In late August, Hodges Management Group closed on a deal to acquire Mike Murphy Ford in Darien, GA. It was the second new car dealership for the Group, which also owns two used-car businesses.
David Hodges
“My brother and I both really like the Ford business,” David Hodges, chairman and CEO of Hodges Management Group tells Automotive Buy Sell Report.
Now, he and his brother are looking to grow their auto empire. The crucial element to expansion isn’t the right franchise, however, it is the right people.
“We don’t have a grand strategy to try to get 50 [stores],” says Hodges. “For our model, people drive this business.”
His brother Dan, the Group’s vice chairman and president, is constantly recruiting new employees — and looking for ways to invest in the Group’s existing employees.
“Our first focus is to really pour [resources] into people that are with us and find out what their aspirations are” says Hodges. “We will help them achieve that.”
For example, one of his used car directors is “really excited” about becoming a new car dealer, so the Group is sending him to conferences to learn, says Hodges.
Employees also belong to 20 Groups and other professional development organizations.
Dan Hodges
Dan Hodges is in the stores two to three days a week for one-on-one meetings with the managers. The Group brings all its general managers, used car buyers, and chief financial officers in for a deep-dive into financial statements, says David Hodges.
“It is teaching time,” he says.
One topic of conversation: What a good service tech is worth. The client wants a fast, efficient service experience and that can’t happen without a service department staffed with well-trained technicians that produce high quality work.
Those assets help meet a business goal, as well. Hodges Management Group wants service techs that produce 200 hours a month including internal work. “That is our baseline,” says Hodges. High-quality service techs are vital to achieve that.
The Group is focused on acquiring stores in North Florida and South Georgia, he says, but that is not a set-in-stone principle.
“It isn’t necessarily geography as much as it is the people,” says Hodges. “If we have an operator that would move to wherever a store is,” we would grow outside that geographic area.
Mentoring
David and his brother Dan formed Hodges Management Group, based in Jacksonville, FL, in December of 2016. Dan is the Group’s vice chairman and president. Both had previously worked at the Scott-McRae Group, which owns dealerships branded as Duval Motors.
The Scott-McRae group is owned by the Graham family. David Hodges worked there for 26 years. Tip Graham, who passed away in 2010, was his mentor, says Hodges.
“My job was to help the fourth generation of the family business succeed long-term,” says Hodges.
When Hampton Graham, the son of Tip Graham, became CEO and Alex Graham also moved into management, Hodges knew the time was right to leave.
“I knew at [the age of] 45, if I didn’t go out and start a company, it probably wasn’t going to happen,” says Hodges.
Hodges and his brother acquired their first new car store, Duval Mazda in Jacksonville, FL, from the Scott-McRae Group in late 2016. At the same time, they also acquired Green Cove Auto Sales, a used car dealership in Green Cove Springs, FL.
The deal was financed using cash, including part of the 20 percent equity in Scott-McRae operations that David Hodges owned. Subsequent deals have also been cash transactions, leaving Hodges Management Group debt-free.
The Hodges brothers also founded another used car store, Orange Park Auto Sales, as a separate limited liability corporation.
Used car LLCs are “pretty easy to form,” says Hodges. “We are able to acquire and sell used cars, it gave us an opportunity to increase our throughput.”
The used car business doesn’t also involve a lot of financial risk, he adds.
Hodges Management Group leases the property for Orange Park Auto Sales from RPM Automotive, an auto reconditioning company whose owners are friends, says Hodges. That allows reconditioning of the used cars to take place on-site.
While the new car dealerships carry the Hodges name, the used car stores are named based on location. Finding the right person to run them, not establishing a branded used-car chain, is the key to success, says Hodges.
“We kind of feel like these independent [used car] operations are operator-driven,” he says.
While Dan runs the Group’s operations, David handles manufacturer relations and looks for new business opportunities. Though he has worked with brokers, he mainly relies on word of mouth to find stores, including making calls and asking around to “see what is out there,” says Hodges.
“You just have to be persistent,” he says. “I have never been scared of ‘no.’ I am big on ‘it has to be a win for both parties’.”
He and his brother haven’t set a goal to own a specific number of dealerships, says David Hodges. They will keep trying to improve their existing operations and ensure they have a good stable of people ready to take on new opportunities when they do arise.
They look at the value proposition for any potential acquisitions, including looking at specific areas of the financial statement that they think they can improve on. They aren’t looking for any specific brand names.
“There is no ‘gotta have’ franchise,” says Hodges. “I think that is how you get into trouble.”
One Comment
steven lee
This is the best owners I have ever worked for.I am finely ready to go to work every day.Its the whole company not justthe owners.Love it here.