Greg Goodwin took over as the president and CEO of the Kuni Automotive Group in 1999 when founder Wayne Kuni retired. The group began in 1970 with the opening of Kuni Cadillac in Beaverton, OR. It’s grown to 11 dealerships with 14 franchises and is one of the top dealer groups in the country.
The group is known for its stellar reputation and for being one of the strongest performing dealer groups in the U.S. It’s a family-owned company focused on creating an environment where its employees can grow and thrive.
Dealer magazine visited with Greg, CFO Laura Carlisle and COO Joe Herman at the group’s offices in Portland, OR.
I just read the Kuni organization made a sizeable donation of $50,000 to the Red Cross for Japan.
Our relationships with our Japanese OEM partners are very important to us. Our employees and shareholders were heartbroken at the immense loss of life and the scale of the destruction caused by those events. Our thoughts and prayers go out to our many dear friends in Japan, and to their families and friends. We’ve long admired the spirit of the Japanese people and are confident that the same spirit will prevail in the coming months.
Greg, you started in 1978 with the Lucas Automotive Group.
Yes, I was working for a credit bureau in California at the time. And I don’t know that I had ever been in a dealership before I began calling on the Lucas Automotive Group as one of my clients. After a while, I began working for them as a finance manager.
Before I worked a day in that dealership I went to school with Pat Ryan (Aeon Corporation founder) for two weeks in Chicago. I worked in various positions at the store for the next eight years before Lucas sold the dealership.
I rejoined him in 1986 when he sent me to Hawaii for four years to manage Honda Windward. For a young guy, that was a fantastic opportunity – a lot of fun.
And then you began working for Wayne Kuni?
Before going to Hawaii, Lucas and I had talked about my doing a three-year stint there. There was a lot of turnover at the store. I love Hawaii, but we weren’t sure we wanted to raise our children there. I think it was also that we were so remote there. So after the three years were up, I asked what was next, but we weren’t sure there was going to be an opportunity in the Bay area.
At the time, a friend of mine was closing on a store with Wayne Kuni in San Jose area. My wife and I were heading there on vacation so my friend suggested I meet with Wayne while I was there.
I had a couple of good meetings with Wayne in early 1990 while I was contemplating my future. In the fall, he offered me a rather unique opportunity. He didn’t have a place for me, but thought maybe I could create a spot. He told me he would risk a year with expenses and a small salary and suggested I go off and find something interesting for the two of us.
I looked at him and asked if he had bumped his head that morning. Then I said, “So, how much will I owe you if it doesn’t work out after a year?” He answered, “Nothing. I’m willing to gamble.”
What did you do?
Like my friend Joe Herman (Kuni Automotive’s COO), I was a guy who collected business cards. I had been using a computer for some time, so I entered everyone I knew in the car business into a database. And then sent them a resume and an introductory letter explaining what I was doing.
We ended up buying a Lexus dealership in Littleton, CO, which became ours on July 3, 1991. I was Wayne’s partner and general manager there for eight years.
And here you are – the CEO.
It’s good to be lucky. I’m a lucky guy and I picked a great partner. Wayne was a unique man, and I think we are a unique company.
How did the move to CEO transpire?
Wayne told me before he died that he knew for a long time that I was the guy. We had a great relationship and in many ways he treated me like a son. But, I didn’t understand really at the time what he was thinking when he put me in the position. To be honest, I had thought succession would take place in the family. But over time, he made the tough decision that it would not happen that way.
Fortunately, then and now, within the family, there is a lot of respect all the way around.
When did you become CEO?
Kuni is known for having a somewhat unique corporate structure.
Maybe, but it’s not that complicated. There are seven shareholders. Two of them are family. The third is a charitable trust, the Kuni Foundation, which today is the largest shareholder in Kuni Enterprises. And then there are four others, myself, Laura Carlisle, our CFO, Lee Castonguay, Wayne’s original partner, and Lee’s son Brad are the other shareholders. Brad now is the president and general manager of our Lexus Seattle store.
The company is set up as an S-corporation. It’s really not that unusual except maybe the charitable trust’s ownership. And then, each of our stores is an LLC in which the president and general manager have an equity stake.
