Hawthorn Bank will open a downtown banking center, COO Kathleen Bruegenhemke announced Friday. The center will be located on the first two floors of...
Bob McCosh isn’t fond of wearing a suit to work. On any given day, he’s probably wearing a button down and a Mizzou baseball cap. If you didn’t know him already, you probably wouldn’t be able to guess he’s the Bob in Bob McCosh Chevrolet Buick GMC Cadillac.
That’s just the way he likes it.
Since he keeps a low profile, McCosh might grab a cup of coffee and hang out in the customer lounge, just to listen. Are his customers frustrated? Getting good service? Enjoying the coffee?
“I enjoy having that anonymity, that I can fly below the radar a little bit,” McCosh says. “That way we actually have a chance to improve our service and staff and operation.”
There are plenty of improvements happening across the board at Columbia auto dealerships, including McCosh, this year.
After a series of ownership changes at several local dealerships last year, the auto sales business in Columbia has had a solid 2016 — even with election-year consumer anxiety in the air.
Gary Drewing and his son, Rusty, the former owners of the Machens dealership group and current owners of the local BMW and Mercedes-Benz dealerships, say Columbia is a great place to be in the car business, offering the past year as proof.
“Business is good. It’s very stable,” Gary says. “The future and sales and prospects are very bright.”
The Arkansas-based McLarty Automotive Group bought the majority of the Joe Machens dealerships across town from the Drewings — except the BMW and Mercedes-Benz stores, which then became part of Drewing Automotive. McLarty also bought out Fletcher Honda, now known as Columbia Honda and managed as part of the Machens group. The Morgan Auto Group, out of Tampa, Florida, acquired Head Kia, now called Kia of Columbia.
Local dealers have reported sales that are either even with 2015 or a little ahead. That puts Columbia in better shape than the industry as a whole, which has nationally seen sales fall just short of projections.
The National Automobile Dealers Association had predicted a record-setting year for auto sales, citing low gas prices, historically low interest rates, and heavy use of dealer incentives. But NADA data from September shows combined sales of cars, light trucks, and SUVs at 17.65 million, a 1.7 percent decline over the same period last year.
Drewing says sales at his BMW and Mercedes locations are up over the same time last year, despite this being an election year, which he believes creates an overall uncertainty that can impact sales. In light of the growth, Drewing has increased staffing by 20 percent across the two dealerships and now has about 80 employees total.
The McLarty Automotive Group, which owns eight Joe Machens dealerships in Columbia and Jefferson City, has seen steady sales this year, says Ford/Lincoln dealership general manager Steve Nagel.
“Most sales are down [nationwide], but we’re flat, which means we’re up,” he says. “I’m calling that a win.”
The group’s Ford and Lincoln dealership in Columbia is the state’s largest dealership by volume, including total sales of both new and used vehicles. Sales totaled 9,442 in 2015 and stood at just over 7,226 as of November 4 of this year.
This hasn’t been the easiest year for the group to maintain a strong sales position. “Transitioning a huge organization like this to different ownership and a different thought process is a huge feat in itself,” Nagel says.
Another local dealership that saw its share of transition this year was Kia of Columbia, which owners Larry Morgan, of Morgan Auto Group, and local owner Dan Kellar bought from Steve and Stuart Head in September 2015.
“We hit the ground running,” says Kellar, who serves as president and general manager. New vehicle sales are up 25 percent over last year, and used vehicle sales are up 16 percent.
Kia of Columbia has also seen a 45 percent increase in customer repair orders, which Kellar credits to a strong staff of well-trained technicians able to service Kia and many other major brands, including Ford, Chevrolet, Toyota, Honda, BMW, Mercedes, and Lexus.
The dealership has 35 employees and has more than 100 used and 150 new vehicles in inventory. Kellar says total revenue will exceed $30 million in 2016.
In line with local trends, University Subaru co-owner Dave Drane says business has been steady in 2016. He and business partner Dan Burks also own Capitol Chrysler Dodge Jeep Ram in Jefferson City.
“Sales will be up some, but not a lot,” he says of the Subaru dealership. “We’ve had consistent growth and continue to grow.” Numbers are up a bit in new car sales and down a bit in used, he adds. Sales in the Jefferson City dealership are also about even with 2015, but that comes on the heels of a very strong year. “Being off a little bit from our best year is okay,” Drane says.
