Size matters Featured
Ray Marano 10:53am EDT March 28, 2002
A middle-aged couple enters the showroom at #1 Cochran in Monroeville and asks the receptionist if the dealership sells Nissans. No, the receptionist replies politely, but suggests there may be some Nissan products on the used vehicle lot and mentions some of the makes the dealer does represent.It's an easy mistake to make. #1 Cochran sells 11 brands of vehicles at two locations, and like at a few other megadealers in town, offers a dizzying roster of domestic and import brands. The couple takes a stroll through the cavernous indoor showroom, then leaves the building a short time later.The couple didn't know if the make of car that was top-of-mind with them could be found at the dealership, but there's a good chance that #1 Cochran's brand recognition was strong enough in their minds that they thought it at least worth the inquiry.That's the kind of brand awareness #1 Cochran has built over the past 15 years. Rob Cochran, the company's president and son of its late founder, thinks there remains a lot more mileage to be derived from the name."The way I look at it, in this region, we have an opportunity to leverage our name and our brand equity more," says Cochran.Cochran and his team are planning to maximize that opportunity by building new showroom facilities to house #1 Cochran's multiple brands just a stone's throw east of its current location, near the busy intersection of William Penn Highway and Mosside Boulevard in Monroeville. As serviceable as its current location -- a former Kaufmann's department store -- has been, Cochran sees the dealership of the future in a larger complex more customized to its needs and shaped to create an image customers will associate more readily with its name -- and that can be duplicated in other facilities.If plans go as Cochran expects -- and there's little reason to believe they won't, given Monroeville's hospitable disposition toward commercial development -- his company will be selling and servicing cars out of buildings on both sides of heavily traveled William Penn Highway by the middle of next year. The Kaufmann's location has been secured by Lowe's, which plans to build a 122,000-square-foot store on the parcel.Size brings complexity but also advantages. Cochran points out that his company has a human resources staff, an asset that makes training, development and recruitment more effective. The auto industry is laboring under a shortage of skilled technicians as more skill is required to diagnose and repair automobile systems. Automotive Retailing Today, an industry group comprising major automobile manufacturers and dealer organizations, estimates 35,000 new trained technicians and tens of thousands of additional sales, finance and other personnel will be needed to staff dealerships this decade alone.Cochran spends a lot of his time these days smoothing out the details in preparation for the new location. There are permit issues, compliance matters to satisfy manufacturers and, from time to time, other opportunities that spring up as the process moves ahead."The more that you do, the more opportunities are created. It's kind of an exponential thing," says Cochran. "That can be administratively burdensome; it's exciting, it just takes a lot of time."A built-to-suit facility will be a first for the company."It'll be our first opportunity to build from the ground up," says Cochran.Before moving to the former Kaufmann's store, the dealership had made its home in a former Kelly & Cohen appliance store in Monroeville since the late 1960s. In 1965, Cochran's father put up a Pontiac shingle in a North Braddock storefront when that brand was catching fire and mounting a serious challenge to its General Motors cousin, Chevrolet, for first place honors as the sales leader.Today, #1 Cochran employs 390 and posts annual sales of about $250 million.The auto retailing business has changed substantially since Cochran's father started selling Bonnevilles and GTOs. The rise in the number of imports has altered the market balance; Honda, Toyota, Nissan and Subaru all have manufacturing operations in the United States.Ownership patterns have changed; Ford owns Volvo, Jaguar and a chunk of Mazda. The Big Three are now the Big Two, with the third member of the mighty domestic triumvirate that once dominated the U.S. market, Chrysler, now in the hands of German giant DaimlerChrysler AG.Other changes in the industry are some of the reasons Cochran decided, against early predispositions to the contrary, to stay in a business he says he never much cared for when he was younger. Big dealers are swallowing up smaller ones, and in some cases, publicly held companies doing business in multiple markets own large numbers of dealerships and franchises."I didn't want to do this to save my life," Cochran says.His father, driven to succeed and consumed by the business of selling cars, wasn't around much when Rob was growing up."He was the greatest salesperson I've ever seen," says Cochran of his father. "He was always selling."Nonetheless, Cochran wasn't thrilled with the industry's image. And he liked mathematics, enough to major in applied mathematics and industrial management at Carnegie Mellon University in the 1980s. He found that he also liked the management and leadership classes he took there.Later, Cochran went to work at the dealership summers while he