resilience."
Car retailing didn't come naturally to Parks, although his family has been in the business for decades.
His great-grandfather, after returning from World War I, became a motorcycle repairman, started a brake manufacturing company and invested in an International Harvester franchise. Parks' grandfather took over the Harvester store and added Pontiac.
Parks' uncle, Pete Mankins, is his partner in the Hyundai dealership. Parks says Mankins has spent 44 years as a dealer with "all sorts of franchises long gone," such as Daewoo and Daihatsu. Mankins has sold off Pontiac, Cadillac and Mercedes dealerships, but still owns a Nissan store in Texarkana, Texas, in the northeast corner of the state.
As a 9-year-old, Parks cut the lawn at one of Mankins' stores. And in 2003, it was Mankins who pushed Parks, armed with a finance degree, into car sales.
At first it didn't take. Parks had been "bored out of my mind" at a technology company when he came to see his uncle. Parks loved the face-to-face nature of sales work, but was looking for something more. So Parks earned a law degree, joined a law firm in Washington, D.C., only to quit when the high-pressure environment proved not to this liking.
In 2007, Parks returned to Texarkana and began to work in the various departments in Mankins' store. Then one day, Mankins told Parks he was going to fire the general manager at his poor-performing Dodge store in Alvin. Mankins gave Parks five minutes to decide if he wanted to move to southeastern Texas to become the new general manager. Parks said yes.
Alvin, about 10 miles south of Houston, is in the heart of oil refinery territory. Some nights, the motels were filled with oil-cleanup crews, so Parks slept on a Wal-Mart air mattress in the back seats of trucks on the lot.
But he relished the challenge, even if it was a five-hour drive to see his girlfriend. Rogers Dodge was $100,000 a month in the red, trying to sell trucks with gasoline at $3.50 a gallon.
"We had gone through all our working capital," Parks says. "We had a number of Friday paydays where we intentionally issued paychecks at 6 p.m. so no one could go to the bank and cash them."
Eventually, Parks increased car sales and the store was breaking even. Then Hurricane Ike hit in September 2008, doing $500,000 in damage to the showroom.
That same weekend, Lehman Brothers collapsed. Chrysler Financial dried up as a floorplan and retail financing source. The cost of capital soared for car loans, even for buyers with perfect credit.
Still, Rogers Dodge persevered. Revenues rose 52 percent in early 2009 from a year earlier and the store was granted Five Star status, a stamp of approval from Chrysler that provides perks not available to non-Five Star dealers.
Then Chrysler went bankrupt.
"We found out we were terminated when a customer called us," Parks says. "We hadn't seen the news. There was no letter from Chrysler."
The dealership had been selling 35 new vehicles a month, but when Chrysler appealed to dealers to support the struggling automaker, Parks says Rogers Dodge bulked up to 350 new vehicles in inventory. When the dealership was terminated, Chrysler gave the store three weeks to unload nearly a year's worth of cars.
"It was a fiasco," Parks says. "We lost $200,000 or $300,000 just getting rid of those cars. [Chrysler] charged us for inspection and distribution. Parts was a $50,000 loss. ADP sued us over our contract, because there were two years left on it, and we paid them $40,000."
ADP Dealer Services is one of the two largest suppliers of dealer management systems, the operating software for stores.
Parks and Mankins have no desire to join terminated dealers in the quest to be reinstated. Mankins is 72, and is "skeptical about anything that involves attorneys," Parks says.
Meanwhile, Parks says his legal experience taught him that none of the reinstatement criteria applied to Rogers Dodge. He says the business judgment rule, which makes corporate leaders immune from liability for losses incurred in many transactions within their authority, likely means a ruling will be in Chrysler's favor anyway.
While "wholesaling cars on the side, trying to make enough money to eat," Parks and Mankins chased buy-sell opportunities. A planned purchase of a Ford dealership fell through when Ford opted to close the store. A Hyundai dealership in Austin went to a rival dealer.
But when Kia dealer Shahab Salehoun wanted to unload his underperforming Hyundai store in South Dallas, Parks and Mankins jumped. The transaction closed in February 2010.
"A lot of the timing was sheer luck," Parks says. "We bought right as the new Sonata was coming out."
Salehoun's Hyundai store had been selling about 19 new vehicles a month. Two years later, Parks averages about 100 a month, with three weeks' inventory on the ground. Still, Parks estimates he will lose $400,000 at the service drive and parts desk because Hyundais are too reliable to count on for big-ticket service billings, forcing the store to compete with Jiffy Lube for back-shop work.
"We've had a lot of turnover," Parks says. "I went through about five parts managers. Now I have a good group of managers who have been here a year. Once you get stability, it helps everything,"
Parks, who was in Automotive News' inaugural group of 40 Under 40 this summer, doesn't have a surefire recipe for picking good managers. He points to a sales manager who he says has "no personality, not much education, and sounds like he's from deep east Texas."
"But he was salesman of the month from the start," he says. "And now he's one of best managers I have, because he has so much drive and ambition that he overcomes everything else. Other guys have education, talent and experience, and they just can't make it."
After the Chrysler experience, Parks says he is happy to be working with Hyundai. For instance, he says the company recently signed off on a long-term rental car for a customer waiting for a new air conditioning transistor on a car with 80,000 miles on the odometer.
Parks has a 15 percent share in the Hyundai store, with options for the remainder from Mankins. Similar arrangements with Mankins apply to recently acquired Ford and Chrysler-Dodge-Jeep stores north of Birmingham, Ala.
Meanwhile, Parks is engaged to his high school sweetheart after dating on and off for 17 years. They were going to get married this fall, but things got busy with the Hyundai store, so they're waiting another year.
Parks is not above grunt work to keep the store humming, whether it's fixing busted sprinkler heads or helping run the oil-change line.
"If I only have two lube techs working, I don't want the fourth person in line to wait an hour," Parks says. "You have to be willing to do everything."
Recently added to iPod: “Parting of the Sensory” by Modest Mouse
Last book read: The Path to Power by Robert Caro
Last vacation: Hiking in Peru
You can reach Mark Rechtin at email@example.com. -- Follow Mark on