An Ontario dealership group attributes its strong growth to cracking the code on how to keep small-market buyers shopping locally.
With two recent acquisitions in southern Ontario — bringing the total in the region to seven — the 401 Group of Companies now has 16 automotive franchises and 23 recreational-vehicle, marine and power-sports stores across the province.
Automotive brands include Kia, Hyundai, Subaru, Volkswagen, Nissan, Honda, Chrysler, Dodge, Ram, Jeep and Mitsubishi.
The group, based 100 kilometres west of Toronto in Cambridge, employs nearly 1,000 people and expects to sell 14,000 to 15,000 vehicles, said Ted Lancaster, 401’s executive vice-president of business development and mergers and acquisitions.
The secret to the 11-year-old company’s success?
“We understand the small-market mentality,” Lancaster told Automotive News Canada.
The strategy begins with vehicle pricing that’s comparable to that of metro markets, which have more competition, Lancaster said.
“We don’t have the attitude that we’re the only game in town — take it or leave it.”
But that’s just the beginning:
- The 401 Group’s dealerships also support local charities and causes and use social media to “show our clients we’re engaged in the community.”
- The group ensures its dealerships are modern and have up-to-date service technology.
- Buyers in small markets are more likely to visit dealerships earlier than metro buyers do to talk through the purchase, Lancaster said.
“They really want to build the relationship. I can’t imagine [them] making a 20, 30, $40,000 purchase without coming in and having personal contact.”
- When the 401 Group buys dealerships, it aims for seamless transitions of ownership so customers might not notice a dealership has been sold.
“A big part of our success is because we really put tremendous value on what the [previous] owner has done to build the business,” Lancaster said. “We don’t want to tarnish what the owner has done.”
- Existing staff are kept on as much as possible so customers see familiar faces. “We don’t lose people. We try our best to retain all our staff,” Lancaster said. Often, employees have gone to school or played hockey with customers.
- Staff are taught not to upsell during the sales process but to ensure the vehicle matches the buyer’s needs.
‘HIRE FOR PERSONALITY’
During ownership transition, Lancaster said, staff at a newly acquired dealership are educated in the 401 Group’s “top-tier” approach to business and customer care. For new staff, “We hire for personality, and we train for efficiency.”
The dealership group is constantly looking for ways to improve, including learning from the company’s RV sales experience, Lancaster said.
People who buy RVs often buy them as “reward” vehicles, and the purchase comes with excitement and joy. Car buyers should feel the same way, he said.
“We want customers to have the [most fun] experience possible.”
Metro dealerships could learn valuable lessons from the way small dealerships treat their customers, said Dominic Sigouin, a Quebec-based automotive retail consultant who caters to small markets.
“People want to be recognized and well-served,” he said.
When metro dealerships compete intensely on price, the ability to create a positive buying experience can get lost.
“You’re talking about price when you don’t have anything else,” Sigouin said.
Larry Lantz, who owned Hanover Honda in Hanover, Ont., (pop. 7,700) 180 kilometres northwest of Toronto, said he always kept focused on a golden rule.
“I would not treat a customer any other way than they wanted to be treated.”
Lantz retired in 2021. He sold the store to UpAuto in 2022. His sons still work there.
Dealers in metro markets who cut the purchase price to the point of minimal profit often say they can make up ground on volume, Lantz said, but “that makes no sense to me.”
To make up for it, they’ll often set high shop rates, which turn off service customers, he said.
Every buyer wants the best price, Sigouin said, but they want the personal touch of familiar staff members being involved in delivery and ownership experiences.
The one-contact approach, he said, is much more common in smaller markets where dealerships have smaller teams.
CORRECTION: A previous version of this story incorrectly identified the purchaser of Hanover Honda. UpAuto bought the store from Larry Lantz in 2022.