Market struggles; Machens expands

The day after one of the country’s largest auto dealers abruptly closed all 14 of its locations and financial markets seemed on the brink of collapse, Gary Drewing, the owner of Joe Machens Dealerships, calmly surveyed his latest acquisition, Legend Automotive Group.

Drewing, as usual, had expansion on his mind. He wants to quickly pack the lot on Vandiver Drive with more cars from his new brands-Mazda, Mercedes-Benz, Cadillac and Pontiac-and beef up the sales force.

“You won’t see much blacktop here,” Drewing said as he stood in front of the Legend sign, which will soon be changed to Machens. “It’ll be aaaall cars.”

The automotive business has been sputtering. With rising gas prices, tightening credit markets and wary consumers, both manufacturers and dealers have seen a shakeup in the market. Many dealers are just worried about securing financing to keep their lots full, and some smaller dealers are under pressure to consolidate. Drewing, who’s been Missouri’s biggest selling car dealer for 12 years running, sees this environment as prime opportunity for expansion.

“We’ve got an old saying around here, and it’s been true since 1983: You either get better or you get worse,” Drewing said during an interview in his office at the Ford Lincoln Mercury dealership.

That was the year when Drewing became a partner with Joe Machens. In the 25 years Drewing has managed the company, it’s acquired the Toyota Scion, Lincoln-Mercury and BMW franchises and increased the number of employees nearly tenfold, from 35 to around 330.

Drewing’s purchase this week of Legend Automotive Group will add four franchises to the company, giving him 10 car brands at his dealerships.

“You’re probably wondering why we’re buying something in a market like we’re in now,” Drewing said. “I think it’s a good opportunity. We’ll put this thing on the map; we’re going to sell a lot of cars.”

The four new franchises each have “a pretty good niche in the market,” Drewing said.

Nationally, sales in the automotive industry decreased 11 percent from January through August. Through the same period, Joe Machens Ford Lincoln Mercury sold 4,379 vehicles, a slight increase from the first eight months of 2007. That also was about 1,400 more cars, trucks and SUVs than the second biggest dealership in Missouri, according to state Department of Revenue figures. Also in that eight-month period, Joe Machens Toyota sold 2,096 vehicles, 11th highest in the state and 8 percent higher than the period in ’07.

Last year, five out of every 10 cars sold at Columbia’s 12 franchise dealerships came from one of Drewing’s lots. Machens sales combined with Legend sales in 2007 added up to six out of every 10 cars sold. In addition, with the City Council’s approval of the Crosscreek Center plan this summer, Drewing will be moving the Toyota dealership to the new development at Stadium Boulevard and U.S. 63. With the new, larger location, Drewing expects the Toyota dealership to nearly double sales.

“We’ll put Toyota in the top three dealerships in the state when we build this new facility,” he said. “They’re selling 300 units a month now; it’ll go above 500 units.”

Drewing’s optimism is in sharp contrast to the anxiety many dealers have right now. But his diversity of brands gives customers many options, something most U.S. dealerships are still working toward, said Mike Sheridan, president of Global Debt Network, an online marketplace that connects dealers who provide in-house financing to financial institutions looking to buy auto loan portfolios.

Drewing is on the winning side of what has been a national trend of consolidation among car dealerships. Mark Johnson, president of MD Johnson, a consulting firm on auto dealer mergers and acquisitions, said the number of independent dealers is decreasing.

“There’s an absolute assault on auto dealers with any sort of financial weakness right now,” he said. “There’s no more middle class in the auto market. You’ve got dealers who are struggling or people who have more money than they know what to do with.”

Robert Bass, a lawyer with Meyers & Fuller, which deals with dealer/manufacturer relations, said domestic manufacturers have been pushing consolidation among dealers for 10 to 15 years. And it’s gotten harder for smaller dealers as banks active in financing car inventories have been getting out of that business, he said.

But not just small dealers are at risk. Georgia-based Bill Heard Enterprises, one of the nation’s biggest dealers, announced Sept. 24 that the company will close all 14 of its locations because of tightened credit and low sales.

Drewing said he just focuses on the everyday operation, the things he can control, and tries not to worry much about the economy, even though it does affect business.

“We concentrate on the things we can take care of,” he said. “The car business is tough right now and there are a lot of dealerships struggling, and they’re going to continue to struggle. But we find that business is pretty good.

“The most important thing all employees do each day is take care of customers,” Drewing said. “Happy customers and word of mouth advertising are what sell vehicles.”  Sixty-six percent of all customers purchasing a vehicle at Joe Machens Ford Lincoln Mercury are returning to purchase their next vehicle, he said.  “We don’t want to sell you one vehicle, we want to sell you ten.”

Sam Barbee, president and CEO of the Missouri Automobile Dealers Association, has known Drewing for years. Although Columbia is a great car market in general, Drewing’s involvement in the community, knowledge of the business and strict adherence to his business plan have all contributed to his success, he said.

