How Bob Alvine switched from banker to dealer

Bob Alvine says he made just about every mistake he possibly could make after switching careers 12 years ago and acquiring Premier Subaru in Branford, Conn.

Not long after the young banking executive bought the dealership with his father, he misread a factory invoice, then went out and shot his first TV commercial. Alvine offered viewers an eye-popping deal on the Forester crossover -- the televised price was $1,500 less than the car cost him.

He had to honor the below-invoice price on 30 Foresters.

"It was a very expensive mistake," he says.

And then there was Alvine's first trip to an auto auction. He bought all the wrong vehicles -- based on what he liked, not what was selling at his store -- and he paid far too much. Worst of all, he didn't buy any Subarus.

But he learned fast. When he took over the shabby store outside New Haven, Conn., it had a poor reputation for customer service and tiny sales volume. Alvine overhauled the staff, rebuilt the facility and today sells four times as many new cars as the dealership did in 2000.

Of course, it hasn't hurt that the Subaru brand has undergone a resurgence.

Last year Premier Subaru sold 804 new vehicles, up 12 percent from 2010 despite a severe shortage of inventory in the United States because of the earthquake in Japan.

Alvine, 45, also has won several awards for sales, service and parts operations from Subaru of America and independent distributor Subaru of New England. Last year he was a recipient of the Subaru Stellar Care Award, which Subaru gives annually to 100 U.S. dealers. Subaru has 620 dealers in the United States.

From 1988 to 2000, Alvine worked in the financial industry for JPMorgan Chase & Co., among others. In 1997 he was senior vice president and chief credit officer for Falcon Financial LLC, now AutoStar Financial, when it began providing financing to auto dealerships. He launched the credit underwriting group that included lending against the "blue sky" value -- the perceived value of a dealership's goodwill, beyond its bricks-and-mortar value.

Alvine's father, Robert, had been CEO of various companies, including suppliers Uniroyal Tire Co. and AP Parts Corp. He currently is chairman of the board of governors at the University of New Haven, in Connecticut, where Bob Alvine got his M.B.A.

Back in 2000, Bob says he and his father heard through a university source that Subaru of Branford, as the dealership was then known, was failing. The owner had died and his wife was trying to run the business.

Alvine did an analysis of the car market and concluded that except for a few downturns, the industry historically had a high return on equity and investment.

So father and son sought approval for the sale from the Boch family, which owns Subaru of New England, distributor of Subaru vehicles in the region. The Alvines met with the distributor's top executives, the late Ernie Boch Sr. and Joe Applebe.

The Alvines weren't the only ones who wanted the store; several established dealers also put in bids. But Bob Alvine says his banking experience paid off.

"I presented them with spreadsheets and a five-year business plan in a big binder," he said. "They looked at it and asked each other, 'Did we ever get one of these from anyone before?'"

The Alvines got the store. Bob's dad agreed to be an investor/adviser and Bob took over daily operations.

"The entrepreneurial bug kicked in," he said. "I took a cut in pay and I did it."

Boch and his son Ernie Jr., who later took over the business, kept an eye on their new dealer.

"We would get phone calls late on a Saturday night at the dealership and they'd be surprised I was still there," Alvine said.

And he was learning.

"I didn't know what a repair order was or any acronyms," he said. "I called on people who I knew in the industry to give me advice -- other dealers who I had dealt with on the financial side and people who I met along the way. Some of them looked at me and said, 'What did you just do to yourself?'"

When Alvine bought the store, annual sales were about 200 new and 100 used cars.

"They had a difficult reputation in the marketplace with customers. They weren't the most customer-centric people," Alvine said.

He says the dealership looked like something out of "Sanford and Son," the 1970s sitcom set in a junkyard. The showroom glass was grimy and dustballs covered the cracked tile floor, he said.

One of the first things Alvine did was hire Brian DuBoisar, who had worked at nearby Ford and Toyota stores, as his general manager. He also hired a new service manager and new technicians and salespeople. He started with 11 workers and now has 48.

It took years to get local permits to renovate the facility. So Alvine fixed up the old store the best he could. He finally completed a new 15,000-square-foot building on the site in early 2005, doubling the size of the place. The service area was expanded to 11 bays, from four.

"I don't think there is any secret sauce other than making sure the customer is taken care of," he says. "You price competitively, but you show them a great experience. People will pay a bit more if they trust you. I went from the financial industry where everyone trusted everything to the car business where no one trusted anything."

Setting up a robust Web site and driving traffic through the Internet was one of the first things Alvine did.

"It is all about using the Internet as a virtual showroom, having good content to make it appeal and giving buyers a reason to come," he said.

Today he spends 40 to 45 percent of his annual marketing budget on the Internet. Alvine says he stopped advertising in newspapers years ago and shifted all of what he didn't spend on the Internet to local TV stations and cable. He also set up a separate Web site that chalks up more than $750,000 in online sales of factory parts and accessories annually.

He also began sponsoring local events such as a summer jazz series and a women's and family center. He also worked with local universities. He has allowed business students to use his store for case studies and class projects, and they have come up with ideas that Alvine has put to use, such as making the reception area more welcoming and redoing signs to help direct customers more effectively.

There are two other Subaru dealers within 10 miles, but Alvine said that won't hinder future growth.

"I think with Subaru we haven't hit the tipping point," he said.

Subaru has redesigned the Impreza for 2012 and is launching two vehicles this year: the BRZ coupe and the XV Crosstrek crossover.

Alvine acquired a Kia franchise last year and located it in a former Mitsubishi store that he renovated. The Premier Kia store opened in September. It's a small operation with 12 employees, and Alvine said he probably will retail 350 vehicles in the first full year of sales.

Is this "blue sky" expert looking at other franchises?

"I always do," he says, "but right now ... we haven't reached our potential with Subaru and Kia."