Interview: Vince Sheehy and the Future of the Auto Industry
He recently spoke with Patch from Sheehy Ford in Springfield.
Sure, there are trains and buses, but there's a reason why the DC metro area is notorious for intimidating traffic — it's simply because cars are a vital necessity. Vince Sheehy IV, owner of Sheehy Auto Stores, recently sat down with Patch and discussed his business as well as the changing face of the car industry.
Sheehy Autos counts 19 locations and two dozen franchises under its business umbrella, and that means either you or someone you know has given a nod to their soft sell and bought a new or used car. They're the largest seller of Ford automobiles in the Mid-Atlantic, and they also offer such brands as Honda, Lincoln, Subaru, Lexus, Infiniti, Mazda and Hyundai.
The Sheehy story begins with Vince I, who emigrated from Ireland to Washington, D.C. and worked as a stone mason at the U.S. Capitol. After World War II, his son (Vince II) took over a dealership in Hyattsville, Md., and then Vince III joined the family business in the 1950s.
Vince Sheehy IV took a different path, and after receiving his MBA from the Wharton School at the University of Pennsylvania, worked as a marketing manager at General Mills. But the auto industry was in his blood, and, in 1987, Sheehy joined the family business. He went from being a marketing manager at a Fortune 500 company to battling it out with 30 other salespeople for the next opportunity that would come through the door. He quickly rose through the ranks and became president of the company in 1998.
Sheehy, 54, lives in Oakton, is married and has three children.
Patch: Fill in the blank: If I weren't selling cars I would be a ____.
Sheehy: A marketeer.
Patch: What's your favorite chase scene in the movies?
Sheehy: I know this is where I'm supposed to say Steve McQueen, but it's Dustin Hoffman in "Marathon Man."
Patch: How many cars do you own, and is one of them your baby?
Sheehy: I own three cars, but my favorite car is one I don't own. It's an Aston Martin DB9. I toyed with getting one with my brother-in-law, who is also in the Ford business, but there's still time.
Patch: How old were you when you got your first car and what was it?
Sheehy: I was 16, but I'm cheating. I was the son of a car dealer. It was a new dark green 1974 Ford Pinto.
Patch: Are you a fast driver?
Sheehy: Who's asking? "No, officer." Let's put it this way: I like to see what a car has under the hood, but in my C-MAX, I'm a perfect angel when I drive, because I'm trying to maximize my mileage.
Patch: Who was the best car salesman you ever saw?
Sheehy: The best car salesman I ever saw was a guy named Dan Turcotte, who I hired in 1989. He came across as a fairly country, low-key truck salesperson, and he had the ability to contact more customers in a day — where he had actually talked to a live person — than anyone I had ever seen in the business. It was a fairly quiet approach, but he was routinely selling 30 to 40 cars in a month… I was trying to figure out the "secret sauce" that he had, as I was the general sales manager trying to convey that to other people, but those skills are not necessarily transferrable. But he was just amazing.
Patch: What's your favorite song about cars?
Sheehy: My favorite car song… Gosh. Marc Cohn has one that's called "Silver Thunderbird."
Patch: You were in marketing and then went into business with your father. Was working for the family business always in the cards for you?
Sheehy: It was not, no. I graduated from college in 1980, which was one of the extreme low points in the car business, and my father was working as hard as anybody could possibly work just to save the business. The energy crisis and then the massive recession with interest rates were 15 to 16 percent, and it didn't look like anything that I wanted to get into.
I went to business school with the intention to become the brand manager for a major marketing company in the U.S., and I did that, with General Mills. But then I just decided that corporate life wasn't for me. I really wanted to be involved in a business that I could run, and small business was in my blood. I also wanted to join my father before he got to the point where he was working his way out of the business. I joined him in 1987, and then we bought this store in 1988.
Patch: Do you still think we're in a recession?
Sheehy: It's not deep. We're coming out of it. We're sitting here in D.C. We've had the benefit of the federal government largess for enough tough years to see us through, but clearly the toughest year for the car business in recent memory was in 2008 - the beginning year of the recession.
What happened was that all the production was designed for a different world, for trucks in the early part of 2008, and then the gas crunch hit and suddenly everyone wanted a car. And our lots were bloated with trucks at that point in time. And then the market slid and we had too many vehicles on the lot. The toughest time for any business is when the business conditions don't match how you are set up.
The great news about car dealerships is that because we are in such a cyclical business, you learn to be very resilient and how quickly you need to reduce expense. But it takes a year to right the business with inventories and personnel. So, 2008 was very challenging; 2009 was tough, and by the time we hit 2010, it was a pretty good year in the car business.
We are now on a $1 billion run rate. We bought a Volkswagon store in August, so we'll be a billion dollar company in 2013. It's just a question of how many cars you sell.
Patch: What kind of a hit did you take from 2007 to 2008?
Sheehy: We probably had about a 50 percent drop… We ended up closing our Chevrolet and Chrysler Dodge stores in Upper Marlboro, Md. It was very difficult, but we did place those employees who wanted to move to other dealerships.
Patch: Which brands are doing better than others? Are luxury cars a tough sell these days?
