In existence for only 20 years, Classic Chevrolet in Grapvine, TX, has been the number one selling Chevy store four consecutive years and is about to make it five. Much of that is due to the culture Owner Tom Durant created that his son Hagen, Classic’s general manager is carrying forward. Hagen sits down with Dealer magazine and shares his thoughts on GM’s new management, being a “dealer kid,” and how technology is helping Classic continue as an automotive retail leader.
Classic Chevrolet has a good-natured battle with Paddock Chevrolet in Buffalo for the title of the top selling Chevy store. And you won in 2009. How many years in a row has Classic been number one?
Four years in a row. It looks like it could be five in a row if we stay strong. We are more than 300 hundred units ahead of Paddock right now. That’s been a fun rivalry.
The loser was supposed to take the winner’s management team to lunch. Have you collected yet?
Duane Paddock took us out to dinner after our fourth victory, which was this year. He’s a good guy.
How long has Classic been around?
Was it your dad who started it?
My father, Tom Durant, started it. It was actually a business that he purchased in downtown Fort Worth sometime in 1988 or 1989. He moved it here about 20 miles away to Grapevine in 1990. There was nothing here at the time. The area looks much different now because of the growth.
Classic recently acquired some of the old Bill Heard stores.
Yes, one in Florida and one in Sugarland, Texas.
How are those stores doing?
The Florida one is doing relatively okay. It is not thriving right now, but the economy in Florida has some catching up to do. Our Sugarland store right out of the gate is just doing awesome. We get to share the same front page on the top 250 list.
Are you looking to acquire more?
I think we are taking a little bit of a breather on that one, but we always keep our eyes and ears open. If a good opportunity came up we will look at it.
Do you get to Florida at all? Or are you tied to Texas?
I went to Florida for NADA. I got to drop by Stingray Chevrolet, but that is the only time I have ever been there.
Every store that we buy, we put in a key person who has gone through our flagship store in a management form, we like to call it the Classic Academy. They have proven themselves over here and have absorbed our culture and then we send them off as partners to go run another store.
It typically works pretty well. We don’t do it with a corporate mentality, though. We actually do it as a partnership, meaning we are not going to outline procedures. We don’t do contracts with vendors throughout the whole group either. It is just about as independent as it gets.
You grew up in the business?
I have. Of course, I had my time while I was at college thinking nothing of the business. But I have most certainly grown up with it. Since the age of 10 I started doing the basics. I washed cars, swept the service department. Everything you can think of, I’ve done it.
But I didn’t work in the back end. I grew up a little more front end oriented. Which a lot of dealerships are strong in, but I want to balance it out now.
What are some of the things you are doing now to do that?
I spend time visiting with and learning from my service manager. Having a daily visits with him and then wrapping my mind around the back end – including the body shop – is giving me a good perspective.
Texas seems like it has a vibrant body shop business.
Yes, but it depends on the area you are in and the relationships you can develop with the insurance companies.
Where did you go to college?
I went to Texas Tech. I went in 1998 and came back here in 2002.
A Red Raider?
Good football team.
Interesting football team.
What did you study?
I studied business. I didn’t have any real general direction, I just wanted an education.
You came back from school and started working at the dealership again, and now you’re the General Manager. What is the timeline of that?
I sold cars starting in 2002, mainly Hummers. I looked at vehicles that I was enthusiastic about. I felt it wouldn’t be hard to sell that vehicle. I never wanted to have to talk a vehicle up. I was 22 and wanted something outrageous to sell so I chose that department. Selling those was the most fun I had in the car business.
Now you’re the general manager running the dealership. As a GM, what are some of the challenges that you have running such a big store?
I think one of the challenges — considering the employee count is more than 260 – is just being able to stay on top of communications and procedures. We have six trusted managers running our stores and often procedures can be created and I am not aware of them.
So staying on top of the operational flow is very important. This is a business that has been around for 20 years and it is huge. It is hard to wrap your mind around how it works. That is an ongoing challenge.
How is it being the son of a dealer principal and having to gain the respect of the staff and not just being seen as another dealer kid?
I have thought that since I was young. I have always tried to approach everyone humbly. I try not to look down on anyone. I look straight at eye level. We are all here to work together. In many cases my elders are people that I manage and they have a lot to teach me.
That is both a good and a tough position to be in.
What are some things that help make Classic such a success?
I think it’s the culture that’s been created. People around here catch on to the fact that they are compensated well and treated well. They aren’t getting bombarded with policies. It is a very relaxed place to do business and it is evident to the people who come here to do business.
You can’t just spring up a dealership. It has to happen over time. What got us to where we are today is all of the referral traffic that we’ve built over the last 20 years.
What are some things as you look back you would say “Wow, I’m glad we did that, it was a homerun for us.”
That is a good question. I’m glad we started doing an Internet department in 1998. There was sure a lot to take in for that as the technology started to evolve. At the time, the Internet was barely in existence.
Classic has a strong Internet business and has some good people working there.
