Jim Evans grew up in the auto retail business, then spent seven years as an executive with AutoNation Inc. While there he also was chairman of the American International Automobile Dealers Association. Now he has returned to his entrepreneurial roots.
Evans, 48, says he learned plenty working with the nation's largest dealership group, and he's applying it to his single-store, three-franchise operation.
Evans spoke with Staff Reporter Donna Harris about the challenges he faces with his new enterprise, Evans Motorworks in Dayton, Ohio.
How did you start in the car business?
My grandfather started in 1926 selling used cars. He had new-vehicle franchises but was mostly a used-car operator, owning multiple used-car outlets all over the East Coast all the way up to Canada. The business controls weren't there, though, and he shrank down to a few used-car outlets in south Florida. My father took over, acquiring the Mercedes-Benz and Nissan franchises, and built up the operation as a new-car business.
I started at 11, picking up cigarette butts and washing windows. It was a great market for the Mercedes franchise, and it became the largest store in the country.
How did you become involved with AutoNation?
In 1998, I started having discussions with Mike Maroone [now COO of AutoNation], who as a south Florida dealer had been a friend of mine. I was excited by the growth potential of AutoNation. We came to a fair business arrangement for the Mercedes-Benz store and two Nissan stores. It was one of AutoNation's first cash transactions; it had been paying for dealerships in stock.
I was living in Fort Lauderdale, where AutoNation has its headquarters. I started working in AutoNation's e-commerce operation and moved into industry relations, dealing with new-car sales.
What was it like working there?
There were a lot of creative people within AutoNation who had no automotive experience. They knew how to do things a little differently and change public perception of our industry. It was all new. The feeling was the sky was the limit. There was never an idea that could be brought up at any meeting that wasn't seriously considered.
A famous quote of Maroone's was "Retail is detail." That was the challenge -- spreading common practices among 300 stores. It was exciting to go to stores in, say, Chicago and see ideas we discussed in Fort Lauderdale in action.
AutoNation could pick a successful practice from a store it acquired and test the concept in a market where it had a dozen stores. And if it worked in a dozen stores, we could take the concept across the network. Making minor tweaks in the operation could yield dramatic results.
Eliminating one day of cash flow, from when a car was delivered to when we actually received the money, would lead to millions of dollars in savings.
What was it like working with Mike Jackson? You were a Mercedes-Benz dealer when he headed Mercedes-Benz.
He was the right man for the right time. He brought to the table the ability to have a vision and to communicate that vision not only to Wall Street and to investors but to a general manager and even a technician. He can talk casually with a technician on the line because he has been there. Everybody knows that he started as a technician. He has credibility when he walks into a dealership, and he knows how to rally the troops and get them excited.
Why did you leave AutoNation?
When I joined, I said I would be there 21/2 to three years. I joined in 1998 and left in August 2005. I was there longer than I thought because I was really enjoying it. By 2005, it was time to leave, partially because of the big, corporate atmosphere.
Didn't you find that exciting?
While that can be exciting, when you come from an entrepreneurial background, it can be challenging. A privately held dealer can have a meeting, make a decision and execute something in a half-hour. You can't do that when you are a publicly traded company and have dealerships in many states.
Did you start your next enterprise immediately?
I left the industry for a year and a half. I was burned out. I didn't do anything auto-related. I got involved in real estate investing, which was extremely slow-paced compared to what I was used to.
Then I decided to make inquiries about dealerships. Within 90 days of making that first phone call, I was in Ohio and in negotiations. I ended up purchasing this dealership group in Dayton selling BMW, Volkswagen and Volvo.
I operate these stores differently today than I did prior to working for AutoNation. It's a combination of entrepreneurial foundation along with the disciplines I learned at AutoNation.
What are you doing differently?
When I owned my own stores in Florida, we had no used-car discipline in terms of how long we would own a car. I saw the financial effect of turning inventory faster when I went to AutoNation. Now my stores mark down prices if a car is not sold in 30, 40, 60 days. We get rid of the car between 75 and 90 days.
Another example is the finance and insurance menu process. AutoNation was transparent, honest and professional with customers. They thought it was a competitive advantage. The operation I bought didn't have a lot of discipline in that area, but we instituted a strong menu process and sales process, in general.
Credit started to tighten as you acquired your dealership. How did you finance your purchase and obtain operating capital?
When I acquired my franchises in 2007, I sat down with three different big banks and outlined what I was looking for, how I felt I wanted to structure my loans, my floorplan line and capital loan. I brought money to the table myself. I let the three banks bid against each other. When the dust settled, Bank of America had the best overall package.
That was the summer of 2007, and here we are in March 2010. I still have all my accounts with Bank of America and still have a great working relationship.
What are your current challenges?
We have had an extreme challenge with all three brands in the fixed operations -- service and parts. We are not quite sure why. We had a full shop meeting to analyze what we are doing right and wrong. We have not seen the customer come into the service drive after purchasing the vehicle as frequently as we should.
What are you doing to improve?
We took the top 40 operations we're getting calls on and repriced all these fast-moving, competitive service items after surveying our competition -- not necessarily dealers but independents. There is a large independent repair shop two blocks away from me. We've seen a pickup in Volkswagen business already. If we are within $5 to $10 of the independents' price, customers are going to come here. We have the tools and the master technicians and the resources.
What's your greatest challenge?
The big issue is volume of people coming into the dealership in general. But we made more money in 2009 than we did in 2008, and the growth came from pre-owned cars.
We have put time and effort into pre-owned business and seen nice results. We are aggressively going to auction to buy cars at the right price, not just depending on trade-ins. Our certified used-vehicle sales rose 39 percent with BMW last year. We are also selling more pre-owned Volvos than we are new Volvos. It's a niche we have developed.
We also did a dramatic evaluation of our costs. My overall expenses in February were 28 percent less than in February 2009. We started reviewing expenses in the second quarter of 2008 and sat down with the managers. We told them everything is on the table with the exception of three things: We won't fire anyone, won't touch the 401(k) and won't reduce benefits.
We had a contest for the associates to save money. We gave $50 Visa gift cards to the associates with the three best ideas. Everyone, all 57 employees, got involved. We may have made a change that made a $2,000 difference, but if you make a lot of those changes in a store my size, it makes a difference in your bottom line.
What kind of changes did you make?
We considered how we set the timers for the lights in the lot and how often we open electric doors in the winter to reduce heating expense.
We had fancy coffee makers that cost $1,800 per month. We switched to offering Seattle's Best coffee, a known brand. The expense dropped from $1,800 to $250 a month, and the customers started making comments about how great the coffee was.
What else are you doing to keep customers happy?
People make financial decisions like buying a car in an environment that they are comfortable with. I insist that all the associates acknowledge the customer. When they see a customer, they thank them for their business or tell them "Good morning" or that they are glad they are here.
I also personally thank every customer when they buy a car. Some people don't believe I am the owner. I have to show them my business card. I tell them if they have a problem and they can't get it resolved with a salesman or manager, they can give me a call.
People say they bought a car from Evans and actually met the owner. They're so impressed. It takes me only 30 seconds, and it costs me nothing.