was in college and discovered he liked selling cars. Just about that time, his father was building a multibrand strategy for the dealership. He acquired a Cadillac franchise to complement the Pontiac and GMC truck lines and swung a deal to move into the Kaufmann's store after the department store operator moved into Monroeville Mall.Shortly after the move, the company's vice president, Cochran's father's right-hand man, retired and Cochran's father became ill.Things were happening quickly, and by this time, Cochran had changed his mind about the business."It all kind of just fell on me, and it was exciting, it was a growth experience that made me better, just to get my hands around everything at that point," says Cochran.And he realized the business was changing in fundamental ways."I understood the opportunities that existed in our business and the industry," says Cochran.Auto manufacturers were loosening their restrictions on multibrand dealers, allowing retailers to represent additional nameplates. In Cochran's case, the dealership now has Pontiac, Buick, Cadillac, GMC and Oldsmobile and Saturn franchises, all General Motors brands. As Japanese companies like Toyota, Honda and Nissan have moved into the mainstream, upstarts from Korea and elsewhere are trying to squeeze in and grab a share of the market.The newcomers give dealers an opportunity to buy into a brand early with little investment because manufacturers are eager to get their nameplates into the showrooms of dealers with brand equity of their own."It's really no different than what's happened in other retail industries," says Cochran, citing examples like appliance and electronics chains that sell a wide variety of brands under a single roof."In a lot of cases, our business is like portfolio management, getting brands when they're low and riding them high," says Cochran.He throws out Hyundai as an example. While the Korean automaker has been in the U.S. market since 1989, #1 Cochran picked up the line when a reshuffling of brand ownership in Monroeville four years ago left it orphaned. With a modest investment in space and inventory, #1 Cochran has leveraged its name to make the Hyundai franchise pay off."Now we've got a franchise that has a pretty significant value," says Cochran.That kind of strategy can apply to other brands as well."If we do a good job under the Cochran name selling Pontiacs, GMCs, then we can take what's been built up under the reputation, under the Cochran name and apply it to Hyundai and get an immediate advantage over most of the competition selling Hyundais," says Cochran.#1 Cochran has Korean maker Daewoo in its stable as well, a brand that's a bit speculative to hold onto. Daewoo hasn't done well in the United States and GM is currently in due diligence in anticipation of a purchase of Daewoo. GM's ultimate disposition of Daewoo will depend on its own global strategy, Cochran says.If it decides to put some money and muscle behind a U.S. marketing effort, it could turn out to be a bonus for U.S. dealers, and Cochran says it could be a bonus for his company. On the other hand, GM could decide to pull the brand out of the U.S. market and target it for developing nations' markets.On the other end of the spectrum, #1 Cochran has the only Infiniti dealership in the area, and it retains the blue chip Cadillac franchise. And the Saturn brand gives it a make that usually ends up being a plus sale for GM, sold to a customer who might have had an interest in a Honda or Nissan, for instance.The new car business remains "the engine that drives the business," Cochran says, but the trick to success in his industry, he maintains, is to not be overly dependent on new car sales.Besides the new car lines, there are other holdings in the portfolio that can be managed for profitability in changing economic conditions. Used car sales generally improve as the economy slows, as do parts and service, and used cars produce more profit for new car dealers as well.#1 Cochran maintains a busy service and parts department and a high volume body shop that does work on all makes of cars. The company has its own upholstery trim and repair shop, a function most other dealers farm out to vendors. It also installs burglar alarms, auto sound systems and remote starters."Not passionate about cars" A woman with three pre-teens circles the #1 Cochran showroom. She herds the kids back to the reception desk and asks about a model that caught her eye on the floor. The receptionist summons a salesperson and introduces him to the woman."I'm interested in the Envoy," the woman tells the salesman, adding that she's "just started looking." Not surprisingly, she's seems to be in the market for a vehicle in the popular sport-utility category. Lots of consumers, it seems, still have a love affair with the automobile, an affection and infatuation with one of the most magnetic symbols of status in our culture, a predilection that sustains the industry in which Cochran and so many others build a business and earn a living.Cochran, oddly enough, isn't taken with cars. More than cars, he's hooked on the car business.Says Cochran: "It's not the cars that excite me; I'm not really passionate about cars. I'm passionate about building our brand and building our relationships with people, being credible and being competent, trustworthy, and being a good community partner."And, perhaps, being No. 1.