Good people who really do understand communication online. That is a whole new skill – being able to communicate online in nonverbal communication where you can’t always show your expressions or body language. A lot of our folks have done it so long that they have fine tuned that into an art.
I’m on your website right now. Do you get a lot of traffic with your chat application?
Actually it is our number one converter. Client ConneXion does that for us.
Logically, how else are you going to engage with someone on your website, besides what you put out there? Ask yourself, how many dealers are putting stuff up on their website that is engaging? Chat is another way for us to communicate and engage.
You went with a company called Dealer Trends to build your web site.
We did that as an auxiliary option. Our OEM-provided web site had its obvious limitations, so we looked for a different company to do that. This month we are switching to VinSolutions.
Dealer Trends is a good company – especially for web sites. But VinSolutions offers such an encompassing platform that is going to save us a lot of money. We’re going to gain so much in efficiency and awarenenss.
For example, we never used a CRM. I wanted to stay away from computer products even though, I am a computer geek. I love computers and I love what they can do for us.
But I don’t want to turn into the Cheesecake Factory where you have 75 open tables, but it still takes five minutes to get seated because the computer has to do it all.
But I did find that there are many elements of the CRM tool that improve efficiency of transactions. One is not having to fill out three separate buyer orders and take them to the sales manager for a signature. We can type the information in once and have all the information that has been collected populate and be pushed to the different parts of the dealership. The F&I stream, the DMS, so we never have to do any double or triple entry. It eliminates the redundant tasks we’re doing now.
What is the value with the social networking as you see it?
I think the value for social media is being in front of people and having a message that resonates with people. I originally started playing with it in 2009. There wasn’t a lot to do and not much business is rolling in because of the downturn. People are talking about social media being the next best thing, so I thought I would give it a shot.
I’ll be honest with you, the first time I saw it I was wondering what the heck I was supposed to do with 140 characters on Twitter. I ended up watching people engage — acting like a mole watching people and how they interact. It has gone really good. I know a lot of people have argued how do you measure your ROI? I don’t think that’s where it is. I think it has other ways to really help your Web presence; help the SEO of your website if you do it right, and again it is relaying your brand and getting in front of people. It is also being human.
Have you brought in any consultants or trainers to help with that or are you doing it on your own?
I did it on my own for the first eight months. I had my Blackberry and iPhone out throughout the day and I don’t wish to go back to that. But I do like to speak on there on a daily basis. And I had a consulting company put together a blog for me. It provides valuable information and tips for the ownership experience of a new vehicle.
You mentioned the downturn in 2008-2009, what are some of the things you did as a general manager that helped keep Classic a premier store?
The first thing that happened was being made general manager. In November 2008, I graduated from the NADA’s Academy and after that I just started to dive into things I hadn’t been into before. I was looking at general ledger accounts and looking at expenses and creating templates for monthly procedures to help with workflow.
Dad caught wind of that and put me in the chair even though I didn’t think I was ready for it. You never think you are ready to take on a business of 260 plus employees at the age of 29, but you could eat an elephant one bite at a time, so I figured I would just roll with it. It has been a blessed learning experience.
As a store you made cuts.
We didn’t have to make too many, but we did make some.
Your sales really didn’t drop a whole lot, right?
They didn’t drop too bad, we were at 4,101 in 2009. In a typical year we usually push 5,000, so we were about 900 to 1,000 cars short by the end of the year.
Was there any point where you were nervous?
There were points every day where I felt nervous. But you always have to go back to being clear and level-headed about it. You always have to think about how people will react. The whole mass can react if there is a huge tragedy, when in fact there is light at the end of the tunnel.
Recently, General Motors sent an internal memo about Chevrolet. What was your guys take on that?
It was leaked to the news last week that GM executives wanted employees to ditch the Chevy nickname and start using Chevrolet only.
I think it is ridiculous really to be honest with you. I don’t mind it, and I’ll roll with it. I think I am referred to as Chevy.
I think they’re backing away from it now. I see on your website you use Chevy.
The names are synonymous; the name will have negative effect on web traffic because people are going to type in Chevy not Chevrolet. They want to call it Chevy.
What are some other things you are going to be doing over the next year?
I have been very meticulous about my ecommerce with a huge primary focus on the front end when I am not thinking about fixed operations. I’ve got a lot of plans for that, but unfortunately these plans take time to deploy. It is kind of like watching a bean sprout grow.
It’s tough being patient.
You want to do it all at once, but you just have to tackle one thing at a time.
You want to take the big picture perspective of what I want to do. I think we should be able to offer all of our services in an ecommerce fashion. I’m not talking advertising, I’m talking ecommerce. I think just how you can do at PayWay, you should be able to pick what you want to have and put your credit card information in there and go to the dealership and say your name and be able to pick it up. I think you should be able to do the same thing with a maintenance plan and have a promise to get the vehicle back at a certain time.
Why do you have to do a parts request by email to the parts representative at the counter, who is going to email you back? Why can’t we do that real time online?
On your service side, are you looking at bringing in a company that is going to let your customers set a real time service appointment?
