When Bob Hoy stopped practicing law and started selling cars 42 years ago, the world was a different place. U.S. automobile manufacturers ruled the road, cashing in on the American love affair with the car. Fins and trims changed, but automotive engineering was stuck squarely in the 1950s.
Just over the horizon, a revolution was brewing. It would force American technology to improve, change consumer buying habits forever, and make luxury cars available at middle of the road prices.
That’s the tale Bob Hoy told El Paso Inc. 15 years ago, in 2000, as he was winding down his role in one of El Paso’s most successful automotive groups. He was taking a minority ownership position in the Hoy-Fox dealerships. His son, Steve Hoy, and his partner, Steve Fox, would run the seven franchises that had sales of $100 million a year.
Hoy passed away June 26 at age 81; his obituary appears on page 11B. He led a remarkably successful life.
What’s also remarkable is that much of what he said in the interview 15 years ago still rings true: how the car business had changed, what makes a dealer successful, why he’d decided to step out of the daily duties of running a multi-million dollar business. El Paso Inc. is sharing excerpts from that 2000 interview with today’s readers. His comments say a lot about the car business, and about the kind of man Bob Hoy was.
Of course, some things have changed. Just a few months ago, Hoy-Fox split into two companies. The Hoy family kept the Mercedes-Benz and Volkswagen franchises, while the Fox family took ownership of the Toyota, Scion, Lexus, Infiniti and Acura franchises.
In the interview 15 years ago, Hoy explained that when he started to practice law, it wasn’t much fun. Eventually he found himself in a Volkswagen showroom, ready to sell cars, and never looked back. In 1996, he was elected chairman of the Texas Automobile Dealers Association. He was also active in civic affairs, and served as a city alderman from 1969-1971, when Peter de Wetter was mayor.
Back then, Hoy was looking forward to lowering his golf handicap and being granddad, helping to car pool his four grandkids in the morning.
But he couldn’t stop talking about cars, and he had a lot to say. Pay particular attention to the cup holders.
Q: What do you see when you look back over all your years in the car business?
When you think about it, the retail automobile business is the last of the major retail segments in this country that hasn’t seen an enormous change in the way it does business.
It’s a unique business, with unique people. Automobile dealers are the last of the real old-fashioned entrepreneurs. El Paso is typical of most communities in that the car dealers are usually high-profile individuals. They’re large employers who do big-volume business, they advertise, market and merchandise. They’re active in civic matters, their churches, civic causes. They’re generally darn good citizens.
And while most every other retail segment in the country has changed dramatically in the way it sells, the car industry has stayed pretty much the same.
Q: So who started the revolution in the car industry?
The Japanese revolutionized the business with product, with engineering and with quality. As they gained prominence in the late ’60s and early ’70s, we saw this great change take place.
Twenty-five or 30 years ago, we were driving cars with technology that dated from the ’50s. In those days, the American companies changed the outside of the car significantly. But the guts, the suspension, the brakes and the engines, were all 1950s, or a bit later, technology.
When the Japanese really got in gear in the ’70s, they brought new, innovative and high-quality cars at cheap prices. That forced American manufacturers to change the way they do business.
Q: Still, it took some longer to change than others.
Some went down kicking and screaming, and some have not completely changed, even today. But the consumer has been the winner, because they have far more choices and better pricing structures. Cars are more expensive today, everything is more expensive. But if you do a careful cost comparison, the American automobile consumer gets more for less.
Q: Who changed the most?
Lexus, a division of Toyota, all by itself changed the way the Germans do business.
In the late ’80s, I was on the Mercedes-Benz American national dealer council. When Lexus came to market, Mercedes leadership just sloughed them off. They said it will take them years to develop the traditions that Mercedes-Benz has; they can’t think they are going to seriously compete with our product.
Well, the American public changed that mindset in a heartbeat. The perception of the American public was that it was a quality car, and it was. And that it drove darn good, about as good as Mercedes, which it did.
The big difference was that it sold for $38,000. A similar car from Mercedes was in the $50s, pushing $60,000.
And besides Toyota, with its Lexus, there came Acura from Honda, and Infinity from Nissan. So within 36 months, the Germans realized they had to change the way they did business. They had to stop being conservative, and realize the Japanese did something the Germans never did. They asked local buyers “What is it you want?”
Q: A little market research? What a concept.
Yes! What do you want? What colors do you want? What features do you want? Traditionally, the Europeans built the car they thought was best, and either you bought it or you didn’t.
