Many dealerships got paralyzed by the coronavirus pandemic, and some even closed down their business. However, some are surviving, even exceeding their sales record as expected.
One of those who is thriving is Action Auto Utah, a car dealership with multiple locations. Action Auto is located in Orem and Lehi, Utah. Erik Schofield, the company’s Chief Operating Officer, sits down with us to discuss about how they managed to pull through from the financial threats of the pandemic and come out winning.
Key Points
- How Action Auto managed to win despite the pandemic threats
- Their first reaction when the crisis went global
- The automotive industry’s current condition
- Erik’s advice to other car dealerships
- Where’s Action Auto Utah six months from now
Carketa:
Action Auto Utah is really successful, even though we’re in this whole pandemic. Don’t you think it’s a miracle?
Erik Schofield:
There have definitely been miraculous aspects to it, especially because we have been able to stay in business, and even surpass our sales from last year during the pandemic. However, I think many aspects of that success come from our team, the employees we have put together, and the minds working together. We have a really good team. But yes, there definitely have been some miraculous aspect to it.
Carketa:
When you heard the news about the pandemic becoming global, what was your first reaction?
Erik Schofield:
Personally, I was honestly kind of nervous! At that point you don’t know what’s going to happen. You don’t know how many people are going to get sick, or how fast it’s going to spread. But I think our first worry was thinking that we’d have to shut down Action Auto Utah for two weeks towards the beginning and then just wait it out for a second while everybody self-quarantined. We were really blessed and lucky that we didn’t have any coronavirus cases, and we were able to keep working. Because we’re a dealership and we do service on vehicles, we’re able to stay open as an essential company, which definitely helped.
But yeah, we were definitely nervous to see what’s going to happen. But like I said, we’re definitely lucky and blessed our employees didn’t come down with anything that we could continue work and keep our doors open. Honestly, after a week or two, that worry started to fade away pretty quickly. So we started seeing things move forward as usual, and we didn’t see too much of a change. Everybody kept coming to work. We all worked hard and just kept moving forward.
Carketa:
So you thought that it would really affect the business, right?
Erik Schofield:
Yeah, we thought we’d have to at least shut down for a couple of weeks. And, at that point, that worries everybody. Am I going to get paid? Am I not going to get paid? What were we going to do when we come back to resume business? And how do we get back up in the grind? Unfortunately, we had to let a couple of [freelance] guys go. There are a few in the crowd that we kept around that we needed.
Carketa:
I want to ask about the automotive industry’s current condition, specifically in the used car dealerships area. Have you heard news of dealerships who unfortunately closed down or something like that?
Erik Schofield:
I haven’t heard of anybody that’s a personal friend of mine. But I know, as far as competitors to Action Auto Utah go, close dealerships that we have connections to, and dealerships we network with. Some of them, yeah, they went belly up. We saw them closing their doors. I remember one, in particular, I drove past it every day. And I slowly saw their inventory get smaller and smaller until eventually there was a new name on a building.
But we’ve also seen others that have grown, just like the one that was bought by another friend of ours. We watched that company grow. We definitely saw some people fall by the wayside, and it’s not something to be happy about. People that have lost jobs, lost money, and lost their company… that’s hard to go through. But in the meantime, it definitely has blessed us because we were able to gain a little bit of market share. I’d like to also add that if Action Auto Utah has done it, it’s not too late for other car dealerships to follow suit.
Carketa:
When you saw the changes around, did you guys come up with some sort of emergency plan?
Erik Schofield:
We never had an emergency plan. Relationship-wise, we’re close with all of our employees, and we have 40 employees now at Action Auto Utah and each one of them I know by name. Even though I may not have a huge relationship with them, we have multiple text groups that we keep everybody aligned as far as what comes up, what things we need to work on, or the information we need to pass on quickly. So we basically just talk about it together in our groups and just let everybody voice their opinion. We all believed that we were going to keep our doors open and keep moving forward.
