As chairman of the American International Automobile Dealers Association (AIADA), Paul Ritchie has access to lots of data about the future of the car business. But that’s not why he’s so optimistic. It’s more what he’s observed with his customers at Hagerstown Honda (MD), and with his employees.
“I don’t want to say that kids today, those Millennials, are late in maturing,” he says with a laugh. “Let’s just say they’re late coming around to growing up. They’ve had an opportunity to have a delayed maturation. We didn’t have that. When I was in my late teens, my friends and I were worried about Vietnam, and that makes you grow up early and fast.”
Adding, “But I see that my younger team members are starting to settle down, buy their first house, have kids. We’re getting a lot of customers looking for their first cars or buying their first family car. That generation is starting to assume the responsibilities of growing up and that includes car buying.”
It’s a Touch Business
Ritchie grew up in the car business as he did work for 41 years at a Ford dealership in Richmond, VA. “I saw him deal with customer issues, service problems, everything. I saw that it was a tough business and it was the last thing that I wanted to get into for a career,” he says.
He went to Virginia Tech on a football scholarship and planned to go to law school. But a trip back home to see his high school football coach torpedoed that plan and he started coaching football and got a sales job with another Ford dealer down the street. “I really enjoyed it and then I went to its graduate training program and for the next eight years, I traveled all over the U.S. calling on dealerships. I was gone Monday through Friday. It got real old soon and I missed my kids. I had to leave Ford and get re-acquainted with my kids.”
He eventually went on to Honda’s sales division and that job saw him move to Nashville and then Washington, D.C.
Eventually, in 1990, the late Wilson Howes, who had a Honda dealership in Silver Springs, asked him if he would like to buy Hagerstown Honda with him. “It was a natural choice.” In 1997 he added Hagerstown Kia and bought Altoona Honda in 2013. Overall every month he sells about 320 new and used cars at the Hagerstown stores and another 140 in Altoona.
Business, he says, is good. “We’re in a mature market so if we grow 3 to 5 percent, it’s good. It’s hard to grow past that here. We bought Altoona and we learned some things, mainly that we don’t geographically want to go any farther. Altoona is about 140 miles and that’s our max. It’s a very competitive market but I’m not looking actively to purchase another dealership but I’m not saying no.”
Marketing Challenges and Changes
His greatest challenges, he says, are keeping his team motivated and turnover low and figuring out the new marketing mix. “It used to be we did a lot of advertising in the newspapers and radio and some television,” he says. “But it’s all changed. It’s a lot less radio, some TV and maybe 50 to 55 percent digital. We update our website daily and I think that it is a big part of staying on top. I will say though, that it used to be simpler.”
He almost yearns for the days of big events and promotions. “We did a Jurassic Park theme one time with big dinosaurs balloons. People came from all over. It was crazy but I don’t think you can really do those types of things anymore.”
Internet sales comprise between 26 to 32 percent of his business and it’s growing about eight percent yearly. “It’s hard to measure it but we know that digital plays a part in the sale whether they buy it online or look at it and then come into the showroom. I do know digital marketing works.”
Although some members of his team have been with Ritchie almost from the beginning, he says there are no generational issues among his sales team, especially when dealing with social media. “The younger ones tend to be more internet savvy but the older guys have reloaded and understand it. It’s a nice transition with both age groups working together.”
Ritchie, who was nominated in 2009 for the Time Dealer of the Year Award, became involved with Maryland’s Automobile Dealers Association and eventually became its chairman. His late partner also was involved in industry association and showed him the importance of giving back. “I feel that it’s a wonderful industry and that you have to be involved. I’ve spoken on auto issues in front of the state’s General Assembly and it felt good getting our message across and helping other dealers.”
Getting Involved and Giving Back
After heading the state’s association, he took a break in his industry involvement but eventually found his way to AIADA “and I’m glad I did. This national organization deals with so many issues that go beyond what the state dealerships can do on their own.”
He praised the organization’s win over the abandonment a border adjustment tax (BAT) that would have added a 20 percent tax on all goods and services imported into the U.S. “We pulled out all the stops to make BAT not happen. It was all hands on deck.”
He is equally concerned about the North American Free Trade Agreement (NAFTA) and its cost on vehicle prices. “NAFTA directly affects our manufacturers, not only Honda, but others as well. The existing NAFTA is working and we have to stay diligent and keep our voices at the table. There are a number of manufacturing plants in this country. Honda opened up one in 1981. I agree that there are some changes that could be made but what they’re proposing is frightening.”
He also wants the elimination of “death tax” that makes it harder for family-owned dealers to pass it on to the next generation. “It’s like the family farm. They tax it so much that you can’t pass it on to your kids. They’re being penalized just because you died! I have two sons in the business and a long-term partner and I want to protect their futures.”
He also is not in favor of stair-step sales programs. “Gosh, don’t get me started,” he says with a laugh. “I do not like it and I think there are unintended ramifications. I don’t like it when you price a car and then down the block, the same car is at a different price. We’re all about customer satisfaction and I know that this two-tier pricing works for the manufacturers but for dealers is puts a Honda dealership against another Honda dealership. We’re stealing business from each other and customers are confused, and that’s never good.”
For Ritchie, it’s all about his customers, his team, and his community. “The auto dealership business is a great one and that’s why I give a lot back to my community, help train new technicians with scholarships, work with the associations and remember it’s all about making customers happy and employees feel appreciated. I want to give back because I want the auto dealerships industry to remain strong.”