Q&A with Earl Stewart, Owner and General Manager of Earl Stewart Toyota and Scion
by Boardroom Brief Staff on August 25, 2011
1. We discovered people will travel a long way to buy a car if they have a good reason to and because of that, Earl Stewart sells cars locally, throughout Florida and the United States. It’s a misconception to think you have to have a car dealer on every street corner like you would a bank, gas station or McDonalds. The fact is car buyers are rigorous when considering a car purchase and are actively seeking out the right dealer to buy the right car. Today, Earl Stewart is doing about 1/3 of our business on the internet which gives you an idea of how many cars we’re selling outside of our area.
In terms of our management philosophy, it’s absurdly simple and probably mirrors every other car dealer’s philosophy. The only difference is we walk the talk when it comes to executing our strategy of taking really good care of our customers. As the CEO of Earl Stewart, I promote exceptional customer service in everything I do and as a result, my sanity has been questioned. I’m the only car dealer in the world that dares to put his home and cell telephone numbers on his business card. There are also 4 red phones placed throughout the dealership which connect directly to my red cell phone. This hotline has a distinctive ring and when it goes off, whether I’m in the shower at home, in a movie or out to dinner, the call will be answered. And my passion, or what others may refer to as fanaticism, trickles down to all 130 of my employees who also embrace complete accessibility for our customer. When you call our dealership, whether you’re trying to reach any employee or me, your call will be automatically put through. We’re open 7 days a week and if you call me at 2:00 a.m. on Sunday morning, you will reach a live person that will take your message and deliver it to me. If you’re out on the road at 2 a.m. and your car breaks down on I-95, we have a full-time towing service that picks you up, takes you home and delivers your car to the dealership. Our philosophy of total accessibility is responsible for our enduring success and growth in a competitive marketplace and weak economy.
2. Most of us think of Earl Stewart as a Toyota dealer, however, you originally entered the family business over 40 years ago when you joined your father’s Pontiac dealership in West Palm Beach. Pontiac had its day but made its last car over a year ago and about a month ago, all Pontiac dealer GM franchises expired. As a forward thinking trailblazer, what changes in the market did you detect in the 70’s which led you to make that dramatic leap to take on a Japanese franchise and Pontiac’s competition? And how did this investment strategy impact the growth of your business and the retail auto sales market in South Florida?
I acquired the Toyota dealership in 1975 at what was then known as Lake Park Motor Plaza when I was I was also selling General Motor products. And because I had a real basis for comparison, I immediately recognized there was a significant difference in the quality of the cars and that gap grew exponentially. At the Pontiac dealership, we were spending just as much money fixing new cars as we were cars that were out of warranty. At the Toyota dealership, the warranty work was so insignificant, it almost didn’t exist. A lot of friends and customers would ask me, ‘should I buy Toyota or Pontiac’? That placed me right in the horns of a dilemma because I had loyal employees working at both the Pontiac and Toyota dealership. And since I couldn’t play favorites, I would then encourage them to do their homework –test drive cars at both dealerships, check out what Consumer Reports is saying and decide for yourself. About 14 years ago, I decided I better get out of Pontiac, though I didn’t have any wild notion General Motors was going to go bankrupt or much less that Pontiac was going to be discontinued as a division. I did know I wasn’t making any money with Pontiac and I was making a lot at the Toyota dealership. My customers were raving about the Toyota product and complaining about Pontiac. Fortunately Chuck Schumacher had been asking to buy my Pontiac dealership. He made me an offer I couldn’t refuse and I sold it. From that point on, the handwriting was on the wall as buyers discovered Toyota was the better car and the sales volume at that dealership continued to increase.
3. You are not just a figurehead but the grand patriarch of the Earl Stewart family. As the CEO, you have been vocal about South Florida’s often unsavory retail car sales market and have often taken aim at your competition in your blog posts and on your weekly Saturday morning “Earl Stewart on Cars” radio program. Can you explain why your competition has not been able to replicate your leadership strategy to compete more successfully against you?
Years ago I was at an honorary meeting of top volume Pontiac dealers which took place at the Ritz Carlton in Naples. The CEO of Ritz at that time spoke before our group. He’s spoken around the world, written books, produced videos….Anyway, he was telling us how he delivers speeches to the Four Seasons, the Hyatt, Hilton and other luxury brand resorts on just how he has grown so successful at the Ritz Carlton. One of our dealers asked, “Why would you stand up in front of your competition and tell THEM how to do it?” And he just laughed. There’s an enormous difference in telling someone how to do it than actually doing it—the execution. All I’m doing is openly letting my competition know what they need to do to compete with Earl Stewart. Most will tell you they take really good care of their customers. But if you ask them to give their customer their home phone number, suddenly you’re asking them to cross a line and you’re being ridiculous. That’s me: I am ridiculous when it comes to delivering exceptional customer service. My competition knows what I do and they try to copy me. They admit the red phone thing is a great idea, so they install and market the red phone. But they don’t answer the red phone. Why? Because you have to be there to answer the red phone, you have to get out of the shower, you have to put down your fork, and you have to step out of the theater. Admittedly, these days it doesn’t happen that often but I’m getting to the point I almost want the phone to ring. Because when it rings, it’s another pebble in the pond, it’s another ripple and through it all, I’m building a legend. And yes, a lot of times customers will just call me to see if I really will answer the phone like I say on TV.
