Upon entering the Hankey Group’s offices, you quickly realize glasses that filter blue light are essential.
Six large screens greet visitors in the Hankey Group lobby, each updating in real time auto loan deals taking place throughout the country. When giving a tour, the chairman overseeing all seven of his companies housed in the room can tell you exactly what each datapoint means.
The 80-year-old Don Hankey displays his command when narrating the data feed, explaining to observers what each line means, be it a dealership’s loan application in some far-off place or details on a particular car. He is orchestrating his lending empire built on numbers.
Hankey, with a net worth of $9 billion and a longtime member of the Wealthiest Angelenos list – he’s tied for No. 6 on this year’s list – stands as a testament to how meticulous strategy in statistics can garner outsized returns, even as his main business places bets on subprime customers, the kind many in the financial world deem too risky. Hankey is the founder of Westlake Financial Services Inc., the largest lender for independent car dealers in the United States and the biggest of the seven related companies he runs.
He has an eye for detail that borders on obsessive when it comes to returns, a trait that has been pivotal in navigating the ebb and flow of the auto financing and real estate sectors, industries in which the Hankey Group has left an indelible mark.
One of a number of octogenarians reluctant to relinquish control over enterprises, Hankey has yet to formally name a successor. His unwavering commitment is showcased by the time stamps on his day’s first emails he sends – usually in the 6 a.m. hour.
His days typically commence before the sun rises. He climbs into his chauffeured silver Maybach at 5 a.m. to ride from Malibu to his Mid-Wilshire office, analyzing troves of reports and meticulously picking apart potential loan outcomes as the car moves along.
Early data mastery
The precise, data-driven mindset that steered his conglomerate to a $24 billion group of businesses can be traced to Hankey’s upbringing in the Los Feliz hills.
As a teenager, Hankey began playing poker, an afterschool activity his father feared would lead to a gambling addiction. To prove it wasn’t a waste of time, Hankey showed his father an itemized breakdown of every game he’d participated in.
“I thought nothing of it,” Hankey said. “He was so impressed that I actually kept track of it. I didn’t understand at the time. I didn’t understand why I kept track of the numbers. And now I look back on it, it’s the same thing I tell people. You keep the information every month on what you do, see what, how you’re trending, and try to improve on your numbers.”
In 1958, a young Hankey saw his father acquire a quarter stake in the Midway Ford dealership on Vermont Avenue. It wasn’t long before Hankey himself was baptized into the business, working summers washing cars, before graduating to a salesman role that he perceived not as a promotion but as a learning curve.
“In retrospect, I learned a lot,” he said.
On the scorching asphalt at the dealership, Hankey mastered the art of the hustle. In his first summer on the job, Hankey was named “salesman of the month,” a title he said he earned by courting customers the other salesmen would snicker at – the kind of credit-challenged, subprime borrowers who would later make him a billionaire.
During the time Hankey briefly left the auto world to attend USC as a finance major, his father died and his family lost its stake in Midway Ford.
After graduating in 1965 and jumping into investment banking, his family took on a $250,000 loan to buy back the Koreatown Midway Ford dealership, which had fallen into a negative net worth. Coming back in 1972, Hankey believed his burgeoning professional confidence could right a business that had withered to a less-than-lucrative enterprise.
“When I first went in, we were breaking even,” he said.
Hankey instituted employee-retention tactics amid a tough market to keep high-quality mechanics in the shop. Launching a profit-sharing fund, Hankey blurred the lines between employer and employee. He managed the fund’s portfolio himself, a risky tactic: his employees could sue if investments were lost.
The venture paid off: employees garnered significant gains, and Midway Ford retained a crew that put the dealership back in the black.
“Our returns (for the profit-sharing fund) were pretty exceptional,” Hankey said. “Looking back, I think we averaged 25% a year, and in retrospect I think I gambled a little bit more than I should have. But I was young and didn’t know.”
By 1975, Hankey’s family had paid back its initial loan, changing the dealership to a profit center as Koreatown grew and prospered with a growing number of immigrants starting businesses and settling in the area.
Hankey ultimately stopped working out of Midway in 1988 when he decided to buy North Hollywood Toyota. After decades of slowing income, Hankey closed the Midway store about a decade ago.
Origins of subprime
Hankey saw opportunity in the credit-challenged customers other dealerships turned away. Risking its own money, Midway Ford began carrying its own paper to service the steady stream of people with subpar credit histories. As a result, the dealership became the prime conduit for subprime auto loans in Los Angeles.
