Paul Lunsford recently signed on as president of the Costa Mesa-based Orange County Automobile Dealers Association, a trade group for local auto dealers.
Like predecessor Matt Gunderson, Lunsford heads the group at a trying time for dealers.
With about 130 members, the association provides dealers with seminars and puts on an annual auto show at the Anaheim Convention Center, along with Southland Motor Car Dealers Association in Long Beach.
The OC association also helps recruit auto technicians and sales people to dealerships.
Lunsford, general manager of Costa Mesa’s South Coast Toyota, talked to Sherri Cruz of the Business Journal about his plans for the group, as well as about how dealers are managing the downturn and what the future looks like for them.
What would you like the association to focus on this year?
If I had to key in on one thing, it would be education within our industry, the training we provide and the compliance issues that we address for the dealers.
But as an industry, we have a great story to tell. We’re good people in the community. We’re the first stop when people are looking for sponsorships, when Little League is looking for new uniforms. We’re a huge sales tax generator.
Beyond that, the government,federal, local and state,is taking a more active role in our businesses. I think it’s important that they understand that ours is a complex business. Most dealerships have several businesses going on,the parts department, the service department, used car store and body shop. There are some complexities that exist within our industry and we need to do a better job of making the politicians and elected officials aware of them.
How is the association politically active?
We go up to Sacramento annually and talk to the various officials. We try to make them aware of things that we feel are important, in areas we think they could be helpful. We’re trying this year to bring more of those elected officials into our stores. Car dealers are an enormous part of this economy. We’re huge contributors on a number of levels. We’re big employers.
Toyota recently posted its first annual loss since 1950. As a Toyota dealer, does that worry you?
This has been a challenge. I’ve been doing this for 26 years, starting in the early 1980s. It’s kind of a 100-year flood. I’ve been with Toyota since the early 1980s. That’s pretty much where I stayed. When you see Toyota post a loss, it definitely gets your attention. But I have a lot of confidence in Toyota’s ability to be adaptive. If they see something’s not working, they change it.
Ultimately our industry may reshape itself a bit, but it isn’t going away. The first day I pull on the on-ramp on the 405 and I see guys on bikes with brief cases, I’ll get nervous. In the interim, our industry is here to stay. We’re very entrepreneurial. We’re salesmen. We’re problem solvers. As a group, we’re very well equipped to deal with these problems and come out on the other side. There’s going to be some winners. There’s going to be some losers. We’ll have a smaller group than what we started with.
It seems what the business dealers were doing wasn’t sustainable. Does the industry need a new business model?
The industry will probably size down. The pendulum swings from one side to another, whether it’s the housing market or the auto industry, with some regularity. I watched for years as they built million-dollar tract houses on Newport Coast and people were buying them like bags of popcorn. At a point, it isn’t sustainable.
In terms of the business model, I think as an industry we’ve been on the right track, providing products that people want and providing a terrific sales experience, a transparent one. I think we’re going to be more intuitive and stick with the business plan and size it properly to where we can make a living, given the sales volume.
Are dealers angry at automakers?
There are some manufacturers that have done a better job than others. As a Toyota dealer, I’m not in the least angry. Toyota has been on the fore of a lot of innovation. They’ve always had a real hand in glove relationship with the dealers. I hear some of my counterparts, with other makes and models, haven’t enjoyed that kind of relationship. It’s been more adversarial. I’m sure that some of those guys are a bit upset with the manufacturers.
If more people could get loans, would your business immediately improve?
No question about it.
We’ve come out of a period of easy credit,not just in the car business. Some of the lenders started looking beyond common sense.
Once consumer confidence is back, will business ever get back to the way it was?
Our industry will be here for a long time. We’re going to have to adapt. But certainly the industry is going to come back as it always does.
Some of these changes are going to be permanent. The type of vehicles we’re selling will change. The manner in which we’re buying stuff will change. The idea of what’s cool might not be the most expensive car. The idea of cool might be what’s the most economical car. It’s going to morph into something a little different. There will be fewer dealers.
We’re running leaner. From an expense and personnel standpoint, a lot of the things I thought were mandatory a year or two ago I’ve come to find I could live without.
Like what?
My advertising budget is the most glaring example. There is a lot of expense in that advertising budget that I don’t envision going back to, from the billboards to some of the institutional advertising. I’m just not going to run that budget back up again.
In the business office I have people covering one or two job descriptions. As opposed to having eight or 10 people up there, I’m getting a similar amount of work done with six people. We’re paying them a few extra bucks to do it. You just get leaner and faster and better at what you do. Bad times create good habits. Good times seem to create bad habits. You get lazy and you get a little fat in your thinking. Just for sheer survival you have to downsize to survive. Some of those habits will carry through the next run-up.
How do you keep staff morale up in these kinds of downturns?
We just have a lot of super good people. When I hire I’m looking for that person with a smile on their face, pep in their step and
a great attitude. We treat these guys fairly.
We pay them well. I think that goes a long way in good times or bad, in having a group of people that are consistently happy to be here.
Why did you want to serve as president of the association?
I didn’t actively campaign for it. I’m not super politically active, personally. I don’t sit on a lot of boards. I work hard. I go home. I have a family. I like to go home and enjoy life. The reason I like this board is it’s a well organized group. They get a lot done. The time that is spent there, I view to be of value.
It seems car dealers have an optimistic streak.
We can make Tony Robbins look like a pessimist. That’s what I enjoy about this business. There are truly some wonderful personalities. Right now isn’t the most fun I’ve ever had, but on the whole it’s a lot of fun.
Any final words?
Support your local car dealer. Throw that in there, will you?
