The Hawthorne-based company, better known as LAcarGuy, has leaned on its extensive knowledge to help mitigate the impact of the pandemic on its business.
LAcarGuy reported $837 million in revenue for 2020, a decrease of almost 20% from 2019, according to Business Journal estimates. It ranks No. 30 on this year’s list of the largest privately owned companies in Los Angeles County.
The decline, which illustrates the volatility faced by many local businesses over the past 18 months, could have been even steeper without seasoned leadership from the LAcarGuy team.
Chief Executive Mike Sullivan said the company pivoted to digital sales and home deliveries in the early days of the pandemic, when LAcarGuy was deemed an essential business and allowed to operate at 25% staffing capacity.
“We really did get good at that,” Sullivan said of the company’s shift to alternate sales platforms. “We did 350 (car sales) one month out of all the stores, and we really thought we were onto something.”
LAcarGuy operates 13 dealerships in locations including Santa Monica, Hollywood, Torrance, Lancaster and Hawthorne. The company sells vehicles from Honda, Audi, Lexus, Porsche, Subaru, Toyota, Genesis and Volkswagen.
Sullivan’s father, Wilfred, started the business in 1964, selling Volkswagens in Santa Monica. He brought his son aboard in 1976.
While the past year and a half — featuring Covid-19 closures, social justice protests and a worldwide microchip shortage — was unlike anything Sullivan had encountered, that doesn’t mean he wasn’t able to adjust.
“Forty-five years was never predictable,” Sullivan said. “The car business has always had these fluctuations. So, if you couldn’t stomach that, you wouldn’t be doing it for this kind of time.”
Last year’s social justice demonstrations took a toll at LAcarGuy’s Toyota dealership in Santa Monica. In addition to business interruptions, the dealership had 23 cars stolen and saw $400,000 in damage to its showroom.
An interruption in the global supply chain for microchips caused by Covid shutdowns, along with a March fire and an earthquake that affected one of the world’s major suppliers in Japan, forced Sullivan to shift his team’s focus to pre-owned vehicles. The move was designed to shore up dwindling stock on his lots and alleviate the need for new cars to sell.
After drawing down his initial surplus of vehicles from the early days of the pandemic, Sullivan elected to increase used car payouts to attract new customers and offset rising new car costs. “If their car is worth $4,000, we pay $5,000,” he said. “We’ve learned how to nullify that slightly inflating new car price with a slightly inflating used car price, and consumers are not confused.”
Sales at Sullivan’s Santa Monica dealerships lingered at around 55%-60% of previous levels until March, when the city fully reopened. And now he’s bracing for further supply delays as the microchip shortage gets slowly resolved.
Despite 2020 losses that he claims were in the millions of dollars, Sullivan has restored his work force to 665 employees, about two-thirds of the company’s pre-pandemic numbers.
And he and plans to open a 14th dealership soon. “We’re getting ready for the electric changeover, which is going to be a very real transition,” Sullivan said. “Profits are good right now, and that’s because margins are up because product is down. We’re a very much a supply-demand business. My focus is holding market share.”
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