Rick DeSilva was alarmed as the Great Recession was bearing down in 2008, but he also had a couple of things going for him. For starters, he had lived through two previous downturns and learned a great deal about the art and science of survival.
Second, he was sitting there with a Subaru store just as the most recession-proof of franchises was hitting its stride. It was the only mainstream brand whose sales increased straight through the recession.
Was DeSilva just lucky? Nope. In the previous big downturn, he had placed a bet on the little Japanese brand when its prospects were far from certain. He also picked up some wisdom in the double-dip recession of 1980 and 1981-82: not to rely too much on just one lender.
"The [2008] recession was not as impactful on us," he said. "It was almost more like a speed bump for us. Our numbers were pretty good."
Quick recovery
DeSilva, 66, is dealer principal of Liberty Subaru in Emerson, Liberty Hyundai in Mahwah and Liberty Kia in Ramsey, all in suburban northern New Jersey. For many years, Liberty Subaru was his only store.
DeSilva said the rate of growth in new- and used-vehicle sales combined for Subaru and Hyundai declined in the run-up to the recession. (The Kia store came later.) But sales fell outright in only one year — 2008 compared with 2007 — and they didn't fall by much, he said.
And by 2009, DeSilva, said volume at his stores had already started to recover.
- Title then: Owner
- Dealerships: Liberty Subaru, Liberty Hyundai, Liberty Kia
- Where: Northern New Jersey
- Survival strategy: Diverse finance sources, captive floorplan
Meanwhile, hard times were in full swing across the rest of the industry. When Ford dropped the Mercury brand in 2010, it created an opportunity. A much bigger Lincoln-Mercury store went out of business down the street from Liberty Subaru, which took over the bigger location.
Subaru was keeping DeSilva's head above water, but so were the three lessons he learned in the 1980s: Don't get overextended, don't attempt to grow too fast and, above all, don't do all financing through a single source — especially one that's not a captive.
DeSilva said he drummed that philosophy into his sons Rick Jr. and Michael, who are president and CEO, respectively, of the family dealerships.
"We don't shoot from the hip. We plan. And we plan on what's going to happen when the music stops," Rick Sr. said.
For example, the business does not pay a lot of rent, relatively speaking. The group owns the buildings for the Hyundai and Subaru dealerships, and rents the Kia store and a separate service center.
Hard times
DeSilva's early career was all about navigating hard times. He started in automotive retail in 1974, as a salesman at Hackensack (N.J.) Ford, where his father, "Big Wes," was service manager.
Selling was "probably the best automotive learning experience of my career," he said.
Two years later, DeSilva was on the verge of leasing another location, a former Jeep dealership, as an independent used-car dealership in Emerson. However, a Subaru new-car franchise became available through Subaru Distributors, an independent distributor based in Orangeburg, N.Y., with territory in north New Jersey and across the border in New York.
The used-car lot never did open. Instead, it became Liberty Subaru.
"I think the line of credit for the inventory was $25,000. We were there for 30 years," DeSilva said. The original showroom was so small, it held "maybe two cars, and that was on a good day," a veteran staffer recalled.
DeSilva said he made a lot of rookie mistakes.
"Back in the '70s, I had my mortgage, my checking account and floorplan all with one bank. I don't want to criticize one particular bank. But today, we have three stores and three different banks. I'll just put it that way," he said.
DeSilva said he also uses Subaru's private-label captive finance company for floorplan.
He says 1979 to 1980 were rough.
"I looked at my checkbook and tried to figure out a way I was going to do this. More than one time I made my payroll using a MasterCard cash advance. I did some things — I don't even want to recall some of the things I did."
Over time, though, the hole-in-the-wall Subaru store became one of the brand's top-selling U.S. dealerships.