So I wanted to open a car dealership. This was 2008, and naturally, many people thought investing in the unloved automotive sector was a dodgy idea, if not financial suicide. And so the unhelpful, and unsolicited, comments rolled in: Had I not read a newspaper or watched CNN in two years? Weren’t thousands of dealerships closing? Had I suffered a head injury?
I am not a Kamikaze car dealer. My family has a long history in the business, enduring tough times of recessions past. And really, all this criticism struck me as a good sign. Armchair quarterbacks, from analysts and economists to columnists and television pundits, had everyone convinced the auto industry was toast. The worst, I figured, must be over. Conventional wisdom, always a reliable lagging indicator, had swept aside reason. It was time to start a new store.
The thing that always appealed to me about small business is the tangibility of it: the hard work, the personal responsibility and hands-on involvement needed for financial success. It is a far cry from the get-rich-quick mentality behind credit-default swaps, securitization and whatever financial Franken-products got us into this jam.
Mark Carney, Bank of Canada governor, is urging the private sector to step up, warning that government spending alone won’t cut it. “While this September brings signs of renewed growth around the globe, the recovery is in its earliest stages and almost entirely driven by public policy,” he said in a recent speech. “Over the medium term, a difficult hand-off from public- to private-led growth must occur.”
Well, Mr. Carney, look beyond the companies on the TSX and you’ll find it’s already happening. Despite the weepy, pessimistic coverage, commerce carries on. Small businesses are borrowing, investing,adjusting to market conditions and even thriving.
But that’s not to say it’s been easy. Over the past two years, most auto manufacturers and dealers could only dream of growth. It was equally challenging for our family businesses, located in southern B.C. The first hurdle was the sudden strength of the Canadian dollar, which sent some consumers into the U.S. Then the stock market buckled. Banks stopped lending, and the real estate market tanked. There was so much negativity swirling about, even well-off car buyers, mortgage free and collecting gold-plated pensions, were freaking out. Next came the restructuring of General Motors and Chrysler. Hundreds of dealers, many solid operators with decades of experience, were cut loose. Watching television or reading the paper was painful. It was the same story over and over: North American automakers were dead.
As bad as it seemed, most dealers went into survival mode and adapted quickly. When new car sales dropped off, dealers focused on used vehicles. They turned to service, parts and collision repair to stay alive. We all cut costs.
In the middle of such turmoil, there’s a natural tendency to hunker down. As a family, we found ourselves, unintentionally, in expansion mode. After years of planning, my brother built a new facility for his Toyota dealership. We moved our expanding collision-repair business from our General Motors dealership into a new building. And my project — renovating a building to house a new Hyundai dealership — was about to start after many months in development. It was not the easiest time for a growth spurt. Our lenders, as supportive as they were, had a lot of questions. We could have caved in to the hyperbole and hysteria, but we believein the car business. We believe in the future of our region. And we wanted to prepare our businesses for the inevitable recovery. Reinvesting was crucial.
Today, we see encouraging signs of a recovering economy. Consumers are shopping again. Banks are lending. These days, the biggest challenge for GM dealers is finding enough inventory. Toyota continues to foster loyalty and strong sales with its well-built cars and trucks. Castlegar Hyundai opened in early September. It is early days, but the doom and gloom — and all those unwelcome comments — are giving way to optimism, common sense and a sense of purpose.
“The truth is, nobody knows where all of this is going, short term,” Kate Warne of Edward Jones said recently when asked about the direction of the S&P/TSX. Amen to that.
The short-term is meaningless. Like other small businesses coming out of this recession, we are focused on our longevity, on helping customers, on staying lean and efficient. We are unafraid of change. We are re-examining everything we do, looking for improvements. This kind of effort, largely unnoticed but multiplied among thousands of small-business owners, will provide the real stimulus this recovery is built on.
Keith Kalawsky is a former journalist, now president and GM of Castlegar Hyundai.