Drane says business is different for a smaller store with a brand that doesn’t dominate the industry — Subaru had about 4 percent market share nationally as of September, according to Edmunds, an auto industry research site, compared to 14 percent for Ford and 12 percent each for Toyota and Chevrolet. Kia is also in the small market share category, coming in at 3 percent.
Customers like buying from people they know, Drane says, and turnover isn’t as high among their staff as it is among many dealerships around the country.
Drane and Burks have owned the dealership for almost 13 years. Of their six salespeople, four have been with the company at least six years, and the others have at least two years each.
“We’ve had the same people in the body shop for 10 years,” Drane says. “We’re more like a family than a business.”
Drake also echoes the notion that election years can throw a wrench in consumer buying habits. Presidential elections, he says, are especially tough.
“You don’t wake up one morning and say ‘I’m not doing anything today, I’m going to buy a car,’” he says. “You have to feel good about it, and right now there’s a lot of anxiety.”
With business holding steady in Columbia, several dealerships have expansions in the works.
Anyone who’s driven by I-70 Drive SW has probably seen the early stages of Drewing’s expansion of the BMW and Mercedes dealerships. Construction is underway on a new 32,000-square-foot facility on about 6 acres, expected to be complete by the end of February or early March.
The construction represents a 20 to 25 percent expansion of the entire operation, Gary Drewing says. The BMW and Mercedes buildings will expand, as will pre-owned inventory.
“Everything will go up,” Drewing says. “Inventories will expand, especially on the pre-owned side, and so will employment.”
Once the expansion is complete, the existing BMW facility will be expanded into a pre-owned center, and the adjacent property, which now houses Red Lobster, will become additional parking. The restaurant leases the lot from Drewing, and their lease is up next year. They plan to level the building to make room for additional inventory.
The expansion is designed to take advantage of strong sales and positive local trends — and increase the dealership’s stake in the pre-owned market.
“Our goal is to get a bigger share of the pie that’s out there,” Drewing says. “You either get better or you get worse — you don’t stay the same.”
McCosh’s visibility has increased along I-70, as they demolished two buildings to extend the parking lot. McCosh says that, due to easements and sidewalk regulations, the parking lot takes up less square footage, but it did add 100 parking spaces.
“To have that retail display for 100,000 people a day driving up I-70 and Garth and to have everybody get to see that display of inventory — I think it makes a big difference,” McCosh says.
McCosh built a 15,000-square-foot building on Indiana Avenue to accommodate reconditioning, the detail shop, clean-up, and delivery. Though, McCosh says, they’ll soon run out of space in the Indiana building as well, as they’re adding 20 percent capacity to service and parts operations, increasing the number of service bays. Technicians will again relocate detail and reconditioning. Bob McCosh employs 176 people.
McLarty group is also working on an expansion at the Ford and Lincoln store on Bernadette Drive. Nagel says they’re expanding the service department in the facility currently being used for reconditioning work. The new service center will double their service capacity and add focus to quick repairs such as brake work, tires, and oil changes. The expansion is expected to be complete in January.
To meet demand for the additional service offerings, Nagel expects to add 20 to 25 employees to the 250 already there. Machens employs about 1,100 across all eight dealerships. Machens also plans to expand inventory at the Ford campus in Columbia. They recently hired a manager to focus on building the local presence of the Lincoln brand in particular.
“Lincoln does fairly well,” Nagel says, “but it has new products coming that we’re excited about,” including a new Continental. Machens is also expanding its truck service department and recently hired additional technicians with diesel truck experience to service larger fleet vehicles.
The Ford and Lincoln store in Jefferson City is also undergoing an expansion, including a remodeled showroom and renovation to the service area. A quick-repair area is also being added there, similar to the one on Bernadette, focusing on tires, batteries, oil changes, and the like. The Columbia Ford campus is next in line for a major renovation, most likely in the next two or three years, Nagel says.
While the uptick in hiring points, in part, to the service expansion, it’s also a matter of course in an industry with high turnover, Nagel says.
“About 20 percent float in and out, so we’re always in the need for sales [staff],” he says
Machens will also continue to build on its strong online presence, which is supported by 10 to 12 salespeople dedicated to internet sales. In October, the Ford and Lincoln store alone had more than 520 leads, with duplicates and other bad leads screened out.
