After selling out to Sonic, Price builds another empire
"I do well working with people but not so well working for people in a corporate environment.": Tom Price, pictured with his favorite Ferrari 250 GTO at the Pebble Beach Concours d'Elegance.
Tom Price built the First America Automotive retail empire in the western United States through the 1990s before selling it to Sonic Automotive Inc. in 2000. But Price chafed under the public-company structure, and after three years, he bailed out to start anew.
A decade later, Price Family Dealerships is gaining momentum in northern California, with an estimated $800 million in annual revenues. CEO Price, 68, spoke about the changing retail environment with Staff Reporter Mark Rechtin at Price's corporate headquarters in Marin County, flanked by his collection of vintage automobiles.
Q: How did you get started as a dealer?
A: I started selling cars when I was going to the University of Arizona. I transferred to Colorado and had a leasing company. Then I emigrated to an Australian ad agency and I handled some dealerships.
When I came back to the United States in Detroit, I went to work for Lincoln-Mercury, but I was transferred to the West Coast. After eight years, when they said, "Come to Detroit," I said goodbye.
Went to work for a Lincoln-Mercury dealer in San Francisco for two years, then I bought an Oldsmobile dealership in Daly City. With a lot of enthusiasm and a lack of knowledge, I took the store to No. 1 in the western region in 1976. But five years later, I realized I was limited by the profit opportunities with Olds and started expanding into other brands.
Why sell to Sonic?
We were a fairly corporate structure at the time. We had 30 dealers throughout the western United States. We were at $1.6 billion in revenues, which was better than a lot of publics. Sonic, in Charlotte, has gone through change and growth and they're good car people. But I learned that I don't want to be part of a public company. Not because of Sonic, but just the environment of a public company. I do well working with people but not so well working for people in a corporate environment.
How have your high-end luxury brands performed, here in the shadow of San Francisco?
The luxury brands are less affected by ups and downs. We have a brand-new Mercedes-Benz store in Fairfield. It was an open point with no good will to speak of but it's in that startup window. That area was hit by recession and foreclosures. It will be great long-term, but right now it's just ramping up.
With Jaguar Land Rover, we just can't get enough cars. Volvo is holding its own, waiting for new product. Infiniti is kind of in the same category. We love the cars, had it for a while and it's successful, but I'm excited about becoming a worldwide brand.
Are all of your stores profitable?
The Mercedes store is just getting there, but other than that, yes.
How do you keep customers loyal in the competitive Bay Area?
Some of our practices are probably more customer-friendly. We have value pricing on new cars, fixed pricing on used. Most of our stores take care of the customers. Everyone says that, but actions speak louder than words. We post other dealers' ads on our showroom floors. We're very transparent. We have 50 to 55 percent of our sales through direct sales, the Internet and incoming sales calls. We quote prices over the phone and the Internet.
Which is the more important sales tool: Internet or face-to-face?
You can't separate them. Internet contacts come in and become face-to-face. With used cars, the Internet has become more powerful than anyone ever imagined. Everyone thought it was going to be all about new car, but it's actually used cars, because everyone is looking for a specific car. If it's the right car at the right price, you'll pull people from a long distance.
How do you develop managers?
In conjunction with Adam Simms, my COO [formerly general manager of Sunnyvale Toyota], we put together a group where we train all incoming salespeople so we have consistent processes and procedures in our stores.
Most of our GMs have moved up from sales manager positions. If someone is new from the outside, we have them work in stores at a lower position for a while, even if they were a GM somewhere else, so they understand our philosophies.
Do you have difficulties hiring women?
Toyota Marin has women as parts manager, service manager and body shop manager. But many women are not as tolerant of the long hours, especially if there are families involved. It's a challenge. And there needs to be more support. If there are just one or two women in the dealership, they are kind of out there by themselves. There needs to be a closer ratio of men to women on the floor. We work hard on it. I have some dynamite women salespeople, just not enough of them.
Are you looking to expand your brand footprint?
We're pretty close to where we want to end up. Probably we can add one or two more stores over the next couple of years. We're at a size just before where you need a management company.
Are your kids in the business?
My COO is 20 years younger than I am, and my son is 20 years younger than that. I don't want to put that kind of pressure on him. I have two sons.
One is waiting to hear if he passed the bar. He speaks Japanese and wants to get into international law.
The other son was a basketball walk-on at the University of San Diego, and he is interested in sports and cars. He went through the NADA Dealer Academy. He is learning the business so that if something happened to me, he could make good judgments. I've never worked a day in my life, so I want my boys to have that same attitude. You see a great mix of [second-generation] dealers who take it to the next level, and then there are those who squander it away. The key is having the same passion as the person who built the business.
Your vintage car collection is magnificent.
There are about 25 to 30 core vehicles, and then some that come and go. My favorite is a 1932 Alfa Romeo 8C that was one of the factory team cars, and which may have won the Mille Miglia. I've driven it in 100 races, 30,000 miles at speed. My second would be the 1963 Ferrari GTO, one of the most collectible Ferraris.
You bought 21 vintage Ferraris at one sitting a few years ago?
There was a bankruptcy, with [Dutch distributor] Kroymans. So, I sold a GTO and bought his collection plus a couple of other cars from his collection. I have sold all of them off since then. It was a used-car deal with good gross. I don't see them as a collectible in the traditional sense because you can use them.
You can reach Mark Rechtin at firstname.lastname@example.org. -- Follow Mark on