The Qvale family maintains a long-respected and eclectic history within the United States automotive business. Bruce Qvale’s father Kjell, moved from Norway, becoming a distributor in San Francisco for exotic brands such as Jaguar, Morris Garages (MG), Maserati, Porsche, Rolls Royce, Lamborghini and others. He also helped establish the San Francisco Auto Show.
Bruce Qvale has been an Audi dealer and has served on the brand’s dealer council. From 1997-2000 the Qvale family manufactured the Italian Qvale Mangusta, originally known as the De Tomaso Bigua. It was later sold to the MG Rover Group in 2003.
Qvale is now focused on growing the automotive retail aspect of the business. He recently relocated to Florida where he acquired one of the largest Audi stores in the country and is in the process of building a second Audi store in Fort Lauderdale that will act as a “satellite” location.
He shares with us a high-level perspective of building a successful automotive retail company.
Let’s talk about the Audi dealerships that you recently acquired and what brought you to Florida from California?
Although our company is small, it contains a lot of history in the car business on the manufacturing and distribution side. We are probably the only family to have been involved in every single sector of the car business from distribution in the early days for Volkswagen to retail and manufacturing. At this point, we no longer manufacture and distribute – now we focus on retail. To build a dealership group, you really have to go where the potential growth is and California is saturated and heavy with bureaucracy so moving to the east coast seemed like the right move.
So I chose to come to south Florida to open up an east coast division that possesses a lot of growth potential. We’re now a small national group that is family owned and operated.
You purchased one Audi dealership, which is the largest in the country, and the rights to a second Audi franchise.
Yes, the large existing store is in the Coral Springs market and next in line is the store in Ft. Lauderdale.
The timing is terrific because it is a great market and Audi has some very well timed products right now. Florida is a great car market so it is nice to have a brand like Audi in a market like this.
I personally feel Audi builds the best vehicles, hands down across the board.
I think you’re right. The technology and reliability is second to none.
You were involved in distribution. Did you own other dealerships?
Originally, we distributed Porsche, Audi and VW and we owned a small amount of the dealerships around our distribution companies. We were distributors in those days, not retailers. But now we’re slowly growing our retail business.
Do you own other dealerships in Florida or elsewhere?
We own several on the West Coast, two Audi stores, Honda, Porsche, Bentley, Lamborghini, Jaguar, Land Rover, Chevrolet and Mazda. We have about 12 franchises in the bay area in six different locations.
You bought the Florida locations from Champion Motors, which had to declare bankruptcy earlier. I talked to the owners a few years ago. They were young but seemed smart with a lot of good ideas.
The opportunity came up – and who in the car business hasn’t suffered or had some financial troubles in the last couple of years? It was unfortunate they had some problems that were hard to overcome, but we certainly did not buy a broken store. It was clean and organized. I thought it was a great opportunity!
I’d been here for two and a half years looking for stores and couldn’t put the right deal together. I looked at stores in Alabama, South Carolina and a couple in Florida. But for various reasons, mostly real estate — bank controlled real estate – deals fell through.
Working with the banks was difficult because they did not want to adjust their thinking to the current market. It is not easy, although, you’d think in tough economic times you can just pick up stores if you’re in a good cash position.
The recession last year was really different, because the credit issue and the fall out with the capital finance players, so it made it really hard for any deals to get done.
It really did. There was so much going on at the same time. I found it difficult to bring deals to a close like we’d done in the past.
Are you starting to see the credit and floor planning issues working themselves out?
I believe so, but it will still be rather difficult throughout this year, yet, 2011 looks strong in my opinion.
Will it still be fairly quiet on the acquisition side?
We’re always looking for the right deals.
You have been involved with Audi for a long time, what are some of the advantages of being with that franchise moving forward? What are some of the disadvantages?
Advantages: Technology, styling, and value for money.
Disadvantages: The product line has not fully matured yet but it will soon.
Over the last few years, Audi’s products have been so well designed from a visual and engineering perspective they have been able to build a base that allows the brand to launch an entirely new type of marketing campaign.
Previously, Audi didn’t have much product. Now you are seeing a lot of holes being filled. Audi wants to sell 1.5 million vehicles worldwide by 2015. That sounds aggressive, but possible. They have a lot of competition so it won’t be easy. They certainly have the funds, and it’s nice to see that Germany and the United States are on the same page. We didn’t see that a few years ago, and now we see it clearly. Both sides are moving in the same direction, which is great.
