Rebounding from the Loss of a Dealership Partner

April 29, 2011
Donald Reckner, owner of Elmo’s Auto Body, felt the brunt of the auto-market slump a couple of years ago when GM dumped the dealership connected to his shop. Unwilling to give up, the collision center reinvented, rebranded and overcame the doubts of DRP partners to survive.

Donald Reckner still gets choked up recalling the day his shop’s dealership connection in Scotia, N.Y. received a notice from GM that it was getting the axe.

“That was a pretty big blow not only to us, but to the dealership itself,” Reckner says. “I can tell you there were people crying there that day.”

Brandon Tyner remembers similar emotions at his shop in Springdale, Ark., when Chrysler cut his connected dealership.

“The stress level went up tremendously,” Tyner says. “If you have any type of heart, you worry about each person.”

Both shops rebounded from the devastating change—which could have been a death sentence for their businesses. In the midst of heavy negative press about the cuts and rumors of the shops’ closure, they quickly reinvented, re-branded and marketed themselves as independent facilities to survive. Today, they’re both successful, and after a lengthy arbitration process, the Springdale shop is reuniting with its manufacturer.

Starting over

Reckner already owned Elmo’s Auto Body in Ballston Lake, N.Y., when he entered into an agreement in 2004 with a GM dealership that needed a replacement for its ailing collision center. Elmo’s, a 4,000-square-foot shop, was growing and needed to expand.

“We couldn’t keep up with the volume,” Reckner says. “The smaller repairs we couldn’t do, because we were doing the train wrecks. I knew I needed more space to handle the customer load.”

The dealership had been in business since 1967. It was older, but its sales were good and the new shop reaped the benefits from that strong foundation. The dealership accounted for a quarter of the collision center’s work.

But the good times wouldn’t last. The facility was put on GM’s list of 1,200 underperforming dealerships, which it targeted for closure in 2009.

“Do we believe if we had fought it that GM would put us back on? Maybe. But we don’t get a do-over,” he says.

The dealership had three months to close and liquidate its inventory. Reckner could stay in the location for six months because of his lease agreement, but he had no intention of shutting down completely. He made sure his eight employees got that message.

“[The dealership was] good to us, but they held us back a little bit too. There are two sides to everything.”
– Chris Reckner, manager, Elmo’s Auto Body

“We had just poured five years into this second location and people were very nervous,” he says.

Reckner looked into buying the building, but it was too expensive. Refusing to give up, he became determined to move, but it had to be done quickly.

One of the first calls he made was to a mechanical shop about a mile away. At 6,000 square feet, it was slightly smaller than the dealer shop, but it was zoned properly and it had a paint booth. It wasn’t for sale, but Reckner explained his interest in buying the property and was met with a “Maybe.”

A week later, a deal was made and the transition to a new building began.

“This was the best option that we had in this short amount of time,” Reckner says. “So we put our best foot forward and went on this journey.”

After going through an environmental remediation process, moving the mechanical shop equipment and retrofitting the paint booth for waterborne, the shop made the move during a single weekend with no lapse in business.

The shop is far more visible than it used to be, so the business has noticed a significant improvement in customer traffic. The facility repairs about 70 cars a month and last year made $1.4 million in revenue, a 3 percent improvement over the last year in the dealer shop.

Reckner says his team pulled through thanks to these strategies:

Marketing. When the news about the dealership’s closure spread, many people in the area assumed the shop was closed, too. The facility was in danger of losing customers and its 12 DRP relationships, so Reckner launched a radio campaign, sent out a mailer and reached out to insurers to reassure everyone that the shop was still in business.

Loyalty. Reckner stuck by his employees throughout the ordeal and reassured them that the business would survive. That mitigated the panic among staff and eliminated any flight that might have happened otherwise. All of the shop’s employees were retained.

“Donny runs two locations and he’s the type of boss that he just wouldn’t lay people off,” says lead painter Frank Turriglio. “So I wasn’t concerned with that. There would have to be some kind of major thing.”

