When Todd Caputo took over running Sun Chevrolet from his dad in 1994, the dealership was doing a small amount of retail business, and a lot of fleet. It wasn’t that profitable. Caputo, who had just graduated from college, decided to look elsewhere for a business boost.
“I got us hard and heavy into the used car business,” Caputo tells Automotive Buy Sell Report.
His instincts were spot on. The Sun Auto Group now operates two large stand-alone used car dealerships, as well as the Chevrolet franchise. The used car business is booming. Caputo is hungry for more expansion, and not just in the used car sector.
“I am looking to grow my business, whether it is new, used, or fixed operations,” he says.
Caputo acted fast to make used sales at the Chevy dealership stand out. Soon after taking over, he separated the used business by branding it “Used Car King”.
Used car sales at the dealership car grew five to 10 percent annually between 1994 and 2001, says Caputo. But the business really took off after September 11, 2001. Automakers offered incentives including zero percent financing to keep the economy moving. Consumers bought cars – then stopped buying as they waited for more and better incentives.
“I loaded up on used cars after 9/11 when the market tanked, and the bet paid off,” says Caputo.
In 2004 he bought a building in Cicero, NY that had housed a Lincoln Mercury dealership. After a “quick remodel,” it opened as a stand-alone Used Car King dealership.
“During the first month, I sold 90 used cars” at the new store, says Caputo.
Sales continued to grow, and in 2007 he leased a building across the street to house the service department. “You have to be able to service the [used] cars,” says Caputo.
As the Cicero location thrived, Caputo open a second Used Car King store at a former Ford dealership in Cortland, NY. That dealership now sells more than 1,400 units annually.
In 2017, the two Used Car King stores sold 3,480 units. The Chevy store sold an additional 1,180 used retail units, and 949 new retail units. The Sun Auto Group sold 5,609 new and used units among its three stores.
Caputo attributes his success at growing the used car business to more than just good business instincts. Finding the right people to help run it was also key, he says. “You have to surround yourself with good car people.”
Caputo recruits from other dealerships and develops talent internally.
On the F&I side, the Group sells extended service contracts – “a lot of them”—as well as reinsurance and vehicle protection plans. If a used car still under the manufacturer’s warranty comes in for service, Used Car King gives the customer a loaner car then takes the unit that needs a repair to the appropriate brand dealership for the work. That keeps the customer in the Used Car King orbit.
“I don’t want [the customer] sitting in someone else’s store drinking coffee,” says Caputo.
Caputo also wants to grow his fixed ops business. He aims to offer door-to-door repair service, which would include picking up the vehicle at home or work, completing the service, and delivering the serviced vehicle. He wants to include a function that allows customers to track their vehicle through the process and pay by phone,” just like you track an Uber driver,” says Caputo.
He is evaluating potential vendors now but won’t make a hasty decision. The vendor has to be just right, and Sun Auto Group needs to be ready for it organizationally, says Caputo.
Used Car King image program
As sales at the Cicero Used Car King location grew, and the former Lincoln Mercury facility became increasingly cramped, Caputo debated whether to remodel that store or build an entirely new facility. The lease on the building housing his service department was due to expire in 2017, as well.
When he was able to purchase an additional 48 acres around the store – which is in an area with retail businesses – Caputo decided to build a new store.
And not just any store. The Used Car King dealership in Cicero can hold 20 units in its airy, well-lit showroom and has 25 spotless service bays. It has a playroom for children, a coffee bar, a fire place, and lots of comfortable couches.
It resembles a luxury franchise new car dealership, and that was his intent, says Caputo.
“If I have an opportunity to get a new car franchise, maybe I can put it there,” he says.
He is remodeling the Used Car King store in Cortland right now, aiming to make it look like the Cicero facility as much as possible. If that sounds like an image program, well, it is.
“It is the Used Car King image program that can be scaled,” says Caputo.
He is interested in growing the Used Car King brand regionally or nationally. If nationally, it would need to be with the right partner, says Caputo.
“I believe there is truly an advantage to scale, especially 2018 and beyond,” he says. “If you don’t have scale, you can’t compete.”