John Eagle is a member of the PhD club – “Papa had a dealership.” He’s been in the business since age six when he started washing hubcaps and grilles on vehicles. What started as a bankrupt Lincoln Mercury store has turned into 13 franchises spread out through Texas and Florida and is one of the top 100 dealer groups in the country.
Eagle says his dad was his greatest mentor, letting him make mistakes but always teaching him. Eagle has taken those lessons and now is growing a new generation of dealers as he sets up partners in each of his stores.
It’s a model that helps further the industry along with strengthening his company. It’s allowed him to start spending much of his time in nonprofit endeavors in the Dallas area.
How did you get into automotive retail? You grew up in the business, right?
I did. My dad started the business in used cars in 1962. He lived in Dallas and he bought a bankrupt Lincoln Mercury dealership that was selling eight cars a month. In a few short years it became number one in the country.
I started out at six years old washing hubcaps and the grilles – would’ve washed the whole car but I couldn’t reach the hood.
This is all I have ever done and all I will ever do. I think I have had every job in the dealership, except the Internet, because when I started we didn’t have the Internet.
So this was what you always wanted to do?
I always wanted to be like my dad. He is a great guy and he was just always my hero. He was a great mentor. He let me make mistakes. We talked about problems or challenges and he’d ask me what I thought. If he didn’t agree, he let me know, but he would let me go ahead anyway because I needed to learn.
If my way didn’t work out, he took the time to explain why it didn’t work. He never chewed me out for making mistakes.
You have grown quite a bit from that bankrupt Lincoln Mercury store.
Yes, we have done a lot of things since 1970. We added the Honda dealership and continued to expand. He wasn’t working to get out of Lincoln Mercury, but at that time Ford was expanding and they were adding a lot of franchises in Dallas and my dad felt he needed to protect himself.
We were one of the first dealerships in the country, outside of California, to make our Honda store exclusive.
You have several stores.
We have five stores in Houston: a Mazda, three Honda dealerships and an Acura store. In Dallas we have Honda, two Toyota dealerships, an Aston Martin and we are adding a second Honda store. Then in Austin we have an Aston Martin, Bentley, Lotus and Rolls Royce. In Florida we have a Honda store and a Volkswagen dealership.
Are you still looking to grow?
We are in the middle of a legal protest, but we should have a ruling on that soon and I am confident we will be successful in that. That will be another Honda store, right outside of Dallas.
Do you still have the Lincoln Mercury store?
We sold that a few years ago. That is what prompted my move downtown, where are now. We had our corporate offices above the Lincoln Mercury store. We didn’t have space after we sold Lincoln Mercury so we moved downtown because I spend a lot of time there with nonprofit groups.
What kind of nonprofit work do you do?
I spend most of my time today on nonprofit ventures. I’m on the executive committee for the performing arts center. In Dallas we have a performing arts district that has just been completed. We just opened a new opera house and a new theater center. I have been on the executive committee of that for a long time putting that together. I am also the chairman of the board of a small private Episcopalian school that my daughter attends. I have also been doing that for a long time.
I also sit on the organizational board of group that provides meals to needy people. We provide 2,000 meals a week and we do 20,000 to 25,000 Christmas gifts every year.
I just got a phone call today from the New Car Dealers Association here in Dallas telling me they elected me as chairman.
Any work with NADA?
No, I certainly told the people from the New Car Dealers Association I don’t really have the time to do it, but the automobile industry is going to change a lot in the next few years. The manufacturers are going to try to make some changes in the laws – and some of them will be fine — but others might not benefit the dealer. I think it is important that we have a strong presence and work together. Not fight against each other but try to come together on common ground.
The last couple of years have been kind of difficult on that front. It is has almost been a divide and conquer strategy.
Well, we are seeing that in Washington and it didn’t work. Some of the things the manufacturers want to do, we don’t want them to do. I get why they want to do them, but some of them will weaken our franchise system.
So I want to make sure we’re (the dealers) in a good position the next few years.
Where do you think the biggest challenges will be?
I think, honestly, we’re going to see everything change in a traditional sense, primarily with how cars are sold and the way dealerships are set up. It really has become too expensive.
It costs more than it ever did to buy a dealership today. To build one, it costs a lot more than it ever did. It’s unfortunate but we are eliminating many of the young guys, like my dad, who got into the business and didn’t have a whole lot of capital. My dad wouldn’t be able to do that today.
I’ve structured our business to enable younger guys to move up. I put partners in every store. I find these young guys have a ton of talent and have a lot of ideas. They don’t have the capital to start off on their own. It is a model that works extremely well for us.
Most of the guys that I put into business came from stores where if the dealer died they thought they might have a chance to buy it, but that didn’t happen. Then they realize they weren’t able to attain their dream.
So we work together and that is how we are growing. The pace isn’t too fast. That’s also how I’m able to devote so much time to my nonprofit areas.
Are your children involved in the business?
I have a daughter who is working with us now. She is running a business development center that she has designed, staffed and trained everybody. She started out similar to how I did. She sold cars, was an F&I manager, and a service writer – she has worked her way up in the business.
With the BDC, she wanted to write out the business plan and run it entirely herself. We are really excited about it. My goal is to someday turn this over to her. I have another daughter who is 13, so I can’t get her in just yet, but we have room her for her down the road.
You have some perspective of history. What were you thinking in late 2008 as it became obvious we were in for a few rocky years?
You know, 2008-2009 were still good years for us – actually 2008 was a great year. For 2009, we ended up with a good year, nothing like we had had in the past, but still profitable.
I think what caught us by surprise was that in the first quarter of 2009, the Texas economy seemed to still be pretty strong. That first quarter got us. We recovered from that. From 2008 to 2009 we started to watch our expenses. My father always taught me that bad habits were made in good times. A lot of the things that we have done in the last year are starting to work out well for us.