Sheehy: Ford is doing great. We're on the cusp of a phenomeal year. I don't think it's as much as high-end versus low-end. Lexus had a very tough year because of the tsunami in 2011 [in Japan] — they just didn't have the product. The high end is definitely coming back.
We're seeing many more customers with credit issues, who are three, four, five -time customers who now have significant credit blemishes. They went through some significant event, like losing a job, or people who were very extended over their homes who may have lost their homes. But generally, we've been able to work through that with them, because their prior history with us has been so good. But it has been shocking for us to see long-standing customers come in with credit challenges that you just never would have suspected.
The next big differentiator is: Who has a new product in the marketplace? This is a game-changing moment for Ford, with all of the new products that have rolled out over the last year…the Focus, Fusion and Escape. And with Ford, we've always been phenomenal with pick-up trucks, but we haven't always had what the customer wanted in terms of cars, but that's all changed in the last five years.
Patch: What is it about those new Ford cars?
Sheehy: The Focus is just a phenomenal car. I've got friends who would not have, frankly, driven a domestic car for anything in the world, and now they're coming in and want to look at the Focus. It's a great-looking product and has great technology inside. I think we've gone from being a truck-based company and have realized that there is the pick-up truck segment, but we've also got to approach cars from what the customer wants, and those are totally different mindsets.
The best thing about the auto bailout, which Ford did not take, they bet the ranch in 2007, and when they did, they put together products that they've been able to execute over the last five years. General Motors and Chrysler were sliding into bankruptcy and had no money to spend on product and did not do that… Ford basically got a three-year head start on product development, and it takes three-to-five years for a product strategy to come together.
Patch: Smaller, more energy efficient cars are the ticket, right?
Sheehy: Absolutely. Ford's fuel economy is up there with everybody. Ford decided that they weren't going to just be the electric car company, that they would be the "all-of-the-above choice" and would let the customers decide what they want. So, we have very fuel-efficient cars with an eco boost. We've got hybrids and plug-ins, and we'll have an all-electric vehicle.
Patch: Do you think the country is ready for electric cars?
Sheehy: The economics of the battery, the weight of the battery, the type of car you can have, the range of the electric car — there's no electric car that can go 100 miles on a single charge. There's too much "charge anxiety." You put me in DC traffic on the Beltway with a 100-mile range, and if you run the AC a lot, my range just dropped to 80 miles, and then I'm on my way home and I have 20 miles left until empty — that's just too much pressure. I got enough problems during the day.
It will get there, and I think it has a place in any manufacturer's portfolio, but I think it's five or 10 years ahead of it's time. And the jury is out as to how much that really saves, in terms of our carbon footprint, given the amount of energy we use in the factories to build these cars.
Patch: What do you think will be fueling our cars in the next 50 to 100 years? What are we going to be driving?
Sheehy: I think it's going to be all of the above. Hydrogen has a lot of potential. Diesel, depending on our tax policy of diesel going forward, and gas and electric will continue to improve. I think electric will be an important part of our future, but it's a long way from being there now.
Sheehy: I think biofuels are a political headline. To have your fuel competing with your food is a really tough thing to do when so much of the world is starving. I don't really see anyone who wants biofuels at this point, other than the mandates, which is driven by regulations and not what the consumers want or what the manufacturers think the consumers want.
Patch: What's your plan for growth?
Sheehy: I try to keep things very near-term with our outlook. One of the things you learn with our business is that the longer term your plan, the more you get laughed at down the road. It's just not possible to see five years down the road. Our near-term plan — we're trying to be very opportunistic with our growth plan. I'm not really interested in going out of our Mid-Atlantic footprint…
Businesses are binary. They're either growing or they're shrinking. There's not really such a thing as maintaining. You always have to be in a fairly aggressive posture to move forward. I'm sure I will do some things that are stupid, but that's not part of my strategy, to stupidly grow. We don't want to grow for growth's sake. We just want to continue to fill in holes when we can. There are a couple brands I'd still like to have. I'm very bullish on Ford.
Patch: How many employees do you have?
Patch: It must be hard to remember people's names.
Sheehy: That's one of the saddest parts of having 1,400 employees, is that I've always prided myself on knowing, not everyone, but as many people as I can, and I'm coming up way short.
Patch: What are your target areas for growth?
Sheehy: We've got pieces of property outside of Northern Virginia. We bought the Ford store in Warrenton a couple of years ago from a good friend of the family and bought enough property to put another brand in there, and that area is a new growth market. We also built a new store in Ashland, Va. We'll continue to look at opportunities on the outskirts, and we'll be looking at Stafford and Warrenton. Most other areas are a fairly mature market around D.C. and there's not a lot of need for additional dealerships, so we'll have to look further and further outside the metro area, as the population justifies it.
Patch: Are your kids going to get into the car business with you?
Sheehy: I told each of my children that I did not want them in the business in the first three to four years out of school. I want them to figure their own world out and then come and sit down with me and convince me why I should hire them. As long as they have something to bring to the party, then they will earn the respect of the people around them. We're a family business, but business comes first.