Wayne had three personal goals when he set up the structure. (Editor’s note: Wayne Kuni died February 3, 2005 at age 75). He wanted to take care of his family; he wanted to reward his business partners and employees whom he felt were instrumental in the success of the company. He did that buy making sure the company would continue after he was gone. And third is the charitable part, which remains very significant and will continue to grow over time.
Have you thought about how you’ll make sure the company goes on beyond your retirement?
I would just say that all of us have a lot to figure out the next few years. The board is aware of it, my team is aware of it. I’ve been blessed with great health and energy and a great team to work with and I’m having more fun than I’ve ever had. I’ll be around for awhile. My goal is to leave the company in just as good as shape as when I got it.
What’s surprised you the most being CEO?
Looking at the whole range of my experiences, I’d have to say I’m most surprised by the increasing complexity and the change of pace in our business.
How do you manage the change?
I’ve really wanted to imitate Wayne’s practice in keeping local authority in control at the dealership level. We’ve been successful doing that, but we’ve also become somewhat of a hybrid because it’s simply more efficient to do some things in one place that affect all the operations that might have been done in each of the dealerships before.
I think organizations that aren’t evolving and becoming razor sharp in anticipating change and being on the leading edge of change are in jeopardy.
Larger dealers who aren’t leveraging their talented people, technology, scale, reputation, branding and customer loyalty – some will have a tough time because this business is changing in a number of ways that are very significant.
And very quickly too.
Oh, yes. It’s the breadth of change and the speed – and both of those things are challenging.
What concerns you the most about the business and what areas do you look at most closely as CEO?
Well, as a company, the thing we talk the most about and care the most about is improving owner loyalty. We really try to teach that relationships are precious. And we take care of the things that are precious. The way we can impact owner loyalty from where I sit in this office is making certain that we bring the best people into the organization as we grow and that we help them understand the way our company does business.
And taking that thought further is retaining our great employees. I would say that’s the number one thing I worry about.
The industry has yet to grapple with something I’ve been worried about for a long time and that is creating opportunity for producers – salespeople and technicians primarily. Technicians are still doing OK, but there are some challenges on the horizon for them.
Salespeople, though – we as an industry haven’t enabled them to become more productive and that means their incomes have not kept pace. So we’ve lost a lot of good people in the industry.
Our company is doing better than average, but not as well as we need to do in improving productivity so that people who produce are rewarded for their efforts.
A big part of that are the technology initiatives we put in place this year, which help us better track productivity so we can know who our top performers are and who needs additional help and resources so we can get them where they need to be.
(Editor’s note: Kuni’s management last year began looking for vendors with what it calls “best-in-class” technology to help it keep in front of today’s fast changing industry. Some of its key vendor partners include DealerSocket for CRM; Resource Automotive for a captive finance company; Dealer.com for web sites; vAuto for used vehicle management and J.D. Power and Associates for mystery shopping.)
You’re a fan of technology.
My nickname is Gadget Man – there’s a special expense category in the budget for “Greg’s gadgets.” I was a student of computers when Charlie Chaplin was selling them (Editor’s note: IBM used a Charlie Chaplin look alike in a popular ad campaign years ago) and the benefits of technology. I actually tried in my early days as a salesperson to build my own CRM system and if I had been successful at it, I’d probably be doing something else. I did it in a rudimentary way with computers, laser printers and databases.
Not only computers, but I studied the Internet when it came along. I was the first chair of Lexus Interactive Committee and had one of the first Lexus.com dealership web sites.
I believe an informed consumer is a great thing and we need to make sure our sales consultants understand that. It saves time and builds trust. It takes Oz out from behind the curtain. It also empowers women. They’re empowered in terms of how their place in society has changed, but also with information and that’s a benefit. We need to be prepared for that and not intimidated by it.
How does a CEO and an organization stay disciplined, especially in light of the lessons learned the last couple of years?
I think it starts with information – and it’s something Joe Herman has brought to the organization – making certain we have the critical information we need and making sure the managers have that information and know what to do with it and how to adjust.
It involves communication, support and training. Joe is a great bridge between this office and the managers. His focus is on helping them – that doesn’t mean he’s taking away their authority, but he’s a great coach. We always talk about adding value, and not stress. It’s not about looking over people’s shoulders and playing ‘Gotcha!’ It’s got to be about improving.
Think about it. Our GMs are leaders of powerful businesses and interface with the OEMs and with the community and have to have the authority to make decisions but we also have to be behind the curtain to provide support and education.
