On March 11, 2011, a magnitude-9.0 earthquake rocked northern Japan, followed by a devastating tsunami that hit Japanese automakers hard. Manufacturing production was halted for several days, resulting in a shortage of parts and suspending the auto supply chain. In November of that same year, catastrophic flooding in Thailand again shut down Japanese auto production.
The shutdowns led to few new vehicle imports at U.S. auto dealers like March Hodge. Headquartered in Tampa, Florida, March Hodge owns 14 dealerships in six states, and only one, which sells Cadillacs, is domestic.
March Hodge’s portfolio is mostly Japanese autos: Honda, Mazda, Mitsubishi, Toyota, and Nissan, including luxury brands Lexus and Infiniti. It also sells Volkswagen (German), Volvo (Swedish), and Jaguar Land Rover (British). “We adapted to the downturn by focusing on our fixed operations and service of parts and by controlling our expenses,” says co-CEO Tony March. March Hodge’s dealerships also weathered the storm by focusing on customer retention and concentrating on pre-owned car sales, up 28% in 2012.
It was in 1998 that Tony March combined his four franchises with Ernest Hodge’s three stores to create March Hodge Automotive Group, one of the nation’s largest privately held dealership holding companies. The auto crisis of 2008–2010 and multifaceted damage caused by the natural disasters of 2011 have served as a testament of March and Hodge’s leadership and resourcefulness.
Once Japanese-made vehicles again became more available, sales at all the March Hodge Japanese brand stores increased. Not surprisingly, 2012 was a rebound year for the No. 2 spot holder on the 2013 be auto dealers list, with sales that zoomed to $488 million in revenues from $367 million, a staggering 33% increase, as well as a 25% increase in units sold, from about 12,000 in 2011 to 15,000 in 2012.
Another game changer was a newly built Nissan store in Bowie, Maryland, that opened in the first half of 2012. Even in its first year the store had sales of $33 million, strong enough to make a difference, outpacing the manufacturer’s expectations.
March Hodge is one of a handful of be auto dealers mostly made up of imports. What further sets March Hodge apart is its team of co-owners. Since its inception, as the company began to build or acquire new stores, its winning strategy was to offer equity partnership stakes—15% to 25%—to the dealer or president running the operation.
Customer satisfaction is another foundation March Hodge was built upon. “Our service retention is off the charts,” boasts co-CEO Hodge. Indeed, March Hodge’s Lexus store in Northborough, Massachusetts, was the No. 1 dealership in the nation for customer satisfaction two years in a row for new and certified pre-owned car sales, as surveyed by the manufacturer.
Due to its management prowess, quality customer service, talented group of dealership co-owners, and level of sales success, Black Enterprise has named March Hodge Automotive Group the 2013 be Auto Dealer of the Year.
Merger of Two Great Minds and Talents
This is the second time black enterprise has honored March Hodge as the be Auto Dealer of the Year. In 1999, the company was recognized shortly after the holding company was formed. But March and Hodge have been comrades for close to three decades. The two became good friends after meeting at the General Motors Academy in 1984, where they were exposed to every single aspect of the car business. Though they came from very different paths, the two managed to merge their talents and experiences.
A native of Daytona Beach, Florida, March knew at an early age he wanted to be an engineer because of how he excelled at math. After earning a degree in electrical engineering from Howard University, he worked in the Fisher Body Division of General Motors from 1971 to 1984 and obtained patents for three electrical devices—one a pull-down unit for automatically closing car trunks and two motor control units for car seats. After graduating from the GM Academy in 1985, he opened a Buick dealership in Hartford, Connecticut, and expanded it to include GMC and Saturn dealerships in 1990 and 1993. He added Mazda and Mitsubishi franchises in 1998.
Hodge, a 1975 graduate of Norfolk State University, went to work in sales at Colonial Chevrolet in Norfolk, Virginia. He quickly became salesman of the year and caught the eye of company owner Josh Darden, who became his mentor. After rising from salesman to general manager, Hodge applied for the General Motors Academy with sponsorship from Darden. After completing the GM Academy in 1985, Hodge became a part-owner of Colonial Cadillac in Virginia Beach, along with Darden and another partner. By 1991, he was ready to fly solo and opened a Cadillac dealership just outside of Atlanta. Within four years, he added two Volkswagen dealerships to his holdings.
Hodge takes pride in those early years. “I was a sales guy all my life starting with my first job,” he says, recalling how he sold 26 cars his first full month at the Chevrolet dealership. “I was salesperson of the year in my first year.”
Sharing how he differs from his partner, March jests, “I’ve sold only 10 cars in my career. With my engineering background, my talents are in systems and processes. When I think of a dealership, I don’t just think of selling cars—services and parts are an integral part of all successful dealers. At the Academy I learned from the bad dealerships how disorganized they were, how their service and parts departments were lacking in customer satisfaction.”
March Hodge follows a playbook that stresses 100% customer satisfaction and emphasizes a team of dealer co-owners that has driven March Hodge Automotive to victory. “From day one, we would not start a dealership unless we had a president who could walk in with a percentage of ownership in the form of a check,” says March. “We didn’t want to have 100% of ownership and just hire an employee to run the dealerships.”