For so many years, the Germans laughed at cup holders. It was awful to think a person would care about a cup holder. How did that enhance the way the car drove or its performance?
And now, every one of the Europeans has all kinds of cup holders all over their cars, little things that pop up. They have come to the conclusion that if you are going to sell to Americans, you better sell what Americans want, not what you think Americans want.
And Mercedes has reinvented itself, and now sells high-tech cars at very competitive prices.
Q: How are things changing locally?
The quality of people who work in a car dealership has increased dramatically, primarily because of the cost to do business. To acquire a dealership, to build it and fund it correctly, is a huge financial undertaking. And people who are flakes can no longer survive.
The public, the government and manufacturers demand that car dealerships be run honestly, professionally and profitably. Customer satisfaction requirement has become a large part of the interplay between franchiser and franchisee.
Most manufacturers have programs in place that penalize dealers if customer satisfaction ratings fall below minimum standards.
Q: How are they penalized?
Either they don’t get the hot cars, or with some manufacturers they don’t get the same sort of mark-up potential on the car. Incentives are given to dealers who maintain high customer satisfaction. Cars cost every dealer the same amount. But the manufacturer grants additional funds to dealerships that maintain high customer satisfaction. You’re graded on sales and service.
We get back our results from all our manufacturers each month. This is true with everybody. If you are lagging, they come down and discuss it with you.
Q: Why are you retiring now (in 2000)?
I have to confess that, after 27 years, the fire goes out, or tends to diminish.
At least with me, your body and your mind just tell you it’s time. I’ve been working over 40 years, 15 years in the law business. It’s not as much fun as it was. I used to hop out of bed every morning with a lot of expectation and desire. And I found less desire there. Plus the fact that life has changed a lot.
There’s more government intervention. These may sound like crotchety-old-people comments, but it’s true. Customers are more demanding, which is okay. People are so quick to want more, and if they do not get what they want, they sue you. There are plenty of attorneys who want to get involved. Some people out there are looking to hit the jackpot at the courthouse.
One of the things that took me out of law business was that I came to perceive that people were not seeking justice at the courthouse, they wanted to win.
Q: Why did you stop practicing law?
I always agonized when I knew people lied under oath. The very first case I sat in on, I was flabbergasted that the two major parties told exactly opposite stories. I remember telling my wife that one of the sides lied under oath.
Maybe the oath meant more then. Maybe now people are more willing to compromise their principles to win the big money.
Q: What brought you to car sales?
I often say I left the law practice for the automobile business so I could make an honest living for a change. I did not like the law business. Everybody’s always angry. The opposing parties are mad at one another. The lawyers have to take up their causes. The judges can be hard to get along with. The juries don’t want to be there. Oftentimes witnesses are reluctant. There is a lot of controversy. And I am a happy guy. It was a bummer!
I wanted to do something that’s fun. The most fun purchase you ever make is a car. A house is wonderful, but you can’t drive it around, it doesn’t have horsepower. There’s nothing like the adrenaline pump you get with a car.
You get in it, you rev the engine, it smells good and it’s a pretty color.
The difficulty with management is that you seldom get involved with the sale. Over a lifetime, the problems don’t change, the faces do. When that’s not giving you satisfaction anymore, you figure it’s time to get out.
Q: What will you do now?
What I’ve been doing for the past few years. I come to the office about four days a week. We have to redo our corporate structure, and our ownership agreements with manufacturers.
I’ll stay active in community affairs. I will finish up nine years on the Providence Hospital – Paso del Norte Foundation. I’m active in tort reform, and I’ve always been interested in UTEP. I was vice chair of the Legacy campaign, so when Peter de Wetter died, I assumed the chairmanship to wind it down.
Q: Can you name all the dealerships you’ve had?
The seven we have now are Mercedes, Volkswagen, Volvo, Acura, Infiniti, Toyota and Lexus. Over the years we’ve also had Peugeot, International Harvester, Subaru and Kia. When I got in the business in 1972, a Beetle sold for about $1,995. I actually started on Jan. 3, 1973, and my partner was George Belin. He looked awful the day I walked in. Volkswagen had just raised the price of the Beetle to $2,095.
I said, “That’s not bad.” He said, “We’ll never make it! People will never spend $2,000 on a Beetle!” He thought it was over. He thought we were going to turn this place into a furniture store! Well, I bought him out within six months.