While many auto dealerships nationwide were hitting the skids during the recession, one South Florida dealer managed to steer his business in the right direction. Gus Machado not only held on. He sped up.
The auto magnate, who has owned a Ford dealership in Hialeah for 27 years, purchased a second Ford dealership in Palmetto Bay in April 2009, one of the worst years for the U.S. automotive industry. With the recession's massive layoffs and high gas prices, consumers had stopped spending, and the few who were still buying cars turned away from what was then the industry's big seller: the gas-guzzling SUV. National production levels fell to an all-time low. Businesses from Detroit's Big 3 automakers to local car dealerships faced dire times, including corporate bankruptcies and talk of government bailouts.
Machado wasn't exempt from the financial doom and gloom. Sales at the Ford dealership fell 30 percent to $70 million in 2008. Machado laid off more than a third of his employees and slashed budgets for advertising and charitable giving.
But he wasn't giving up.
While he and Victor Benitez, his longtime general manager and business partner, were concerned about uncertain times, they gambled to grow their operation -- and it paid off. The pair purchased what is now Gus Machado Ford in Kendall at 15551 S. Dixie Hwy. in Palmetto Bay from Group 1 Automotive, a deal valued at $20 million. It was a calculated risk -- Machado bought the Hialeah dealership during the recession in the '80s, and that proved to be a smart move. Ford was instrumental in making sure Machado knew about the opportunity and encouraged him to pursue the deal. The automaker had already lost a dealership in the area and didn't want to give up on the territory.
"A lot of times, in the most difficult moments is when you get good business opportunities," Machado says.
Business is now stronger for the Ford company and at both Gus Machado dealerships. Profits at the Kendall location have been even higher than the numbers for the Hialeah dealership, Benitez says.
"Mr. Machado and I took a big risk in 2009 when the economy was really at the bottom and we decided to get into another Ford dealership," Benitez says. "That's going to pay off dividends."
At the Hialeah dealership in 2011, Benitez says, sales were up around 5 to 6 percent over the year before. Customers there tend to buy the Explorer or the Focus, and the dealership is selling about 120 cars a month, less than half of what it used to sell when business was booming.
In Kendall, the forecast for growth is brighter. In the last year, sales at that location are up 20 to 25 percent. At the Kendall dealership, customers are interested in a wider range of vehicles including Ford's longstanding signature vehicle, the Mustang, and the F-150 pickup truck, Benitez says, with sales of 150 cars a month.
"Your sales figures don't necessarily have to determine your profitability," notes Paul Taylor of the National Automotive Dealers Association.
The business model for dealerships includes service, parts and financing, and like most businesses that survived or even thrived during the recession, tough times meant finding ways to operate in a leaner fashion.
"Dealerships simply had to reduce costs," Taylor says. "Customers are buying today because they need cars." In 2012, he adds, the industry expects sales of 14 million vehicles. He says 15 million is a target figure that will signify a return to a healthy economy for the national auto industry.
If you ask about Machado's success, Benitez will credit the advantage of being a family-owned business -- Machado's daughter, Lidia, and Benitez's son, Danny, both work as managers at the company -- as well as community involvement.
"We treat every customer as though they'll be with us for a lifetime," Benitez says.
The dealership is known for its generosity, donating to various causes, from the mother whose daughter needs a dress for a beauty pageant to youth sports teams that can't afford uniforms. The dealership also has a history of contributing larger donations to Hialeah and Hialeah Miami Lakes high schools.
And while charitable giving is still not at the level it was pre-recession, Machado earned the Ford Motor Company's prestigious Salute to Dealers award this year for his philanthropy. Only six winners were chosen from an international field of contenders.
Machado has remained committed to the American Cancer Society, organizing a regular golf tournament, which Benitez says raises $20,000-$25,000 yearly.
Industry analyst Edmunds.com Vice Chairman Jeremy Anwyl notes that veteran owners understand the cyclical nature of the automotive industry. Anwyl calls a 15-year stretch from the mid '90s to 2007 an unprecedented "heyday" for modern sales figures, that was driven by easy credit. He adds that the sales figures then were addictive for dealers.
"Sales were supposed to be good but no one imagined they'd be that good for that long," he says.
"The auto industry is recovering," Anwyl says, "It always does."
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