Young retail leaders gain wisdom amid COVID crisis

Doing more with less. Managing expenses — and expectations. Taking care of employees, customers and the community.

The upside when circumstances go downhill quickly is that there are lessons to be learned. And that's exactly what happened to Automotive News' 40 Under 40 honorees this spring as the coronavirus pandemic led dealerships across the U.S. to close completely, run limited operations or, at the very least, absorb significant hits to business as many consumers stayed home.

"With any sort of uncertainty, true character really shows in times of crisis," said Andrew Warmath, Internet director at Barnes Crossing Auto Group in Starkville, Miss.

Like his peers, Warmath saw the rapid change take hold in late March as dealership group executives tried to figure out whether stores would be open or closed and what to tell customers.

"Everybody was just kind of chasing their tail and trying to keep their head above water, trying to figure out what that new normal was going to look like," Warmath recalled. It took a month for that new normal to settle in.

Kyler Schulze, general manager of AutoNation USA Katy in Texas, said difficult times help him learn more about the business and himself.

"It's very easy to look good when the business is great, the economy's great," Schulze said. "But during times of hardship and discomfort, it really forces you to look at your business, analyze your business, figure out where you're good, you're bad, you need help."

One factor that is obvious but nonetheless crucial in a crisis: constant communication. Schulze described his contact with employees as early and often.

"It was a very uncertain time, and basically all of your employees look to you for leadership and guidance," he said. AutoNation USA Katy held a weekly town hall-style meeting with social distancing so employees could ask about the state of operations.

Boris Lopez, director at South Dade Toyota of Homestead and South Dade Kia of Miami in Florida, created a companywide email sent daily."All these coronavirus things create faster, rapidly changing things in the dealership," Lopez said. "I need to inform everybody every night to make sure everybody's on the same page."

Communicating with customers is crucial, too.

Frankie Florey, general sales manager at Autosport Acura of Denville in New Jersey, said customers responded positively to the dealership's phone and email outreach.

"It wasn't a sales pitch," Florey said. "It was basically letting these customers know that we're here for them during this time, and we hope that they're all safe and healthy."

But customer access to dealerships, at least for vehicle sales, varied greatly from city to city and state to state.

Most stores could keep service operations running as they were deemed essential, but many had to shut their showrooms to foot traffic.

Ryan Bolz, director of digital marketing and e-commerce at Hendrick Automotive Group, said the retailer emphasized concierge services for vehicle drop-offs or pickups for service appointments.

"We systematically went to every store and confirmed what features and capabilities that they're able to offer," Bolz said. The company then took that message to customers, updating websites and ad copy accordingly.

Hendrick stores conducted at-home test drives, video vehicle walk-arounds and question-and-answer sessions with service advisers via Apple's FaceTime.

"We really focused in on adapting quickly to meet our customers' new expectations of safety [and] health, ensuring that their well-being is part of the selling process," Bolz said.

As dealers shifted their focus to remote services, the Internet became a crucial aspect of doing business.

Karen Rodriguez, director of operations and Internet sales at Doral Automotive Group in Doral, Fla., said the crisis brought showroom traffic to a near halt in April.

At that time, more than 80 percent of sales originated in the retailer's business development center.

"Everybody either called or went online when submitting a lead," Rodriguez said. "We had to do a lot of, obviously, home deliveries and all that, and without the help of [the] BDC, I don't know how many of those customers would have been properly attended and taken care of."

Doral is doing more home deliveries than ever. And even for other transactions, more of the process has moved online, she said.

Where possible, dealers have cut costs. Since the crisis began, Doral has mostly avoided adding expenses, such as new vendors, and is restricting overtime hours, Rodriguez said.

Audi Wilmington, in Delaware, is evaluating how many people it takes to run the dealership, said General Manager Thomas Mihok. The store is cross-training employees with the aim of maintaining volumes with a lower employee count.

"We no longer have the luxury of hiring people," said Mihok.

Capital Chevrolet of Raleigh in North Carolina split up shifts. In the first 30 days of the crisis, the dealership went to alternating schedules, which hurt sales and service as both departments operated at half of their normal capacity, said General Manager Casey Best.

Costs must be managed on a consistent basis, said Best, who suggests reviewing each employee's tasks every 90 days with department managers.

"It really magnifies that when something like this occurs," he said. "There are a lot of positions that can be combined into one."

Capital Chevrolet also cut advertising significantly. "We were probably spending $140,000 a month advertising, and we probably pulled back to $65,000," Best said. "And our sales business didn't drop off. That's a change that we will certainly monitor."

Of course, cutting staff is tough. Jimmy Macagna, general manager at Audi Nyack in New York, recalled the day he had to let 22 employees go.

"That was the hardest day of my career," Macagna said. The store was able to bring most employees back after an "awful" April.

Some dealers saw maintaining employment as a way to help their communities.

Barnes Crossing Auto Group didn't lay off anyone, Warmath said. "We felt like we had a responsibility to lead by example."

Ailed Riverol, customer care director for AutoNation Inc.'s Mercedes-Benz of Pompano store in Florida, said certain employees just weren't needed while operations were light.

But store managers created ways to keep them on board — whether through handling pickup and delivery of vehicles or by restructuring some positions. The dealership allowed employees to work from home if they did not feel safe in public.

Parkway Family Mazda in Kingwood, Texas, offered a free oil change and vehicle deep clean, regardless of make and model, for health care workers who qualified for Mazda's service support program for first responders, said Brian Singh, general manager.

Swickard Auto Group in suburban Portland, Ore., offered free service work to community members in need, said Ryan Crooks, director of commercial vehicles.

After weathering March and April, many dealerships reported record sales in May and June. Whether it's pent-up demand or sustainable through the rest of the year remains to be seen.

But one thing is clear: The pandemic has taught auto retailers valuable lessons that have made them stronger.

"In my year and a half as general manager, I went through a buy-sell, I went through a complete dealership renovation and I went through a pandemic," said Macagna. "So if we can get through those things, I think it should be smooth sailing going forward."

Melissa Burden, Jackie Charniga, Krystal Hur, Laurence Iliff, Urvaksh Karkaria, Audrey LaForest, Hannah Lutz, Whitney McDonald, Alexa St. John and Lindsay VanHulle contributed to this report.