Teamwork. Reckner was actually out of town during the weekend of the move, so he relied on his son, Chris Reckner, who manages the Ballston Lake location, to get it done. The Ballston Lake shop, which is seven miles away from the new facility, also picked up some of the work during the transition.

Processes. One of the dealer shop’s benefits was its two paint booths. The current space has one, so the business has streamlined workflow. Cars are now prepped and colors are qualified before a vehicle gets to the booth.

Though the new shop no longer benefits from dealer business, the Reckners say its better location has made up for that. Plus, now that they own the building, they can make investments in it. Chris Reckner says they were afraid to do that at the dealer site.

“They were good to us, but they held us back a little bit too,” he says. “There are two sides to everything.”

Standing fast

Springdale Autoplex, formerly Springdale Dodge-Chrysler, was among 789 dealerships Chrysler cut in 2009.

Connected to the dealership is a 32,000-square-foot collision center with 13 employees. Brandon Tyner, who manages the shop, says the news of the manufacturer’s departure was shocking and quick. The dealership was given 21 days to close and liquidate its inventory.

“It was devastating,” says the dealership’s general manager, Bud Schwartz. “There was no warning at all. Thankfully, we were in a good financial state at the time. We owned the property and the majority of used cars.”

The dealership started fighting for reinstatement through an arbitration process. In the meantime, it changed its name to Springdale Autoplex and rebranded as an independent business. The body shop followed suit, but as arbitration consumed the dealership’s management, Tyner found his shop keeping the business alive.

It was an exceptional challenge, especially as media reports of the closures spread. Customer and DRP relationships disappeared overnight, Tyner says.

“We saw a 40 percent drop in our customer base from the loss,” he says. “It was all over the news. We’d get an assignment and people would call and change it because we weren’t with the dealership anymore.”

Over the last couple years, he’s regained 20 percent of that business, bringing annual revenue to $1.3 million through about 65 repairs a month. Tyner also retained all 13 of his employees.

But just as he was achieving some success as an independent shop, he learned the dealership won back its franchise through arbitration with Chrysler.

“It’s almost disgusting,” Tyner says, “because you think, ‘Why did we lose it in the first place?’”

But he doesn’t expect the hard feelings to last long; he thinks Chrysler’s return will only improve business at the shop. Plus, he learned a lot along the way. Here’s how he managed to rebuild after the manufacturer’s departure:

Rebranding. Tyner’s shop suddenly had a new name, and it didn’t have Dodge or Chrysler attached to it. Tyner put together a brochure that included the new name and listed all of the services the shop had to offer. He sent the brochure to insurance companies and followed up with personal visits. The shop’s DRP relationships rebounded from a handful to 12.

Discounts. Tyner advertised discounts for just about every group imaginable—senior citizens, students, military personnel, corporations and others. The economy was rough and people were looking for deals. Tyner says he wasn’t sure how much of an impact the discounts had, but he guesses they had some impact on increased traffic.

Products. Tyner took a close look at every product his shop was using. He switched to more affordable products and brands where possible. He says he researched products carefully to make sure he didn’t sacrifice quality.

Personnel. Personnel hours were watched more closely so employees didn’t exceed the shop’s smaller budget. Shifts were changed, positions were tweaked and some employees were moved to different departments.

Recycling. The shop beefed up its recycling program, recycling aluminum wheels, radiators and other items that used to miss the recycling bin. That brought in a new stream of revenue the shop was missing out on before.

Springdale Autoplex expects to complete the renewal of its dealership relationship later this year. Whether the name will change again is undecided. Either way, Tyner’s outlook is positive.

“It’s going to take a lot of marketing because bad news travels far,” he says. “It’s more of a story to lose your place than to get it back. Most people thrive on the bad side of it. There’s going to be a curve, but I expect to see a real turnaround.”

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