Buena Park Nissan in Orange County, Calif., should be deserted. Dealer Greg Brown says the previous owners told their OEM that the “point” could never be a success. But just outside his office, the crowded showroom is humming with conversation. Customers and staff are walking around vehicles and huddling over tables. Car doors are slamming and phones are ringing.
By the way, it’s the middle of a Thursday afternoon.
So what changed? What is Brown’s big secret? He nods, considering the question, and then answers quickly. “People and processes,” he says. He then adds, “Great service.”
Clearly, there’s more to it, and Brown will elaborate. But sticking to the basics has already allowed him to engineer three one-year turnarounds in his first 15 years in the business.
Training and Early Success
Brown’s dealership career began in 1997 at a Ford store in Los Angeles’ San Fernando Valley. The owners sent him to the National Automobile Dealers Association’s Dealer Academy in McLean, Va., and he credits that training, along with the expertise and encouragement of his dealer principal, with helping prepare him to take over as the store’s GM in 1999. He was determined to make the most of it.
“It was an old facility, way up in the Valley,” he says. “But in 12 months, we were one of the top volume and top profit stores in California.”
With youth on his side, Brown had enough energy left over to start a family and build a real estate portfolio. He lived modestly and saved his money, hoping to buy a stake in the dealership. It didn’t happen.
“I wanted that opportunity, but there wasn’t going to be a partnership at the Ford store,” he says. He left in 2006 and started looking for a good deal somewhere else.
Buena Park and Puente Hills
When Brown first drove onto the lot at Buena Park Nissan, he found a recently remodeled store located just off the Golden State Freeway and not far from the city of Anaheim. It seemed like a great location, but Nissan told him the company’s sales penetration in that market was among the OEM’s worst. Toyota and Honda were taking the lion’s share of Orange County’s Japanese import business, and their dealerships are located along the same stretch of Buena Park’s Auto Center Drive.
Brown was undeterred. He took over the point and aimed for the same goal he’d set at the Ford store. One year later, Buena Park wasn’t the No. 1 Nissan dealer in the state. It was No. 2. “Second-best in California,” Brown says, smiling. “Three years in a row, now.”
Nissan was impressed. In early 2010, they offered Brown an open point 20 minutes away, this time in the San Gabriel Valley, at the foot of the Puente Hills. He soon learned that “open point” was an understatement — the former Superior Nissan would be closed a full year and a half before Brown reopened the store as Puente Hills Nissan in August 2010. After only a year, it was No. 4 in California.[PAGEBREAK]
‘People and Processes’
Brown doesn’t necessarily consider himself a turnaround specialist. He just has high expectations. “I’m very passionate about this business, sometimes intense,” he says. He tells his managers to “set high goals, and don’t settle, compromise or quit,” and says he tries to never let his best people go.
Brown initially planned to have some staff members divide their time between the two stores, but the arrangement was short-lived. He says that expanding to a second point taught him to cede control. “Running two stores in a high-level role, you have to rely on your people,” he says.
David Reynolds is the finance director at Buena Park. He made the move to F&I two years ago, following a six-month stint in sales. He’s enjoying the recent trend toward a more “aggressive” lending market after a couple of down years, and his own aggressive attitude fits Brown’s mantra.
“The biggest thing for me is that I have to adapt to the banks,” Reynolds says. “I talk to everybody, every day.” Those conversations, which he describes as “extracurricular,” have helped Reynolds stay abreast of each lender’s mood and identify their strong suits. For TD Auto Finance, it’s big advances and low rates for good-credit customers. Wells Fargo Dealer Services, he says, is a relationship lender offering good flexibility.
But the dealerships’ primary noncaptive is Capital One Auto Finance, where Brown is a member of the lender’s Diamond Dealer program and sits on its dealer council. The two stores now book about 40 deals per month with Capital One, and Reynolds says that volume is largely the result of his ability to call the lender when a deal is turned down.
“Just last week, we had a customer with some big issues,” he says. “But what the computer missed was that they had paid their last auto loan well, and their income had doubled. So I picked up the phone and we were able to get it done.”
He also likes Capital One for its back-end funding — up to $2,500 on some Buena Park deals — which helps Reynolds and his F&I team sell products. Brown is pleased with the stores’ penetration rates, which currently stand at 50 percent for GAP, 45 percent for prepaid maintenance, and an impressive 70 percent for vehicle service contracts.
“Service retention is key,” Brown says. “The Buena Park shop has grown tremendously. Puente Hills has been more of a challenge, but, last month, that F&I department set a new record for new and used VSCs.”
The two stores book about 100 contracts per month with their captive lender, Nissan Motor Acceptance Corp. Reynolds says NMAC’s exceptions policy and advances are on par with many of his noncaptives, and that its “Service+Plus” VSC program is the best in the business.
Focus on Online Sales
The world-famous Cerritos Auto Square, with its 22 dealerships, 29 marques and $1 billion in annual sales, looms in the distance. The mall is less than 10 miles from Buena Park, and the Cerritos dealers’ combined buying power has paid for countless TV and radio ads, some featuring celebrity pitchmen.
“Cerritos is a competitor,” Brown says. “If we weren’t selling, it would be easy to blame them. And, in fact, when we got here, their Nissan store was outselling us three or four to one.”
To close the gap, Brown focused on online sales. He hired an experienced Internet sales manager, invested in search engine optimization and built a network of third-party lead providers. The 10-person staff works the outside leads as well as those generated by the stores’ own websites.
Brown also experimented with social media, launching Facebook pages and Twitter feeds for both stores, but he wasn’t impressed. “Not a lot of direct leads, certainly not a lot of buyers,” he says.
Buena Park and Puente Hills did see a jump in website traffic after the launch of the Nissan Leaf in 2010, which could only be pre-ordered online at the time. Brown says that initial demand was “huge,” but interest in the all-electric sedan has since waned.
No matter, says Brown, because the future is online, and he’s not fighting it. He says he sees no reason to fear customers looking to see whether his stores have the model or trim level they want at the price they want to pay. Even in heavily regulated California, a state he admits is “hard to do business in,” Brown says staying ahead of the curve is the best way to remain competitive.
“We’ve been proactive, so the new [identity-theft] rules covered stuff we were already doing,” he says. “Most regulations are not unfair to dealers, even if they can make the process a bit more confusing.”[PAGEBREAK]
When asked about his future plans, Brown doesn’t equivocate. “I would like to grow, and I’m looking for another store,” he says. “I’ve done well, but it’s not about the money. … I want to provide more opportunities for these people. If you can’t do that, at some point, they’ll leave.”
Brown says he likes the challenge of a reclamation project — so much so, in fact, he says he would be less likely to purchase a store that’s already doing well, and he won’t limit his options to his current brand. “I love Nissan, but I would consider another OEM,” he says. “It makes sense to diversify.”
Having rebuilt Buena Park and Puente Hills in a difficult economic climate, he’s looking forward to growing his operation in a time of recovery.
“Over the next 10 years, California will explode,” he says. “Scrappage rates are up, and the housing market and unemployment rate will correct. Everybody needs a car, and banks are lending more. That’s a formula for success.”