Kansas colossus: The nation's biggest private dealership group aims to get biggerDealer-owners, repeat customers are key to successJeff Mortimer SHAWNEE MISSION, Kan. -- The headquarters of Cecil Van Tuyl, who with his son Larry operates the country's largest privately held auto retailer, can be hard to find. The modest office building is on a commercial strip in the midst of Kansas City's suburban sprawl. No exterior signs indicate that offices for the Van Tuyls, who own 62 dealerships in 10 states and reported revenues of more than $5.9 billion last year -- are on the second floor. "We're very proud of what we do, naturally," says Cecil Van Tuyl (van-TILE'), the group's 80-year-old patriarch. "But we are people who just try to stay out of the limelight." The most conspicuous item on Van Tuyl's desk is a scale model of a 1955 Chevrolet Bel Air. His dealers gave him the model two years ago, to commemorate the 50th anniversary of his first dealership, a Chevrolet store in Kansas City. They also gave him a real 1955 Bel Air -- a personal gesture that epitomizes what Van Tuyl says is at the core of his company's success. "I believe in people, people, people," Van Tuyl told Automotive News. "That's our main key to get on top and stay on top. There is no substitute for good people who really care and do a good job. |
"We prefer to be in the Sun Belt. That's where the growth is. You've just got a little more wind in your sails in the Sun Belt areas," says Larry Van Tuyl. |
"The better the people you surround yourself with, the better you're going to do, for yourself and the consumer," Van Tuyl says. "If you do well for him, he'll come back and come back and send his friends back. Repeat business is what really makes a dealership run properly. We work very hard at that."
The Van Tuyls are CEOs of two entities, V.T. Inc. and Automotive Investment Group, that make up the dealership group. The "we" Cecil Van Tuyl refers to include the company's dealer principals, who are called "partners" because they all have ownership stakes in their dealerships.
Larry Van Tuyl, 57, joined the business at 21 and had three dealerships of his own before he turned 30. The younger Van Tuyl has taken the lead role in the operation for the past two years.
On the V.T.V.T. Inc./Automotive Investment Group is the nation's largest privately held dealership group. |
Sun Belt strategy
Larry Van Tuyl's 1982 move to Phoenix was serendipitous.
"The primary motivator was that I had bronchial asthma, and it was getting worse," he says. "But it also got us even more enthused about the Sun Belt."
Of the group's 62 dealerships, 46 are in warm climates -- 40 in Texas and Arizona alone. Larry Van Tuyl owns 28 stores, and Cecil Van Tuyl owns 34. Those dealerships represent 86 franchises.
Larry Van Tuyl was in Dallas last month when he spoke to Automotive News. He was closing on the purchase of a Nissan dealership in Grapevine, a fast-growing Dallas suburb.
"We prefer to be in the Sun Belt," he says. "That's where the growth is. You've just got a little more wind in your sails in the Sun Belt areas."
That doesn't mean the Van Tuyls wouldn't look for acquisitions outside the Sun Belt, Cecil Van Tuyl says. Nor would it shun a domestic dealership, he says, although the company now operates 38 import dealerships to its 24 domestic stores.
"We're not afraid of the domestics," Cecil Van Tuyl says. "We know they've been going in the wrong direction in percentage of total sales. But we think they are in the process of turning around somewhat now, so we'll still purchase a domestic dealership if we think the price is right and the area is right.
"We always try to buy dealerships when the business is down," he says. "A lot of people don't want to do that, but we think that's when the opportunities are to buy them at a better price."
Larry Van Tuyl concurs.
"The right Chevrolet deal, the right Ford deal, the right Dodge-Chrysler-Jeep deal in the right location is something we'd still be very enthused about," he says. "I think in the last three to five years, the domestic manufacturers finally woke up to the fact that their real job is to develop good products. If they do that, the rest of it gets pretty easy."
Humble beginnings
Cecil Van Tuyl says he first imagined owning a dealership when he was 17 years old, not long before he moved to Kansas City from La Cygne, the tiny Kansas farm town where he was born and raised.
"I can't say that I started dreaming that early" about owning a group of dealerships, he says. But in 1960, five years after he had opened the Kansas City store, Chevrolet urged him to take over a struggling store in Quincy, Ill. When the general manager expressed a desire to return to his native Topeka, Kan., Van Tuyl also bought a dealership there.
