What is the current state of Nashville's premium car dealership community?
I would say it is average. The automobile industry generally is not having a good time. Although the premium segment manages to isolate itself to some degree, it's always affected by general consumer attitudes. And, frankly, automobile manufactures have done significant damage to the retail marketplace.
What type of damage?
Over the last probably 10 years, manufacturers, in competition with one another, have increased consumer expectations to the point that they can no longer financially sustain the obligations that come with those heightened expectations. So, taking a page out of Washington's notebook, they are issuing what we might call unfunded mandates wherein they expect their dealers to absorb more and more of these costs, whilst at the same time their advertising and promotional activities are depressing trading margins. I feel the manufacturers' ongoing attempts to control the retail marketplace are possibly in violation of many federal and state statutes.
How do the manufacturers justify this activity?Inside Info
They make sure that what they do is within what one might call a broad interpretation of the various statutes. Interestingly, the Texas Motor Vehicle Commission has outlawed every program that a manufacturer has attempted to impose on its dealers along the lines of the Ford Blue Oval Program [a facilities improvement and customer satisfaction incentives program whereby dealers meet certain criteria and, as a result, are able to purchase cars from manufacturers at lower prices than competing dealers]. In addition, that commission has outlawed used-car programs that attempt to compel dealers to retain off-leased vehicles in return for incentives.
What is your opinion of the hybrid automobile?
Porsche officials have announced they are examining the possibility of a hybrid, but they are the only manufacturer I represent that appears to be doing so. I think hybrids are probably the first generation of a development that will, at some point, lead us to a vehicle that will have broad appeal as well as being ecologically friendly. But the market for the present generation is strictly limited.
What about hydrogen fuel cell cars?
With hydrogen cells, you'll see they are being sold first in commercial applications. The vehicles at this point cannot reproduce the characteristics that people generally purchase cars for: performance, power, enjoyment and competitive pricing.
How competitive is the local premium auto segment?
It's quite competitive. Sonic Automotive Inc. [based in Charlotte and owned by Bruton Smith] owns Crest Cadillac-Hummer, BMW of Nashville, and Mercedes Benz of Nashville. There is also in the corporate category Lexus [which is owned by Austin, Tex.-based Performance Auto Group]. The independents include Andrews Cadillac-Landrover, Volvo of Nashville, and Thoroughbred. When the local market goes from owner-operated dealerships to corporate operations, it ramps up the intensity. Corporations acquire dealerships with the goal of increasing sales and performance. But we believe the personal relationships mean a lot. I've owned this place 20 years, and I'm here pretty much every day. Thoroughbred is part of this community. I am privileged to live in the United States and be a part of the Nashville community.
What about the local market for premium automobiles?
The Nashville economy, being as steady as it always is, tends not to see the highs of major cities, but it manages to avoid the lows too. There is a great deal of quiet wealth in Middle Tennessee, which sustains the market during quiet times.
What are Thoroughbreds' weaknesses?
We continually have to remind ourselves of our mission: to keep our customers happy and to make the buying experience rewarding and fun. Sometimes it's difficult and sometimes we fail. But that serves to reinforce our resolve.
How is the company financially?
Gross revenues have increased every year I've been in business and continue to do so. Our profit margins have come under pressure, but we have managed to keep our performance over the last three years about level. Our net has not significantly changed the last three years, which - bearing in mind the state of the industry - is, in my view, satisfactory. It also provides an excellent platform to take advantage of what we see as increased opportunity over the next three to five years.
What has been your dealership's most significant accomplishment?
Basically taking a company that was somewhat struggling in 1981 and turning it into what it is today. I bought the company from George Crook, who started a company called Scott Welch Motorcars in 1970 with his two friends, Dan Scott and George Welch. That company became Thoroughbred Motorcars in 1978, when George took sole control. I joined him in 1981 as president of the company and bought the dealership in 1985.
What is your view of CarMax?
Austin Ligon [CarMax Inc. chairman] is a very smart man. However, how successful CarMax will be in the long-term is a question mark. The used-car market is extremely volatile. At strategic times, CarMax must either increase or decrease inventory, and this must be done very quickly. I don't know that a corporate structure lends itself to doing that. But God bless CarMax for trying.