“We love it,” Nagel says. “When they come to the store, they already have an idea about options, packages, pricing. It streamlines the process immensely.”
Over at Kia, they’re a little more than halfway through a complete remodel of the sales space and an addition to the service reception area. Kellar anticipates completion in December and has a grand opening planned for March.
In 2017 and beyond, he hopes to “increase our market share and at some point look at expanding into other franchises.”
University Subaru doesn’t have any immediate plans for expansion, although they do plan to hire one more salesperson and add some technicians to the current combined staff of 40.
Drane says sales have been somewhat reined in due to a lack of Subaru inventory nationwide, but the maker has plans to increase production by 18 percent in 2017.
“In a month where we sell 70, it’s because we have 70 cars,” he says. “More production and inventory will help in 2017.”
The dealership has plenty of room on its property on I-70 Drive SW to expand if and when the time comes, but, for now, it’s business as usual.
“We’re the Steady Eddies in this business and keep doing the same thing year after year,” Drane says. “Everything’s going just fine.”
Considering the influx of SUVs and crossovers on the road today, it probably comes as no surprise that sedans are losing ground to small SUVs and light- to mid-size trucks. According to industry tracker Autodata, Ford car sales dropped 20.7 percent in September, while the popular Honda Accord went down 19 percent and Toyota Camry was off 11 percent. Local dealers are also seeing evidence of that trend.
“It’s true, and it has a lot to do with gas prices,” Drane says. Subaru’s Forester and Outback models fall into the crossover SUV category. “They’re a lot more appealing when gas is $2 a gallon rather than $4.”
At Kia of Columbia, Kellar said they’re seeing consistent growth in all model segments, but they’re especially seeing success with the new Sportage, a compact crossover SUV in the same category as the Ford Escape, Toyota RAV4 and Honda CR-V.
For McCosh, managing four brands under one roof offers some diversity of product. Chevrolet is the largest volume franchise, accounting for 65 percent of business; GMC and Buick combine for 30 percent, and Cadillac fills the rest. McCosh says they’ve increased pre-owned inventory in response to demand.
Gary Drewing says they’re also seeing the SUV trend play out in Columbia.
“A lot of people that used to drive traditional four-door sedans are looking at crossover vehicles and SUVs,” he says. “They’re hot right now, and people love them.”
Drewing has also seen a widening of the market for luxury cars, as their SUV and crossover models have helped bridge the affordability gap.
“People have the perception that luxury vehicles are very expensive, which some of them are,” he says. “But we have a lot of crossovers and SUVs that compete with your domestic products and that people can afford.”
Nagel agrees there’s been a sizable shift away from sedans in recent years.
“Our car sales are up, but there is definitely an increase in SUV interest and sales, as well as trucks in our market,” he says.
Columbia has a lot of factors in its favor for a strong auto business, including MU and Columbia and Stephens colleges, and a relatively stable economy. With the ease of online comparison, mid-Missouri car dealers are competing with those in St. Louis, Kansas City, and Springfield.
“You get a little more shopping that goes on because the majority of people will get on the internet, and that allows you to look at vehicles all over,” Gary Drewing says. But he also thinks local dealers still have an advantage — people prefer to buy from local businesses where they have relationships or can build them. Buying from a dealer where you can also get service is another draw, he says.
McCosh says they compete with dealerships in a 100-mile radius every day. He often gets questions about expanding into more franchises and taking on new projects. His barometer for making those decisions remains the same.
“As long as we can deliver the ‘wow’ moments and people can enjoy interacting with us, as long as we’re setting the bar with our people and delivering what customers want, as long as we can continue to drive that, the sky’s the limit,” McCosh says.
University Subaru has benefited from local roots and long-standing connections as well. “I think it helps that we’re local guys,” Drane says. “People like that. They see us at the grocery store and out at lunch — we’re part of the community.”
“I’ve said, many times,” Drewing says, “that Columbia is not only a great place to live, it’s a great place to be in the automobile business.”
And when it comes to buying a car, McCosh says, it isn’t always about price: “Local business can’t always be about just price, whether it’s a grocery store, whether it’s clothing, whether it’s any product that people use every day. If everything we do is just about price, then local businesses won’t be able to employ people.”