The Audi dealers are pretty happy now? I know there was some unhappiness a couple of years ago.
There was some discontent a couple of years ago. Three or four years ago there was lack of support to go behind the brand. We were asked to build facilities which cost a lot of money but we didn’t receive the marketing support that helped with investments of that nature. Now we have them behind us and the proof is there. Sales have gone over that tipping point and now it is an open road and we are now seeing dealers willing to invest. In our case, after Fort Lauderdale is finished, we’ll have 20 million dollars invested in Audi facilities on both coasts.
We have the confidence in the brand to make it. We’ve seen a lot of great new products over the last few years; they have a bright future ahead.
As you embark on building this new facility in Ft. Lauderdale, you are essentially building a dealership from the ground up, what are some things you are looking to do? What are some key points?
From our end, the dealership is considered a satellite to our main store in Coral Springs. We’ll be rebuilding our abandoned store, so hopefully we can begin selling cars soon.
Audi’s dealer development plan is very smart. It is allowing dealers in large markets to put in satellite points. I think that is vitally important, from an economy of scale perspective.
That shows at least a little foresight and understanding of what the dealer really needs.
It’s a big plus. I must say, it is a breath of fresh air.
As an automotive retailer, I guess it is a little different for a luxury brand than it is for a bread and butter type brand, but what are some things that are important as a dealer within the community selling to the customers, what are some things that a dealership needs to do today?
Give back! Today, you have to be involved with the community from a charitable perspective which creates great word of mouth advertising.
More so in Florida, we truly see the results from the charities and sponsorships that we are affiliated with. We have only been here a small amount of time, but have already participated in five to six charities and sponsorships, which have played a large role in how we gain customers.
Working with the community to sponsor events and charities is appreciated, especially during tough economic times. These are relationships we want to continue and maintain for years.
How important is fixed operations to your dealerships?
Well, it is important to any dealer that wants to be successful. There is a lot of upside to it, if you have the reputation of incredibly high quality service delivered in a quick manner.
We greet our customers and try to get them in and out as quickly as possible. That is the most important thing to keeping and growing your service department. I have talked to a lot of customers who have gone through our service department and say that it is fantastic. They felt relaxed and happy when the service employee quickly tended to them and took care of their car.
They feel comfortable coming here because they know that the job and the communication on the job will be done correctly. It’s the day-to-day details that drive the business.
Are you looking at other brands to acquire too?
Yes, we are.
You mentioned California’s bureaucracy and the difficulty it is to run small businesses or any business in California.
It was hard to develop the mall, building a facility and getting through the red tape. It has taken me almost 10 years to build out my mall in northern California with several road blocks in the process that have made it difficult. And in the southeast, I feel they have a much friendlier attitude toward business.
Are you looking to specifically build out in Florida? Or, are you looking to branch out to other areas of the southeast? You said you looked at South Carolina, Alabama and other states.
We looked at one store in Alabama but decided not to purchase it. There were various reasons why we didn’t go ahead, but about three months later, the head of the new business development in Huntsville called me and said, “Hello Mr. Qvale, I’m sorry you didn’t go ahead with that store but wanted to see if there is anything I can do to earn your business in the future.”
That’s from a city government official, and when I heard that, I felt if the next store came up is in Alabama, we’ll seriously consider it. In my experience, a city government official saying something like this is rare.
It must be an exciting time right now, especially as the economy comes back.
Yes, it is. There has been such a huge shake-out in the industry. For those of us capable of surviving the last couple of years, the future seems fairly bright, but in today’s world we’re one terrorist attack away from being back in trouble…scary times.
What kind of car do you drive today?
I drive an S8. I commute 80 miles a day and look forward to it every day.
When are you going to start building the Ft. Lauderdale facility?
Hopefully we will have it completed before the end of 2011. We’re looking to build a more vertical facility that will have the Audi terminal look, similar to our Oakland store.
From a dealer perspective, what is one thing you would like to change about the business?
Unfortunately, there are a few too many to list. We just have to continue adapting to the constant changes.
Margins are becoming tighter every day. Cultivating and retaining seasoned salespeople is our goal for long term success!