Then if something came up we had to move around, as far as somebody testing positive for coronavirus or something like that, we would take that punch one step at a time. But, as I said, we were fortunate to not have that affect us. In the meantime, we all kept our heads up and held positive attitudes, and we just worked with that. With the help of Carketa, we were able to move on with our process and that allowed us to keep moving forward and set records for this year, which is better than last year.
Carketa:
That sounds great! So do you guys have any specific action plan? Or has it been all, “Yeah, we’ll just go to work and see how it goes”?
Erik Schofield:
Our plan was to continue to grow and continue to move forward. There are always things that come up. There’s always something crazy happening, or something challenging that goes on in this world. You know, the economy is going to do this or that, riots start up, like we’ve seen, earthquakes… In fact, we’ve had one of the biggest earthquakes in a long time this year in Utah! Bottom line, there are things that scare you that will inevitably happen, and there’s nothing else to do but try to just keep a straight mindset the whole time.
We know that things are going to hit us, but we know that we have to take that next step and find a way to make it work, adapt and keep moving forward. We’re not here to just let things hit us and bury us. We’re here to take the punches and find ways to make it work to adapt our processes and keep moving forward to keep staying at the top.
Carketa:
Optimism is the key.
Erik Schofield:
Optimism is always the key, yep. Smile through those trials.
Carketa:
Oh yeah, freak out a bit and just do something about it after.
Erik Schofield:
Yeah, if you just sit and enter a depression mode, nothing’s going to happen. It’s like going into a boxing ring without any protection, gloves, mouth guard, things like that. You’re going to get hit, you get knocked down real quick, and it’s tough to get back up.
Carketa:
So, do you have any advice to other car dealerships on what they can do?
Erik Schofield:
Yeah, I think the critical thing right now is to adapt and not stop. Especially with where the car market is going right now, moving to an online market. And that’s why Carketa is so huge right now for us. It’s helping people to move from buying in person to buying vehicles online, and that’s where the market is going. We’ve seen that, we noticed that, and so we have to adapt our processes to it, just like fast-food restaurants. You have the ones who learn how to adjust the process to make sure that they can be safe during this pandemic and use protection for their employees. I’ve had people hand me food on their tray without touching the bag.
Carketa:
Yeah, that level of safety is right up there.
Erik Schofield:
There are different restaurants, sit-down restaurants, that suddenly offer take-out corners, drive-up windows, and stuff like that. They’re changing their processes to make sure that they’re staying busy and continuing to provide the public needs. In such an evolving world we’re living in right now, you have to adapt your business as well. If you don’t do that, you’re going to fall by the wayside, and you’re not going to continue to rise to the top. So just like these other car dealerships that fell, they may not have as big of inventory as us, but they did not adapt to the processes or adapt their business plan to conform to what those needs are going to be at that time. So I think that’s a big thing. It helps to adapt those processes as those new things come about.
I think another thing that helps is to be smart with your money. A lot of dealerships in the area, they get in debt, and they’re not being conservative with the vehicles they have. You don’t want to get too much over your head. Because history has shown, there are random things that come up all the time, and now that we’re in a pandemic, people are like, “okay, holy crap I know this is going to happen”. At that point, they are so far in debt that they’re trying to “Rob Peter to pay Paul.”
So you have to put yourself in a position where if anything happens, you’re going to be okay. That means not leveraging yourself too much by using other people’s money too much. There’s balance between leveraging that money and continuing to push your business forward, as well as keeping a safety net if there’s something that’s going to come up. So I think those two things are the biggest pieces of advice I can give. Be smart with your company’s finances and adapt to changes that come.
Carketa:
I agree with both, especially with being financially smart. I think that’s very important right now, especially with some people’s spending habits at the moment.
Erik Schofield:
Yeah, it’s way too much “go with the flow” and try to make that work later and not as much planning and preparing and thinking six months ahead. That’s something that Action Auto Utah does all the time. We have a management that is always thinking six months ahead. It’s not “now we have a problem, what are we going to do with the punches that are coming?” It’s, “In six months ahead, where do we want to be and how are we going to progress to get to that point? And when we hit that six-month mark, what’s our next move for the n