In early June, the O’Steen Automotive Group of Jacksonville, Florida acquired two franchises from Pipkin Motors in Georgia. That doubled the number of dealerships the O’Steen family owns.
The acquisition was attractive because the O’Steen family could apply a formula that has made its dealerships winners of multiple manufacturer’s awards. A key ingredient of the O’Steen management formula is being personally involved with the stores.
“We are not absentee owners,” Mark O’Steen told Automotive Buy Sell Report. “If we are in town, we are in our dealerships.”
The other two stores are O’Steen Volvo and O’Steen Volkswagen in Jacksonville, Fla.
Mark O’Steen, 55, his cousin Tom, 55, and Mark’s brother Hal, 57, all work at the dealerships, as does Mark’s son Chip, 27.
What does Mark like to do on Saturdays? “I pretty much like to meet and greet people” at the dealerships, he said.
Brokers can be useful
The acquisition of family-owned Pipkin Motors included a Volkswagen dealership and a Subaru dealership. Both are in Valdosta, Ga., about 120 miles from Jacksonville. Valdosta is small – its population is 54,518.
The Pipkin family used a broker to negotiate the deal. Though he had never worked with a broker before, it was a good experience, said O’Steen. He knew David Pipkin before the acquisition, said O’Steen. But doing deals with friends can be tricky.
Using the broker “made it a little more comfortable,” said O’Steen. “If we needed something, [the broker] could push David a little bit more to get the information we needed.”
They didn’t hear that the Pipkin group was available through a broker, however. The O’Steens heard about it from Jason Archer, the general manager at Walt’s Live Oak Ford in Live Oak, Florida.
Archer worked as a used car manager and service writer at one of the O’Steen’s stores in Jacksonville in the past. “He came to us and said [the Pipkin Group] was for sale, and he would be interested in partnering with us,” said O’Steen.
O’Steen said the valuation for the Pipkin stores was “about what we thought. We pretty much based the purchase on what we thought we could do with it.”
No personnel changes are planned for the first 60 days, said O’Steen. “We are going to see what they can do.”
One thing will definitely change, however – the marketing budget, which will grow and also include digital marketing. Even in the online world, however, O’Steen stressed the personal touch.
“I think the online sales are all about consumer gathering information,” he said. “But I still think consumers like to speak with someone and buy from someone they know and trust.”
The Valdosta dealerships will also get more involved with the community, said O’Steen.
That means management that lives in Valdosta. Mark’s son Chip, and Jason Arher both moved to Valdosta. They are both investors in the stores. Archer is general manager of both stores and Chip is general sales manager.
Having skin in the game makes for a better managers, said Mark O’Steen. “They will watch after the money like we do,” he said.
The importance of the management actually living in the community where a dealership is located is a lesson the O’Steens learned from experience.
They owned a Toyota dealership in New Brunswick, Ga. but sold it in 2007, said O’Steen. One reason was that the manufacturer wanted a facility upgrade and they decided to use the money to upgrade their Volkswagen dealership in Jacksonville, he said.
But, he added, “We didn’t have a general manager that moved to New Brunswick. I don’t think that was advantageous.”
A Community Fixture
The family has been in Jacksonville for four generations, and dealerships have been in the O’Steen family for many decades.
Mark’s father and uncle were pharmacists, “so they got to know a lot of people,” said O’Steen. They sold their drug store to the Eckert chain in 1970. Then golf partner Luther Coggin mentioned he would like to have some investors in his dealership group. “That’s how that came about,” said O’Steen.
They owned the dealership group in Jacksonville with Luther Coggin for 26 years, then sold out to Coggin in 1996. At that time Mark and his cousin Tom O’Steen went into the car business for themselves, acquiring Parrish Volvo Volkswagen.
They separated the two franchises, building a new facility for Volkswagen in 2007 and for Volvo in 2014.
Business is good, said Mark. Volkswagen is doing better than Volvo, but the new Volvo SC90 is already popular and it hasn’t even arrived at the dealership from Sweden.
“We have over 20 orders for it,” said Mark. He called the 7-seater luxury SUV will be “a game changer.” Said O’Steen: “Seventy percent of the XC90 orders we have are conquests.”
Both Jacksonville stores have won customer service awards from the manufacturers. The Volkswagen store won the Customer 1st Club Award three times. The Volvo dealership won the President’s Club Award.
As for future acquisitions, the O’Steens will likely stick with the niche brands. The smaller stores allow more of the personal touch that is so important to the O’Steen management style. “It just seems like we can get more involved with our customers and with our employees,” said O’Steen.
