Carl Barnett Sr.'s new-vehicle sales were off about 25 percent and his gross profits were falling short of expenses. The president of Barnett Auto Group, of Paris, Texas, was facing the worst economic downturn to grip the nation since the Great Depression.
At that time, he owned Paris Ford-Lincoln, in Paris, Texas, and Gorman McCracken Volkswagen-Mazda, in Longview, Texas. Barnett, 70, still owns both. He acquired Onion Creek Volkswagen, in Austin, Texas, five years ago.
Barnett's three dealerships retailed 1,452 new and 1,069 used vehicles in 2017 and is tracking to exceed those numbers in 2018, he said.
Things weren't nearly as good during the recession. Barnett neither laid off employees nor cut their pay, though he did eliminate overtime. And there were no pay raises.
He had always met with managers on a monthly basis to review his dealerships' expenses department by department. During the recession, the meetings grew longer and more intense, he remembered.
He would tell managers how much needed to be trimmed from the company's budget and task them with recommending which products or services within their departments could be cut.
"It was: 'Do we really need it? Can we do without it?'," recalled Barnett, who started his automotive career at age 18 on the assembly line at Buick Motor Car Co., in Flint, Mich.
One expense that he cut without serious bloodshed was advertising. He learned which ads were generating leads and which ones were not, by placing information about special dealership deals and discounts in his messages. That enabled him to identify customers who responded to those promotions. Ads that consumers responded to, which largely included TV buys, were kept. The rest, which included most newspaper buys, were dropped.
"We found that some of the ad money we were spending didn't really make a difference" in sales, Barnett said. "We cut advertising by about 50 percent. Digital wasn't what it is today."
- Title then: President
- Dealership group: Barnett Auto Group
- Where: Paris, Texas
- Survival strategy: Reduced expenses by slashing unproductive advertising and cross-training office staff
What really helped is that his accounting office staffs at both dealerships were cross-trained to do various jobs.
For example, if the payroll clerk was on vacation or out sick, the title clerk could handle payroll duties. If the title clerk needed to be off, the billing clerk or office manager would step in.
If an office staff member quit, they weren't replaced; their former colleagues picked up the slack.
"If somebody wasn't there, there wasn't going to be any overtime. If somebody left, we didn't go out and look for someone [to replace them] right away," he said.
"The volume wasn't there, so we just shared the positions in the office. They would 'share the chair,' as we call it."
Barnett gives a lot of credit to his controller, Sue White, who is in charge of training and managing the group's office staffs and who pitched in to help get things done, something she still does. White started as his secretary-treasurer in 1991.
In hindsight, Barnett said his staff probably didn't like taking on more work. But they were dedicated, loyal and understood what was at stake.
Barnett said he also made it a point to talk to each employee individually and let them know that he appreciated their extra effort.
"As team players, they got it done," he said.
Though his new-vehicle unit sales in the first six months of this year exceeded year-ago sales, Barnett's gross profits are lower. Public dealership groups reported lower gross profits in their 2018 second quarters, too.
But having successfully navigated the Great Recession, Barnett feels he is even better equipped to handle the next downturn, which he believes could be just around the corner.
"We've had a real good run," he said. "History repeats itself. It's (a downturn) coming."