Captain D. Michael Abrashoff, USN

I’ve been privileged to work in the car business. I say privileged because I have had the opportunity to work with and learn from some great leaders. I’ve worked for a baseball legend, an amazing CEO when I was with one of the public companies, and entrepreneurs that have had to learn the business using their own money.

While with a public company, I was honored to go to their Dealer Academy where I learned every aspect of the car business, the New Car Business, the Used Car Business, Fixed Operations and Accounting. In completely burying myself in learning about the numbers end, I realized I had a natural knack for numbers and understanding how much revenue was generated and knowing what percentage of each expense needs to be in order to create a net profit. Sounds simple enough but with upwards of $70M in annual revenue and know where each tenth of a percent needs to go can be a bit overwhelming at times. Like I said, I had a knack, not quite a “Rain Man”, knack but a knack nonetheless.

One career-changing event occurred during my schooling at the Dealer Academy that made all the difference, though. I got an opportunity to listen to a speaker by the name of Captain D. Michael Abrashoff, USN. He spoke about leadership as outlined in his book “It’s Your Ship”. If you are in a position of leadership, this is a must read. I read it and immediately put into practice some of the things mentioned that made huge impacts in how I related to my staff. You can have incredible understanding of a business or position you hold but if you cannot get the people around you to rally to your cause you will fail out of the gate. One particular action that made a difference was sending a letter to the spouses, significant other or parent/caretaker of the people whom reported to him. The letter thanks the relative for the support of the sailor and details to that person how much the sailor made a difference in his/her job role. He developed loyalty from his crew because, in order to do this, you must take the time and energy to pay attention to their individual roles and how they affect the operation. With the receipt of the letter, the relative will relay the message to the sailor. Can you imagine the impact?

I did this for each and every employee who worked for me ever since reading this idea. I realized a number of things. First, I can guide my employee by understanding what they need from their job, irrespective of money, and help them get it. Second, I had to pay closer attention to what I have tasked them to do. This will give you much more insight. Third, I realized how much more people are capable of than they realize. People will perform with proper coaching. I’ve had employees force me to make decisions they didn’t like, so I am not in some euphoric state that helps everyone every time, but if I, as a leader, can compel 90-95% of my staff to buy into the overall objective of a business by doing their part I am way ahead of the curve. Lastly, I realized that even though I referred to the great people I’ve been associated with earlier in this post; I was even more privileged to work with, hand in hand, with some exceptional people. People that earned not much more than minimum wage that showed up for work just a little early because they felt they were a part of something, to single mothers in the business office that gained my respect because of what they needed to accomplish for themselves and their children to managers earning over six figures that took my leadership and imparted the same ideas to help all of their staffs to become better and earn more.

The effect of having a group of people that I regarded as exceptional in their individual roles and them knowing I knew their roles, challenges and loyalties was and is dramatic. Be a leader to the people whom report to you and not just another manager. Lead them to their own level of greatness.

Hank Aaron BMW

Cars and the car business have always been my passion. I’ve spent 15 of the past 23 years honing my skills as a Manager, Finance and Insurance Department Director and General Manager. I’ve been a part of transactions with people with incomes close to the poverty line up to people with incomes exceeding the tens of millions annually. I have so many stories that I will share over these blogs that will, I hope, be entertaining especially because the auto business is something the general public thinks anyone can do.

Along those lines, I was privileged enough to work for Hank Aaron at his BMW/MINI Dealership in South Atlanta. I started as the New Car Manager but Hank and his partners realized my previous experience as a GM will make me a good candidate to run his total store some 9 months later. What we accomplished was amazing as the store quadrupled its net profitability in my first year their over its previous year. But I am getting ahead of myself.

When I first interviewed with Mr. Aaron or Henry as his close knit friends refer to him, I was awestruck. Here was a living legend, someone I read about as a kid, one of those people that will go down in history as a great person. I sat with him and asked him the secret to his baseball success. He told me the story of how, during a game, he would watch and study the pitchers he was facing. He would learn their tendencies and focus on what pitches were coming. I told him a professional player does that. “No!” he said. Some of his teammates would be looking at the girls in the stands, talk about what and where they were going after the game and any number of things outside of the game. These things went on in the dugout during the game. He said his secret to his success was he was always learning as a player about his competition.