Although co-ownership with its dealers has meant less equity for March and Hodge, the practice has accelerated the number of dealerships and level of success through the ability to recruit top talent. By 2003, the auto group had earned the distinction of being the No. 1 megadealer on the be auto dealers list with 21 outlets and $427.6 million in revenues.
“A dealer is more committed to that store if he or she has a financial stake in it,” says Hodge, who still fully owns the Cadillac store, two Volkswagen dealerships, and a Mitsubishi dealership all under the holding company, while the other dealerships he co-owns with March. “They aren’t going to just up and leave the dealership in search of a new job if they are a co-owner,” March notes. “In 15 years, we have lost only one general manager or president.”
Phil Morelli, principal of Honda of Bowie and the recently opened Nissan of Bowie, has been with the auto group 11 years and has a 15% equity stake in each of his two dealerships. Originally, he was looking to purchase a smaller dealership in a smaller town. But his partnership with March and Hodge enabled him to open a store on a larger scale in an affluent area. “We were somewhat insulated during the downturn because our customers are generally employed by the government or a company that works for the government,” Morelli says.
Damon Lester, president of the National Association of Minority Automobile Dealers, has always been impressed by March Hodge’s process-driven, detail-oriented approach. “They have their own internal consulting group in that each president of their dealerships meets at least once a year to discuss best practices—what works and what doesn’t work for their stores,” he says.
“Ernie and I are coaches on the sidelines but our presidents are quarterbacks on the field every day, throwing the passes and getting knocked down when that linesman comes through. Who gets the credit for winning the game? The quarterback,” says March. “Our presidents are some of the best quarterbacks in the car business.”
Driving Force: Exceed Customer Expectations
Customer satisfaction has been a key driver in March Hodge’s solid position in the marketplace. During the auto crisis years of 2008 to 2010, the company’s long-term tenet of paying attention to customer retention helped.
Like many auto groups, the company experienced difficulties during the auto industry crises and Great Recession. GM shut down its Saturn and Pontiac divisions between 2009 and 2010; March Hodge had already shut down three outlets that sold those models in 2008.
“Also, people were not buying new cars but they were servicing existing cars,” says March. “Dealers that got hit the hardest were those that focused on selling cars and did not have the support of their service and parts departments in their operations when car sales dropped for everybody.”
In 2007, domestic auto sales reached 16.1 million, a far cry from the 10.4 million sold during the recession in 2009, the lowest level in 27 years. “Every dealer in the country lost one-third of their new-car business,” March says. “You are talking about losing one-third of your gross income. We were very lucky that we built a foundation of customer satisfaction and customer retention that allowed us to survive.”
Paying attention to the customer was seared into March Hodge’s operation during the industry’s crash. Efforts to exceed customer expectations are accomplished by implementing top-notch service, quality of work, courteous treatment, and overall positive experience from the time you drive in until the time you drive out of a dealership. The company woos new customers in times good and bad, thanks to its rewards-based system. Customers accrue points to receive discounts.
In addition to using focus groups, March Hodge delves into customer surveys. Every single manufacturer for every car dealer automatically sends a survey to a customer when an order is closed out. “Every month we get a score of three numbers showing how we compare with other dealers in our district, our region, and on a national level based on those surveys,” March says. Employee compensation is even tied to customer service scores.
In the last year, March Hodge has put a greater focus on staying informed about customers and keeping customers informed by “implementing further refinement in our Internet marketing, going in and understanding what really works and what really doesn’t work,” says March.
Customer retention is vital to the growth of a dealership. It starts with creating certain processes to ensure repeat business. For instance, on Saturday mornings you will find 40 cars lined up back-to-back at March Hodge dealerships waiting to receive a free car wash that’s offered as a service. Their dealerships also offer car buyers free oil changes for life.
“There are a lot of wonderful auto dealers like CarMax, AutoNation, and Penske Automotive that are huge,” says Hodge. “We can’t outspend them when it comes to advertising, but we can out-service them.”
Navigating the Road Ahead
U.S. car sales reached a five-year high in 2012. Total sales for new vehicles reached 14.5 million units, a 13% increase over 2011. It was the industry’s best year since 2007. Toyota continues to shine as the No. 1 foreign brand in the U.S. with more than 2 million vehicles sold in 2012, up 27% from 2011. The U.S. market could reach record sales of a little more than 15 million units sold this year, according to industry reports.
“The challenge for auto dealers is to continue to do the things that they were doing as the 2008 slowdown occurred, like cutting expenses” says Hodge. “We are going to be fine.” Of course, “there are a lot fewer dealers today than there were prior to 2008. So sales per outlet have gone up.”
Lester says that the days of manufacturers having aggressive growth among several brands are nearly over. “New opportunities are not available now as before the recession. We’re seeing manufacturers with moderate growth plans largely because of a lack of capital.” March adds, “We are celebrating our 15-year anniversary. Over the years, you live and you learn. We have learned that more is not necessarily better. Having quality dealerships serve you is better than having a whole lot of bad dealerships. Our expansion and vision for the future is to be very selective in terms of what we add to our portfolio. If it is not a good deal then we just won’t do it.”
March Hodge is not afraid of alteration or making modifications. “One thing about the auto industry is that it changes almost every day. If you don’t change with it, you will get left behind,” adds Hodge.