By Alysha Webb, Editor and Publisher
Cheap natural gas may be good for the U.S. economy as a whole, but it has made life more difficult for Stephens Auto Center, located in the heart of West Virginia coal country.
“We have lost a lot of employment, a lot we will probably never get back,” Richard Stephens, general manager of Stephens Auto Center, tells Automotive Buy Sell Report.
Richard Stephens, Vice President and General Manager
Despite the economic hard times in his area Stephens has managed to keep sales steady at his small dealership group by having a diverse franchise mix and a strong presence in a niche market.
But the downturn does have him thinking about expansion into some faster-growing areas.
“I have had thoughts of trying to look elsewhere and try to buy another dealership, or buy into another dealership,” says Stephens. “Now is maybe the time to seriously consider moving in that direction.”
Stephens Auto Center is located in Danville, W.V., a small town of around 700 in the southern part of the state. Coal mining is the major industry in the area, and his dealership has been very reliant on the coal industry jobs for customers.
But the current administration in Washington’s emphasis on cleaner sources of energy paired with the discovery of significant new natural gas reserves has sent the coal industry headed in “the wrong direction” in recent years, says Stephens.
Nonetheless, “we have been blessed to pretty much maintain our sales level,” he says. He figures to sell about 1,000 new and used units this year not counting fleet sales.
Having a good mix of nameplates for the region has helped. “We are off a bit with a couple of brands, up with others,” says Stephens.
Looking at new areas for acquisitions
Stephens Auto Center was started by the father of Richard Stephens in the mid-1970s. The senior Mr. Stephens — who got his auto dealership start working as a book keeper in a dealership Kentucky in the 1950’s — had the opportunity to buy into a Ford dealership in his home state of West Virginia. He became the sole owner of the dealership in 1981.
“That was something that most people considered almost impossible [at that time] as many dealerships were going out of business then with 21 percent interest rates,” says Stephens.
In 1984, Stephens Senior added Chrysler, Plymouth, and Dodge franchises. In the 1990’s, when Richard Stephens was “very involved” in running the dealerships, the group added Jeep and Ram franchises. The group now consists of Ford, Chrysler, Dodge, Jeep, and Ram.
That mix has helped Stephens keep sales steady even as the economy in his area has taken a turn for the worse. Offering four wheel-drive models across segments has also helped. Danville is in a mountainous region, so everyone from coal miners to soccer moms wants 4WD, be it on a pickup or on an SUV.
Having a strong presence in a niche market has also been a big benefit. For about 20 years, Stephens Auto Center has been the go-to dealer for state and local government fleets in West Virginia. The business is low-margin but very steady.
“[Government fleets] is a very unique business,” says Stephens. “There are not a lot of other dealers involved.”
The group also has an active social media presence and entices customers with contests including Ford Mustang and Kawasaki motorcycle giveaways, all touted on its Facebook page along with photos of the glowing winners.
The Facebook page also offers handy tips on the dos and don’ts of getting a Christmas tree home and choosing the right snow tires for your Ford.
“We recognize in the digital age we have to have a presence that will get us noticed,” says Stephens.
As for other online marketing, Stephens mostly stays away from national third party sites in favor of local sites such as a car finder site sponsored by newspapers in Charleston. That puts Stephens Auto Center on the radar for consumers in the larger city. Danville is about 30 miles from Charleston.
“We’re trying to do a better job of getting the attention of the car buyers in the metro Charleston market, and give them an alternative,” says Stephens.
Stephens, 52, is actively involved in the National Automobile Dealers Association. He is on the NADA board of directors and is chairman of the public affairs committee.
His title at Stephens Auto Center is vice president and general manager. His father, who is “going on 79,” still holds the title of president, and comes in every day for a few hours. “It is a security blanket for me to be able to bounce ideas off him,” says Stephens.
He has two sons, ages 13 and 16. It’s too early to know if either will want to take over the dealership business though the 16 year old has been coming into the dealership to assist in detailing cars, says Stephens. His nephew, who is older, has talked about attending the NADA academy.
Their involvement in the dealership business is one determining factor in a decision to acquire more stores, and to look at other areas for acquisition targets.
“I am not concerned we are on the verge of losing our business, but I don’t think [this area] will in the immediate future hold as much promise,” he says.
He figures now may be the time to start seriously considering investing in or acquiring dealerships in another area, even out-of-state.
But still not too far from Danville because he would want to be actively involved in running the store, says Stephens. He likes the franchises he already has, and figures those brands or a mainstream import brand would be most appealing as an acquisition.
“I am not one who has ever been in the realm of high-end imports or luxury sports cars,” says Stephens.