I took that conversation to heart. As many know, the car business is always changing. More information becomes available to the buying public which makes people much better informed than ever. Let’s go back to my comments about the general public thinking they can do the car business. Mr. Aaron and his partners had the dealership group for a couple of years before I got there. Before I had access to the statements I never thought they had so little experience in the business. They had experiences and success in other businesses but not the car business. I brought the seasoning needed to make some tough decisions, change some policies and process that made that significant difference in the profitability of the store. The best part Mr. Aaron came to the dealership 5 days a week from 8:30am to 5:00pm and he and I visited regularly. I spent many of those meetings teaching Mr. Aaron what I knew. I suggested operational changes for him to receive the ROI he and his partners were looking for. I took that initial meeting with him telling me how he became a great homerun hitter by always being a student of his craft. In return, I became a student of my craft, refined my skills as a leader, not just a manager but a leader of 130 people whom I still remember fondly.

Because my store had such significant increase in volume and profitability, it became a great dealership that had upside to any potential buyers. And Mr. Aaron and his partners had perfect timing…they sold the store along with their Honda and Hyundai franchises for a reported $75M. After the assets and expenses I believe they received $40M-$45M. What a tremendous windfall. It seemed so easy but took so much work on my part to get it there.

I look now at the auto business. I have enjoyed it so much and look forward to what the future of the industry brings. I look at my craft and still think about Mr. Aarons comments…keep studying, keep reviewing and keep looking for the way to groove your swing. It worked for him.

Who says perfomance is going away?

I remember when I was a kid, Volkswagen brought the GTI to market. It had a rip-roaring 88 horsepower. A few years later Honda/Acura came out with their VTEC engines that had as much as 118 HP. I read the car mags and drooled over the cars with the handling to match the power. Note this, I was not born when muscle cars ruled so this was my first exposure to "real" horsepower.

Fast forward 10 years and I bought my first, of now 11 (!), BMW's...a 325 sedan, sport package, white with black leather and the sport package. I thought the car flew and it had only 189 HP. A couple of cars later, I had an M3. Now that car had POWER!!! With a rousing 240Hp, not many cars on the road could match the straight line speed, much less the handling and braking.
Let's go to today's medium priced V6 Japanese cars. The Mazda 6-276HP, the Honda Accord-267HP, Lexus ES350-268HP.

For today's performance cars, the V-6 Mustang has 305HP, Camaro SS V8 with 426HP, the BMW M3 (gotta have this one listed) has 414HP.

Hyper performance cars have in excess of 500HP and many approach or eclipse 600HP.
Lately, we hear about excessive emissions, fuel economy requirements and such. Yet, the manufacturers continue to build some pretty powerful cars and we are all the better for it. I realize these cars represent a very small percentage of the units sold but for the horespower junkies, we have a lot of choices.

Now looking to the future, some concept cars from Ferrari and Porsche have more horsepower than ever with the advantage of Hybrid Technology. The Porsche, I was reading, will be faster than the fabled Carrera GT both in a straight line and around Nurburgring.

For the performance car lover, cars now and in the near future are just going to be unbelievable. Just like each month when I was a kid, patiently awaiting the next issue of the car mags, I cannot wait.

No refueling for Formula One

Sounds like no fun for the viewers and fans.

I loved watching F1 in the late 90's and early into 2000 when active suspension, traction control and all of the lovely technology was on display. Now we are limited to 19000(!) rpms, no refueling and strategies that aren't really understandable for the average fan. All of these policies and rules are designed to make F1 more budget conscious. Have you seen the budgets for an F1 team? Come on!!!

I long for those days gone past when the manufacturers had free reign on what they can bring to the table; when you won because you let the engineers do what they do best. I realize these rule changes are to give everyone a chance to win, place or show but they have made the last race boring to watch even for a die hard Ferrari fan.

Let the engineers design something that allows the drivers to go as fast as they can. Let's say we de-restrict the rpm limit and allow some of the technology that exists on the most common of vehicles, traction control, abs, etc... At some point in time the laws of physics will take over and friction with the tires, aerodynamics and reaction times will not allow any further developement. Then we can count on seeing the best racers race the best cars from the most talented engineers. Now that would be fun again. Remember it will take a team to win eventually and everyone will have to bring their absolute best to the table.

GM’s plan to sell Hummer brand delayed

GM is selling and/or closing some of its brands to focus on the core brands, Chevrolet, Cadillac, GMC and Buick. They are currently negotiating with Sichuan Tengzhong to sell its Hummer brand.

In any purchase used for making money, the money is made on the buy rather than on the sell. Pretty much a non-fallible way of approaching business.