One of the biggest challenges the last couple of years as so much has changed in the industry is that we need to be able to stay plugged in to what’s going on. If we’re not, then the managers in the stores aren’t going know what’s happening unless one or two of them find out on their own.
You have to be great student of this business. You have to be looking forward and be willing to try new things – I wouldn’t say experimenting – we’re not inclined be the first to try, let’s say, a new CRM.
But we do pay attention to what the startups are doing. And we are willing to try new things.
The relationships with the OEMs are a key part also. You don’t want to have just one single point of contact with the manufacturer. So you have to find a way to navigate that. We want our GMs and this office to have excellent relationships with the OEMs.
The way to get there is to be transparent and available and to perform. It’s a commitment we make to manufacturers when we sign.
How are manufacturer relationships right now?
I think OEMs with the best relationships understand the dealership and its practices are critical to the success of the brand. Therefore, dealer profitability is not a dirty word. Trust has to be built.
Meanwhile, dealers need to invest in the brand and not build their businesses on the short term. For example, we’ll go into our pocketbook to do the right thing and cure a problem if we have to.
The last few years had to be somewhat of a surprise.
I don’t think I was surprised at the events of 2008 and 2009 in respect to General Motors and Chrysler. But a lot of people who were paying attention weren’t all that surprised.
The way it played out was a surprise to me, though. I had been saying for a long time that GM could go bankrupt because the path it was on was unsustainable. But I certainly didn’t envision the government bailout.
You actually closed the original dealership.
Not without some pain. But, the fact is we really sold that franchise to a local competitor. The volume Cadillac was doing in that market couldn’t sustain three dealerships. And we weren’t the preferred location.
When I talked to my board about that decision — and really apologized for the state of affairs at that dealership — I pointed out that we had converted many of those customers to BMW and Lexus over the years. So we have been successful in that market.
Are you looking to add stores?
My first answer to questions about acquisitions is that it’s nice to be a private company. We’d like to grow but we don’t have to. We are looking, though. Bringing Joe Herman on board as COO and moving Laura Carlisle into the CFO position, along with some other decisions we’ve made, we’re trying to position ourselves better to grow. And I’m optimistic we’ll be able to do that.
Recently, there has been talk that car prices will increase dramatically this summer as production cuts resulting from the earthquake in Japan are felt.
You know, I think we’re one of the few dealers that don’t mark up vehicles over sticker. We’ve always tried to manage our business with an eye for the long term. Opportunistic is the word for those sorts of practices.
Do I think we’ll see slightly higher margins for a while? Absolutely. But let me tell you something – here’s where the game is won or lost in the car business. If all of us understood this, we’d be much better off as an industry – the buyer historically most taken advantage of is the first time buyer. A person who is stretched and saved their money and is excited by the new car smell and we take advantage of them? I don’t understand – I’ve never understood it.
It’s downhill from that point on with that customer.
Kuni has a stellar reputation. How do you market that?
I don’t know that we do. I spoke to a small Jewish business group yesterday morning. When I was done, a business owner – the largest importer in Vancouver (WA) stood up and told how he had bought six cars from our Lexus store in Portland and how he would never buy from anyone else. He didn’t talk about the cars. Instead, he talked about our people and how excited they are to be there and how it’s the same people time and time again. It was different from any other dealership he had been in.
He said he believed it was the tone at the top. I think a lot of that is due to Lexus and the brand. I also credit the two gentlemen who are our partners managing that store and their team.
We can say we’re charitable, but that’s different than doing the things that are visible — sitting on a board of a charity, giving of our time volunteering or writing that check.
I think people discount the power of word of mouth – and I think we pay attention to that.
These days with social media a reputation can be won or lost with one hidden camera. A person can say, “You said this. But you’re really that.”
I have a lot of respect for consumers – You have to be what you say you are and the less you say and the more you do it, the better off you’ll be. When I hear that Kuni has a different, or good reputation – to me, that’s winning.
The Kuni Dealerships
Kuni Sacramento – Cadillac, Buick, GMC, Chevrolet
Kuni Honda on Arapahoe
Lexus of Colorado Springs
Kuni Lexus of Littleton
Smart Center of Denver
Kuni Collision Center
Lexus of Portland
Smart Center of Portland
Kuni Westside Infiniti
Lexus of Seattle