This would be a software. I would love to do that and I would love for no overlapping between the computing and the viewing. That dynamics has to be perfect. No more Cheesecake Factory.
I have a feeling that if I talk to you in a couple of years, you are going to be so far ahead in your fixed operations services then where you are now.
Well, you know there is so much fun in fixed operations, if you good at turning switches and being patient after you have done that, then remembering to check you results down the road, it can be a lot of fun.
I see there is a lot of efficiency that you can drive in that department if you know what you have; using technology can save you so much money. Money that goes right to your bottom line.
Think about this, you’ve got your sink drain closed and the sink is making one drop per second and you go on vacation and come back and your sink is overflowing. Those are little drops. They don’t seem like much, but in ecommerce we are missing little drops. And if we develop net buckets to collect those drops then we can gather more opportunities.
You have been diving into the fixed operations side. What are some things you’re seeing as a dealer now that you’re saying, “wow this really could help us move the ball forward.”
Well as a GM dealer, I am really excited about this CSSR Program. It is in its early stages and they have had a few hiccups which should be expected. But they had to put massive amounts of data together while merging it. They do have a strong vision to communicate to our customers like we never did, like most dealers never have, to try to get them back in the service drive.
There is a huge perspective out there that a dealer’s service drive is going to try to rip you off and we have to overcome that.
That is a great point. Do you think moving to more of an ecommerce setting will change how you hire and how you pay employees?
No. Our Internet folks are still on the same pay plan as the floor people. But I don’t really see having an Internet department for much longer. Down the road I don’t want to have one. I think we’ll have an Internet store. I want to have everyone certified with certain requirements. That is important to me.
There are some conflicts of interest between the floor and the Internet. I’m sure they exist in every store.
I was talking to Chrysler store in Michigan, and they have been farming a lot of Internet leads to some of their showroom staff that have met certain performance levels.
And I be those people really take care of those leads. If someone on the floor gets it, they take better care of it than my kid does with a peanut butter and jelly sandwich. There is some value there.
What is the craziest thing you’ve seen in this business?
You know, I’ve seen it for so long, and have seen some crazy things, but I don’t know which one I want to bring to the surface. Full moons are my favorite time to be at work, that’s for sure.
What is your take on General Motors these days, just in terms of comparing previous management with today’s?
I like the new GM a lot. We used to go to dealer conference in Las Vegas every year where they said they were going to do this and this and this. Everybody is shaking their heads and go back to work. For a year, you don’t see any of what management said come to fruition or ever get mentioned.
And then the next year, they would say they are really going to do it. They never did.
Now I’m noticing all the things they have mentioned in the last five years and all of things that they recently mentioned they are executing. I feel like they had so much dead weight, like a canoe trying to pull a 100-pound fish net through the lake. It was hard to move and change direction or execute anything new.
And now they have stripped themselves of all that dead weight and are moving forward. I’m seeing more execution. That is number one thing that I like about it. The rest of it, there is a bunch of leadership changes that are making me a little bit dizzy.
I guess my focus is a little bit more on the showroom, so I haven’t kept up with everything but I like the way it is. The only thing they need to get going is the inventory balance. It is beginning to hurt. We are beginning to feel trying to sell out of an empty bucket.
Do you think the production cuts have gone too far?
I‘m thinking this is something that hurts before it balances out.
I’ve heard a lot of dealers complaining that they can’t get inventory.
I’ve got three Suburbans, you want one?
What is the hot seller right now?
The Traverse is pretty hot, so is the Equinox. The Camaro has had its obvious glorious 12 months. Trucks have always been our primary best seller, three to one.
What is your ratio new to used?
We will usually do 150 in used and 500 new.
Has the used car business changed for you guys?
It has been volatile. What we have needed to keep in inventory has changed very quickly. What we previously thought of as good decisions at the time actually turned out to be bad decisions in the end. But we’ve been able to balance it out pretty well now. Good tools, like vAuto has helped.
vAuto, whether you use this or any of the other tools such as FirstLook or DealerTrack’s AAX, you have to work them pretty hard? And that is not criticism, because these tools it make you a better operator doesn’t it? You can’t expect the software to do all of the work for you.
No, it is not going to run your job or run your inventory. It is a tool and for a tool to work, you have to use it. You have to use it whenever you are evaluating where you price your vehicle and it is going to help you know where you sit. If you have a case where you show the price of the vehicle to the customer, you have something to stand on. For the first time ever we have a market priced comparison to stand on top of, because someone can’t claim another dealership’s pricing. That used to be a variable that was tricky because we want to stay on good terms with the customer.
What about gross margins on the used car side?
Gross margins have been pretty good.
Are you seeing them leveling out with less volatility?
The market is getting a lot more efficient, but if we buy your vehicles right, and we don’t have to buy them all, we have a way of managing them. We can afford to make a profit without letting our inventory suffer. And we can do that with new cars as well. You really have to train the salespeople to sell the value.
What is the best product you have seen across the board in any area of the dealership?
To be honest, I think VinSolutions.
That is huge. They would love to hear that.
Also vAuto or any other marketing analysis tools as number two.