Looking at the way this Hummer deal has been stalled/slowed or what have you, the Chinese company is looking to make a windfall if this deal goes down at the end of February. When GM entered into bankruptcy, they estimated the value of the Hummer brand at $500M. Now the negotiations revolve around an estimated value of $150M. Sounds like a little equity built in on the part of the buyer. What will happen then if the Chinese company can re-structure the company to make money? If they do so, they will have little debt in relation to the estimated values of only last summer. We the taxpayers are paying for this. If the bailout money used by GM helps to make them accountable to the taxpayers for performance, I cannot see how taking 30% of its value makes sense.

As I have said before, GM is looking to reduce its expenses at the expense of the taxpayers. What happens if this deal does not happen at the end of the month? Will the value of the Hummer brand continue to fall? If so, then what will the final negotiated value be? If it is less than $150M, and GM takes a bigger loss on the deal, what happened to the tax dollars we invested?

GM needs to pull a Ford and restructure without us paying. Ford posted a $4.8B ($4,800,000,000) dollar profit for 2009 after looking at what they can and need to do to make cars for the customers. They have even better product in the pipeline. Case in point, the new 5.0L engine for the Mustang. They created what seems to be a great engine with minimal development time. How did they do that? They were forced to make tough decisions because the customer demanded it to be done RIGHT NOW.

I guess we’ll see if this Hummer deal is finished at the end of February. If it is not, I guess I’ll make another post about GM.

Bear this in mind; I am not an American Car Company hater. I love a lot of the cars GM makes. They have shown they can do it. Let’s just let them know we are watching.

Ferrari F40: The fastest car I’ve ever driven

Or should this read “the fastest I’ve driven a car”? As far as the fastest car I’ve ever driven…that is definitely a Ferrari F40. While selling luxury cars in Las Vegas, our owner bought some $2M dollars (back in 1998) of cars from a very wealthy client. We needed to transport the cars, among them, the F40, a Diablo, Hummer H1, Ferrari 328 GTBi, and other not so exotic luxury cars. I had the privilege of driving the F40 for a few precious moments. The twin turbo V-8 suffered from turbo lag but when they spooled up, it was like taking off in a jet plane…unbelievable.

Now for the car I’ve driven the fastest. In my first role as a General Manager for another dealership in Vegas, my used car manager came across a 2001 BMW M5 and I bought it. Back then, it was THE ultimate 4 door sedan and coming from someone whose owned 10 BMW’s over the past 15 years it lived up to it’s billing. Case in point. As being the leader of the dealership, I loved to give the usual daily Sales Meeting but on Saturdays the meetings had a different tone because of my drive in. I lived some 15 miles away from the dealership, would leave for work at 6am or 6:30am and was lucky enough to find this most amazing route. It was the frontage road merging to with the 215 Freeway. After crossing Decatur Boulevard, there was an opportunity to take that car to its 155mph limiter for a couple of miles and I did so almost each and every Saturday morning…what a rush. The sensation was unbelievable but as I would take the McCarran Airport exit, I would have to brake hard to exit. I would then bear right and turn left under the 215, I would go under the airports runways, sunroof open at this point just to hear the roar of the 5.0 liter V-8 revving to 7000 rpms. Then another heavy braking zone to get on Sunset Road for an opportunity to test my “heel and toe” technique…I knew then as I know now, in these days of cars being faster, more advanced and just a little more sterile, that was the greatest car, on the right road and at the right time.

I just wonder what that F40 would have been like.

Ferrari

Fernando Alonso is driving for Ferrari’s Formula One team in 2010. Did everyone see this coming? Towards the end of the 2009 season, Santander Bank of Spain finished its 3-year advertising contract with McLaren-Mercedes, announced its commitment to Ferrari’s Formula One team. Rumors around the mill had Alonso going to the Scuderia. Now with that announcement from Santander for the 2010 season, his signing was imminent.

Who says advertising in racing has run its course? This advertising contract, I’m sure, is worth hundreds of millions of dollars. ING, last year, was expected to SAVE $66M to $132M because of cost cutting in advertising for Formula One’s Renault team. Remember, Alonso raced for Renault. Can you imagine the total dollars Santander is spending to promote the most recognized Formula One team with Spain’s most famous racing driver? Those rabid fans are crazy over Fernando Alonso, and with 2 Formula One Drivers Championships, why not? Sounds like a sound investment in promoting the most advanced racing series with one of the most recognizable names in the sport.

Fernando Alonso will be remembered in history as one of the best, his aggressive driving style, his come from behind victories, and his fierce competitiveness. Now he is with the most famous of all teams. I cannot wait to wake up at 7:30 am on the East Coast on Sundays to watch (I would wake up, as many others do, at 4:30 on the West Coast if I still lived in LA.) I have been a longtime Ferrari fan and am excited to see how the next season pans out for Ferrari. It is going to be fun.