4. You have often said car buyers would be better served buying a different make from a good dealer. In addition to shopping around the best deal and doing your homework, how can you be sure which dealers to avoid and those to trust in the South Florida retail car market?
I actually produce a list of Earl Stewart’s ‘Recommended’ and “Don’t Buy From” dealers. On my radio show, we talk openly about those dealers that CAN be trusted and those who can’t. I also tell my blog readers and my listeners that it is sometimes more important to find the right person than condemn the whole dealership. Sure, you can have a trusted service advisor. You can have a trusted car salesman. But even though the culture of the dealership leaves a lot to be desired, it’s a one-on-one thing. The fact is, there are nice people working in companies that aren’t so nice and there’s some bad people working for really good companies. I’d be lying if I suggested I didn’t have some rotten apples in my barrel. I just don’t always know where they are but when I do find them, I get rid of them. I don’t know of any perfect company. What I do know is when you run a business that is pro-customer, you develop a culture of people who have a conscience and really care about customers and doing the right thing. I’m the most successful car dealership in Palm Beach County because I do things the right way. I don’t have to run an ad in the paper for hire because I have a waiting list of people that would like to work for me.
5. Toyota has made a focused effort on expanding its hybrid market by creating fuel efficient vehicles which help combat climate change by reducing emissions. In fact, the Toyota Prius hybrid was ranked by the U.S. Environmental Protection Agency #1 on their list of fuel economy leaders for the 2011 model year. In addition to reducing the carbon footprint, what are some of the other perks offered by the Prius? In general, how fuel efficient are cars today compared to 50 years ago?
First of all, there’s no comparison between fuel efficient cars today versus 50 years ago. When you’re paying 50 cents a gallon for gas, nobody cares how many miles you’re getting to the gallon, you just build a bigger tank because all we USED to think about was how far you could go on a tank of gas. Fast forward to today and it’s a new game. The Prius is an interesting car because it’s the biggest hybrid seller AND it’s also the best. I hate to say that because I try to be impartial and you’ll never hear me say that on my radio show. But if you read Consumer Reports, they’ll tell you the same, which is that Prius is the best hybrid on the market. In fact, it’s the most trouble-free, reliable car in its class, hybrid or not hybrid. And though we didn’t get the Prius in the U.S. until 2001, the Japanese have been building it since 1997. We’re in the third generation now and this product not only gives you great gas mileage and lowers your carbon footprint, but it’s the most reliable car we sell. A hybrid is truly the answer. People think it runs on a gasoline engine and that the electric motor and battery powers the car. What really happens is, it’s always an electric vehicle because the gasoline engine only charges the battery which runs the electric motor. The electric motor is so far superior to a gas engine because it’s clean but also has a huge amount of torque and power. In fact, you can pull a much bigger boat with a hybrid than you can with a similar sized gasoline engine.
There’s a lot of hype now about the Chevy Volt and Nissan Leaf and even Toyota is rolling out an all electric car, but the electric car is for show and to garner attention. GM is only building 11,000 Volts next year to sell in just 13 states. We won’t even have Volts in Florida. The all-electric vehicle may be the car of 2050, but the battery technology is so far from coming up with a battery that would suit the American driver, that it’s going to be the hybrid. By 2015, most cars will be hybrids and we’ll have hybrid everything.
6. Earl Stewart is not only run like a family, it IS a family business and your wife and three sons are all involved in the day-to-day operations of the dealership. Looking forward, will Earl Stewart be family run and what is your future outlook for the retail car sales business?
I believe we have turned a corner in retail car sales by filling the void that was left by 2007, 2008 and part of 2009 when people built up mileage and time on their cars and are now looking to replace them. Combine that with an incredibly good interest rate and you have a perfect situation for leasing with low rates and high residuals. It’s going to get better and better and I think 2011 will be a better year than 2010. In fact, we are targeting a June of 2011 date for a $12 million expansion plan that will double the size of our dealership in Lake Park.
Regarding my family and the dealership, we are truly a family business. About 10 or 12 years ago, I came close to selling the dealership because my family wasn’t interested in being in the car business. I had three sons, all very smart young men with college degrees and a wife who didn’t take much interest in the business because I never shared too much of it with her. When I started focusing on a strong integrity and customer advocacy culture, that sparked their interest. My oldest son, who has a degree in anthropology and wanted to become a teacher, confided in me that what attracted him to coming in to the business was the way I was DOING business. And because of this direction, he could be really proud of what he was doing and his children, my grandchildren, could also be proud of him. Similarly, my wife became interested in the business and now I can’t keep her away from the dealership. In fact, she wants to sell more cars than any salesman on the floor and is sharing our message at the grocery store, the hairdresser, and the cleaners. Wherever she is and whatever she’s doing, she’s selling cars! So we’re not just selling cars, we’re doing something very special here and we’re doing it better than anyone else.