COLUMBIA, S.C. — Bill McDaniels builds his dealerships.
The president of McDaniels Automotive Group runs six rooftops selling Acura, Audi, Porsche, Subaru and Volkswagen. Sales for the Columbia, S.C., company totaled about 3,060 new and used vehicles in 2016.
McDaniels began selling cars while in the Air Force in 1969. When he left the service, he continued selling cars, moving up from salesman to general manager, while also building and selling houses. The profits from home construction and sales provided the funds he needed to take a partnership stake in an Acura store. Since then, he has continued to be a dealer and a general contractor. He has done about 11 construction or remodeling projects for his dealerships.
McDaniels, 69, spoke last month at his Acura dealership here with Staff Reporter Jennifer Vuong about the construction side of auto retailing and where he sees the industry going.
Q: What are the advantages of being your own contractor?
A: I would never build for an individual because the individual does not understand that time is money. Before I start anything, I know what kind of windows I'm putting in, what kind of roof. I hire an interior and exterior designer; we figure out what the furniture is going to be like, the painting, the carpet. [It is] very time consuming, but once you put it all together, the project goes much faster.
How do manufacturers respond when told you're building your dealerships?
There has not been one that's been comfortable with it. [But] pretty quickly, they realize that I know what I am doing. Then they're sort of, "OK."
But nobody is going to build for you like you'll build for yourself. I'm very conscious about the details, the finish. I want it to look like a house more than a commercial building.
I want to build nice stuff. You don't have to beat me in the head to spend money. I want it to look like a nice product when it's finished. Most car dealers, they don't care. [The dealership] is just the box. [Their attitude is] "I got the manufacturer off of me. So I'm done. I'll go fly my jet or whatever. And I'll see you when the building is finished."
But I think the way I grew up, the way I started in the car business, there are very few of us left. And there are going to be fewer as time goes by.
I see the future of the car industry being controlled by maybe a dozen companies like the Penskes, the Asbury group, the big groups. I see them actually owning everything in the car industry. I also see that down the road, once the dust settles, the car business will become an Amazon.com. That's where you order the cars exactly the way you want them. They send it to a service facility and you go there and pick [up] your car. There will not be a salesperson.
But Mr. Customer, I hate to tell you, there's no negotiation either on that. Because they are going to control the pricing once they monopolize the market.
And I've got some news for the manufacturer: These groups that control that market, they're going to tell you what kind of car to build and how to build it. So it's just like the Walmarts, like the Lowe's, like Home Depot. They have destroyed the small business person in the market. Because Home Depot or Lowe's, they never pay for anything on their shelves until they sell it. It's all on consignment. It's a pretty neat deal.
You say single-point stores will go away. What about McDaniels Automotive Group?
I hope a bigger group visits me. And they see all-new buildings. They don't have to worry about building new facilities. They think they can run it better and more efficient, and I want them to. I just want them to pay me first. So yeah, eventually, in the very near future, I would welcome some of those big boys to come in and write me my big check. And I'll ride off into the sunset. But it will probably be the saddest day of my life because I really love the car business and it's fun.
Was there one manufacturer facility requirement that you thought was crazy?
I think sometimes the architect gets too carried away.
Now, I don't mean to knock anybody. But I've got an Audi store down in Charleston, S.C., that's under major renovation. We're having the best fixed operations month we ever had. We are sharing the Audi personnel with an Acura facility. The service department is still intact, and the parts. We are crushing the numbers compared to last year. And we have no showroom and we have no building. Maybe the showroom does help because it makes the customers feel really good. But the bottom line, let me tell you: The customer is looking for a deal. It's all about price.
A lot of times, the architects design stuff into a building that is worthless. If you look at the Acura store here, we've got a big old icon tower right in the middle there. It completely blocks the view of the customer. This dealership would function much better if we had all glass so we can see people. We get, "While I was at your dealership, nobody even came out." It could be that no one was able to see you. We want to see you, but we're blocked. That is one thing that I detest.
Do some other dealers want help?
With this building, maybe a half dozen dealers [have] come in. They want me to give them some advice. I have showed them some tricks in the building — how to save money and get the same results. Over the last 10 years, I've probably had 20 people pick my brain and ask: What are the downfalls? How long does it take to build these buildings.
Now the big groups — like the Hendrick group and the Penskes and Sonic and all of them — they have a whole team that does this and do an excellent job, don't get me wrong. But the single-point dealer, he cannot afford to build a new building like this.
Now he can do some face-lifts out front, but he cannot make this thing work. Even if the building is paid for, you still cannot make it work.
A lot of times, manufacturers [would] better serve themselves by building quality products instead of trying to manage our companies. I'm very grateful for my franchises and I'm very grateful for our working relationships. But sometimes I wish they would just let us run these things.
How are you adjusting to slowing U.S. sales?
I've been planning for a year. I've been in business for 49 years with sales and as dealer. This will be my fifth downturn.
I don't think we are going to see the market adjust like it did in 2009 and '10. In 2018, I think we'll be a million and a half cars off. And I think it's going to level in somewhere between 14.5 [million] and 15 million.
The best way to cope is that you do a lot of things right with your customers. Deliver a high level of satisfaction. Understand that 2 percent of all customers will try to put a scam over [on you]. You got to learn that. But 98 percent of people, when you have a problem, fix it. Do what is right.
But in a slow market, you get to sell more parts, you get to sell more service. You become a very good used-car dealer. You understand that everybody can't buy a $30,000 or $40,000 or $50,000 car.
So you learn to stock the [used] cars that are fast movers. Even during a recession, a $10,000 to $12,000 car will always sell. And it will have a shelf life of probably less than 10 days. Because that is the hardest car to find in the industry.
How did the VW diesel emissions crisis affect business?
Well, 35 percent of our market were diesels. It crushed us. It took us from being profitable to not profitable with Volkswagen. But let me say this about the German cars. I have Volkswagen, Audi and Porsche. They understand how to market, I think, better than anybody. Volkswagen, in my opinion, is on a comeback right now.
I think the settlement and the fines and everything — that's all behind us now. This month we exceeded our objective. We're like over 225 percent [vs.] what we were supposed to sell this month, which is kind of a large number. But we are moving back to where we were prior to the diesel [crisis].
We had nine diesels left over. The moment we got a fix, we sold them all. We bought eight pre-owned diesels last week and three of them are already gone. There is definitely a huge market because there are really die-hard diesel customers. They know they can't get this car ever again, because there's no manufacturer, in my opinion, that's going to build a diesel engine right now.
The [VW] diesels that we are getting that have been refitted and fixed — I instructed my used-car buyer to buy us another 10 of those right away. I am very thankful for that used car because right now some of these diesels, we can sell them for like $10,000 to $12,000. That's the perfect car.
Your son is COO. What's one important lesson you instilled in him?
When I picked him up from Georgia Tech in 1991, I said, "Son, you got your mechanical engineering degree, and you have a choice. You can do that, which I'm OK with, or you can come into the car business." I thank God he chose the car business because he is a tremendous help.
My group is only six stores, [but] we're still going to expand. I'm just waiting for the slowdown to go out buying.
I'm hoping to take the group to somewhere between 12 and 15 stores in the next seven or eight years. He, behind the scenes, orchestrates a lot of the infrastructure of the dealership.
Which brands do you want?
I would like a pickup. We'll leave it at that.