One of the things is advertising. We spend so much money on advertising and so much of it is ineffective. As a result, we have really been taking our time making sure everything we spend is providing us the greatest benefit. For example, our social networking department that we put in is really paying off for us.
I learned a long time ago it is not product, it is people. If you have the right people, then you will be successful. We tried to make sure we held all of our people together while not cutting the core of the business.
How do you manage your partners that you installed in the stores?
We are spread out. We have a pretty sophisticated video networking system through all of the dealerships. So we can do a lot of video conferencing. For instance, when we did our F&I meetings once a month 20 years ago, we would bring everyone into one big meeting and waste the whole day.
Now it is video conferencing. We do it in an hour or an hour and a half. Everybody hears the same thing and everyone looks at everyone else’s numbers and it is very effective. It is not as good as being in a room together, but it is a lot better than wasting the whole day.
We supply all of the managers from all of the stores with everyone’s numbers. When I grew up in business, I called it paper dolls. At the end of the month, we got our part of the statement and that was it. We didn’t know what the other departments did.
That was how my dad was brought up. The managers would paste all of our pages together so we could come up with a pretty good idea of how things work.
One of the things I changed was I began giving everyone a statement and let them understand where those numbers come from. The managers appreciate that, so we manage that way. We are a positive management group. We manage all of our people by inspiring them and challenging them. If a guy is doing a bad job then we all work together to try to help him. If he doesn’t want the help, then we make a change. If you have a guy with the ability and he is willing to listen and learn, usually we can help him turn it around.
What age did you start running the group?
My dad had a brother who died at age 47 and my father was always concerned that was going to happen to him, but he is 83 now. I became a dealer at 19 because back in those days we were always concerned that if something happened to my dad, the manufacturer would take away the franchises. It is a little different today since franchise laws are much stronger.
In 1980, he bought a Pontiac dealership and threw me in it and left me alone. It was a tough time; I learned a lot. In 1984 he brought me back in his office and he retired in 1987.
What do you love about this business?
I like how it changes all of the time. I like the challenges. I am in love with cars – I get excited when the new ones come out. I like people and I like seeing them get a car.
The most exciting thing professionally is helping someone work his or her way up to becoming a dealer. I have a guy who is going to be in my office this afternoon from one of my Houston stores who started as a sales guy and worked his way up through sales manager and general manager. About 10 or 11 years ago he became a partner and has been very successful.
He has a great big house on the beach and has a great life and I just couldn’t be happier for someone like that. He never had that dream, and never thought he would get to where he is now. That to me is very fulfilling. We have been very blessed, and I encourage all of my guys to give back to the community. I think it is our responsibility to help other people along. That is what I like about this business.
Do you pay attention to the international side or the politics that are going on from a financial or monetary perspective?
Well, you know, I don’t worry about things I don’t have a lot of control over. I remember growing up in the 1970s and having cars at floor plan at 20%. We had to deal with a lot of inflation at the time.
In our organization, we look at what’s going on with spending around the world, and adjust accordingly. We have always have had a hedge on interest rates – we floor plan $180 million worth of cars and have favorable interest rates. We may never get to 20% again, but it could be 13% or 14% and that’s a lot of work. We lock those rates in by processing money and having a sound interest policy.
I argue with my guys, or discuss with them when they ask if we really need to spend that much money on this. I tell them inflation will come and it is coming.
The strength of our organization in this area is being able to maintain low interest rates.
We also watch what is coming out of China and India. I don’t think they are ready yet for our markets, but they are going to come and they are going to make an impact. They will get to it, but they don’t need it right now.
It appears that the domestics here are coming back.
I am excited for that, even though we don’t have any domestics. The country needs it. We cannot be reliant on everybody else. We need a strong GM, Ford and Chrysler. I am happy to see and am most proud of Ford. The fact they got a leader in there that was able to get past the history and get them headed in the right direction. And I am happy for GM. Those industries are too important to the United States.
You don’t have any domestic stores. Was that intentional or was it just how it worked out?
Well, it really is how it worked out. We were the second Lincoln Mercury dealership to consolidate. At the time we got rid of the Lincoln store, we didn’t like the direction things were going and we didn’t see a way out.
How does Toyota come back?
Toyota will come back. It is not as bad as the press makes it out to be. I’m confident the core Toyota buyers will still come and buy Toyotas.
The pendulum swing too far and it always does. There were no recalls and now there are too many. Toyota is too big of a company with too many good engineers and it is solid financially. It is going to get it straight. It isn’t going to be as big a company, though, as before.
You know, I think one of the great things that has happened – and I hope history doesn’t repeat itself – but we don’t hear as much about market share anymore, the manufacturers aren’t as interested in it as they used to be. Instead, it’s about doing things right – especially with inventories. Market share will take care of itself. Years past, all they could talk about was market share. Now, we just need to be profitable.
In what ways do you think automotive retail will change?
I don’t think we are going to have these big huge franchises on these freeways anymore. In some cases we will, but in others we are going to see smaller showrooms and bigger service centers.
In our business, 63% of all of our sales start on the Internet right now. The customer is not coming in to see different cars; they pretty much know what they want. They already have searched the inventory.
The customer is not coming in to shop anymore. Why do we have these big showrooms when everything is all done on the computer? I think we will see sales floors become smaller, and the service centers become bigger on cheaper land. And what I would love to see if the manufacturers could figure it out is, there is no reason to have all of these cars just sitting on this expensive land. We can deliver it within 24 hours and keep the cars on land that is cheaper to own.
It is going to change. They are going to find it harder and harder for these big guys to build these facilities. Now again, in some areas in the outlining areas it may work, but I don’t think it as important to the customer as it once was.