“We refer to good dealers as good car guys,” Barbee said. “It’s difficult to run a car business and do it successfully, even in a good economy.”

During tough times, Drewing said he can still sell cars and sees the current market conditions as an opportunity rather than a threat.

“We actually think sometimes you can make more inroads and gain market share in a tougher economy than one with everyone selling everything,” Drewing said. “I think the cream kind of rises to the top, and your good dealerships and your good people will do well.”

Drewing credits Joe Machens for his success by showing confidence in him early on.

“I was fortunate enough to find a partner who gave me the resources and the capital and let me take off with the business,” Drewing said of Machens. “You don’t find that happens too many times. Joe was a very good businessman and an excellent partner, and I have him to thank for where I’m at today.”

Before Drewing joined the small Columbia dealer in 1983, he had worked for Ford and was actually being promoted to Detroit when he decided he’d rather work on the retail side of the business. He wanted to eventually own his own dealership, so he started working at Capitol City Ford in Jefferson City.

While working his way up the ranks, he ran into Joe Machens and soon became a partner at the Columbia dealership. When Joe Machens died in 1997, Drewing and Joe’s son, David, took over Joe Machens’ share. In 2006, Drewing bought David’s share of the company and became sole owner. But he decided to keep the dealerships named “Joe Machens” because of the reputation it had developed.

“When I bought my partner out, he thought probably the first thing I would want to do is change the name,” Drewing said. “I said, ‘That’s the last thing I want to do.’ I don’t have that type of ego where I have to see my name on the side of the building. I don’t think I would ever change the name away from Machens as long as I am the owner.”

He has since moved the BMW dealership to its own location on I-70 Drive Southwest and bought a stretch of the property between the BMW and Toyota dealerships in case of further expansion. Drewing owns the property where BMW is located, but Dave Machens still owns the Ford and Toyota dealerships’ property.

Since he first started selling cars in Columbia, Drewing has had high expectations for the market’s potential for growth. With the Legend deal completed and the planned move of the Toyota dealership to Crosscreek, Drewing shows no signs of slowing down.

“Each year we try to go up, we don’t go backwards,” he said. “We aggressively go after the market and attack the market. I kind of envisioned that back then. You don’t know where things are going to go, but obviously I had some goals and expectations and that’s the direction we took the whole thing.”

The Lighter Side of Gary Drewing

First Car: “I hate to admit it, but it was a Dodge Polara 500 convertible. I think I paid three grand or $2,500, but it wasn’t a lot of money. Back then I was glad to get anything I got. I thought I was pretty neat with that car.”

Current Car: A “die-hard Ford guy at heart,” Drewing, drives a Ford Super-Duty pickup on the weekend and a BMW around town.

“I really don’t get hung up too much on what I drive. I’m not one of those types of guys that has to drive the nicest car in the lot or something. I’ve always driven a Ford truck.”

Off the Clock: Hunting at his farm in Fayette, reading motivational books and listening to motivational speakers.

“I relate a lot of things to sports in business. I love to see a good football team with a good coach motivating players.”

Business Mantra: “The three E’s: enthusiasm, excitement and energy. We preach that all the time, and I think that’s true in anything you do. You have to enjoy what you do, and have the enthusiasm and the attitude and the passion.”

Heir Apparent: Rusty Drewing was born the same year that his father came to Columbia. Now 25, Rusty runs the used car side of the business.

“He’s done a phenomenal job for a young man. The stuff he’s done with pre-owned inventories is truly amazing. I’d put him up against any used car manager anyplace. For a young man he’s got a very good understanding of the business.”

The Making of Machens

1969: Joe Machens moves to Columbia from St. Louis, purchases Ford franchise.

1972: Dealership moves to current location at 1911West Worley.

1981: Machens adds Isuzu truck line.

1983: Gary Drewing joins company as partner and general manager.

1984: Machens buys BMW franchise in Jefferson City, moves it to Columbia.

1986: Purchases Volkswagon, Audi and Porsche from Riddick Motors.

1987-1988: Expands dealership buildings.

1989: Purchases Lee Thorton Honda dealership in Jefferson City and Legend Automotive Group’s Toyota Dealership.

1990: Moves Toyota dealership to its own building next to Ford and makes old Toyota building used car center.

1992: Drops Volkswagon and Audi.

1997: Sells Jefferson City Honda dealership. Joe Machens dies. Dave Machens takes over father’s share of company.

2003: Drops Isuzu.

2005: Rusty Drewing, Gary’s son, begins working at Ford store.

2006: Drewing buys Dave Machens’ share of the company, making him sole owner.

2007: BMW dealership moves to own location on I-70 Drive SW. Lincoln and Mercury are added to Ford store.