"Those three really kicked off the so-called chain dealerships, or whatever you want to call it, for myself," he says. They also established the Van Tuyls' pattern of rewarding dealership managers with part ownership.
Each Van Tuyl dealership is a separate legal entity. The Van Tuyls say they have individual partnerships with each dealer-operator and allow them to operate independently of the other dealerships.
"We cut all of our people in on ownership because we believe that's the way to go," Cecil Van Tuyl says. "We're waiting to get more guys ready for general manager and partner. If they're part owner, they're going to look after business a little bit better."
Toby Hynes, president of Gulf States Toyota, has worked with the Van Tuyls for 15 years. His company, one of two independent national distributors of new Toyota vehicles, parts and accessories, serves dealerships in five states, including Texas.
Hynes calls the Van Tuyls "great automotive dealers."
"They're really focused on making the investments necessary to be successful," Hynes says. "They developed a tremendous management organization, and they have tremendous loyalty among their managers. They wake up every day with a passion for this business and their people."
Larry Van Tuyl says he spends three to five days a week visiting the company's dealerships. He already knows how they're performing against forecasts. So why do it?
"Eye contact," he says. "Most of our guys are partners, so we try to give them somebody to talk to, who they know cares about the same things and is supportive of them. It's not just about giving them an opportunity, but how you treat them after you're together. Like a marriage."
No public plans
The Van Tuyls' freedom to run their business according to their own vision and values means going public isn't an option, they say. Of the seven largest U.S. dealership groups on the Automotive News list of the top 125, only the Van Tuyls' group at No. 5 is privately owned.
"We thought about (going public) some time ago, back when it first started happening" in the late 1990s, Cecil Van Tuyl says. "We studied it and looked at it and looked at it and decided not to. It's better to be a private company because you can do so many things without being criticized by stockholders and other controlling people of public companies.
"I might also add that this way, we get 100 percent of the profit," he says.
Despite their traditional corporate values and operating principles, the Van Tuyls have been ahead of the curve on dealership innovations. They say they believe theirs was the first dealership group to videotape finance and insurance transactions, with customers' approval.
They were among the founders of the Internet Automobile Dealers Association. Larry Van Tuyl estimates that 30 percent of the company's unit sales, of both new and used vehicles, emerge from Internet-generated contacts between dealers and customers.
"But I think it probably ought to be 40 to 45 percent," he says. "As good as I think we're doing in that area, there's still so much there it's incredible.
"We've been aggressively upgrading our Web site and Internet activities, from response times to appointment setting to live contacts versus e-mail contacts," Larry Van Tuyl says. "We measure all those things hard, mystery-shop ourselves a lot, and reward and award performance in that area."
Focus on service
Even in an electronic age, the Van Tuyls will continue to emphasize hands-on customer service, Larry Van Tuyl says.
"All the things you have to do to retain that customer for life are continuing to grow," he says. "So the demands for the training, the people, the processes, the systems are going to continue to move. Even though it was fairly fast-paced 10 or 15 years ago, it's much faster today. You've got to be willing to move at warp speed."
Cecil Van Tuyl says the biggest change he has seen in auto retailing in recent years, aside from the rise of the public groups, is that "the new-car gross profit is more difficult to come by."
"So you depend more on your fixed end -- parts, service and body shop -- and on the aftermarket products and your F&I department," he says. "That's why it's so important that you keep your customers. If you have a real good service department, they're going to stick with you."
One thing that hasn't changed is the relationship between father and son.
"I could have never, never grown this way had it not been for my son, who couldn't wait to get in a dealership from the time he was 14 years old," Cecil Van Tuyl says.
"His enthusiasm and his ability to motivate other people to become better and better and learn the business so they could become general managers and partners are as good as mine ever were, and maybe better."
Larry Van Tuyl shifts the credit in the opposite direction.
"Honestly, my dad started it," he says. "He had all the ideas. He was the people guy and had the vision. All I've tried to do is follow through. I had a huge advantage, because he'd already done a big job. I've been really fortunate to be in the same business with my dad and have us get along and respect each other the way we do.
"We've been blessed with a lot of good people and had a ton of fun," Larry Van Tuyl adds. "We're still pumped up about what we're doing."