Because of his deals’ high interest rates and tight loan terms, the showroom floor was often packed with customers squabbling over what they believed were less-than-ideal terms. It was amid the cacophony of contentious discussions and high-stakes negotiations that Hankey truly shone. Working behind a desk marked off by a red chain to keep the most heated customers at bay, Hankey orchestrated a delicate dance of sales and settlements.
As people shouted over car repossessions and lost collection checks, Hankey’s sale reps tried to sway other customers to buy new Fords in the same room.
“We had beefs going on, and at the same time people coming in, buying cars,” Hankey said. “But it all worked. And you would think that somebody buying a car would hate to see somebody else arguing about a payment, but it didn’t seem to matter.”
The 1980s marked a pivotal shift, as Hankey expanded his enterprise beyond the confines of the dealership. He realized the demand for subprime auto loans went beyond Los Angeles, and he incorporated Westlake Financial Services so his salesmen could begin contracting with dealerships across the country.
Hankey began using Lotus Software to formulize deals on spreadsheets, reducing errors and cutting calculation times.
While growing Westlake’s lending reach, Hankey kept his feet on the ground at the dealership, buying the land under Midway Ford and the surrounding Koreatown area for $8 per square foot. By 1982, his properties were worth $30 per square foot – jumping in value as signs designating Koreatown as an official neighborhood were installed along the I-10 Freeway.
Putting his business roots down in Koreatown paid off for Hankey beyond real estate value. Connections to immigrant Korean businessmen led to an investment in a technology company that proved lucrative outside of the typical business sense.
After the company failed to make a profit and Hankey pulled support, the tech provider dissolved but left behind its servers and hardware. Hankey plugged his company into this tech.
It became Nowcom, incorporated in 1996 to build out data systems tracking the growing number of dealership partners under Hankey’s purview. This capability grew his companies’ subprime customer base from 1,200 in the 1990s to 1.5 million today.
Data advantage
In Hankey’s office, Nowcom feeds running on two giant screens completely fill the wall opposite his desk. He can call up information about any car or customer involved with his auto loan, rental car, or dealership subsidiaries.
With a cadre of more than 600 information technology engineers, the Hankey Group \brings customer profiling to a different level.
“It just comes down to technical and trust through data,” said Ian Anderson, president of Westlake Financial Services.
Since joining Westlake in 2005, Anderson has worked with Hankey to incorporate and integrate new financing services, including consumer credit, leasing programs with credit unions and real estate and credit loans to dealers.
Technically, Westlake Financial merged into Nowcom in 2021 to create Nowlake, but they operate separately under their old names. Today, the combined entity has $17 billion assets under management, overseeing subprime loans, financing for dealerships’ inventory or their real estate, and financing to lenders such as credit unions that make loans to customers.
“We don’t want to have all our eggs in one basket,” Anderson said. “Using our infrastructure as well as our balance sheet to jump into other asset classes has been key.”
To help with the risk involved in servicing customers with subpar credit histories, Hankey spends $1.1 million a month on third-party software.
The company’s strategies have resulted in high returns, selling interest rates at more than double the average for used car loans.
Not slowing down
Westlake not only weathered the pandemic – it thrived. Stimulus checks allowed consumers leeway to pay off their loans, and with higher interest rates Westlake ventured into other kinds of consumer lending, including elective medical procedures and jewelry financing. In Hankey’s eyes, the average consumer is living beyond their income’s limits, and he’s willing to test new markets.
“If it works well and we gain market share, then we’ll get more involved,” Hankey said.
The 80-year-old doesn’t show any signs of slowing down. His days are a whirlwind of activity, interspersed with moments when he is hunched over two spreadsheet-filled monitors to management meetings with his seven company presidents.
Two of his children, Brett and Patricia, hold senior leadership positions in the conglomerate. Most of those in his inner circle have been with Hankey for decades, and he’s very selective about whom he trusts.
“One of the mistakes I made when I first got out of college and went into business is I would sit down and look somebody in the eye and think I could determine if they were honest or not,” Hankey said. “I got burned several times.”
Now facing questions about his age and when he wants to retire, Hankey acknowledges there will come a time when his oversight becomes more a burden than an asset to his own empire.
The company announced in July it had begun venturing into artificial intelligence with Visorbot, a machine-learning loan-underwriting tool. By computing 800,000 applications per day, Nowlake claims this engine can grow its portfolio by billions of dollars, confident that the technology can safely weigh risk.
Hankey says he remains on top of tech trends, including AI, but says his younger executives can steer the ship upon his departure.
For now, he’s happy with the occasional getaway on his yacht, which he catches up to by plane as it floats around the world. But mostly, he works from his corner office on Wilshire Boulevard. It’s here, Hankey says, that he feels not only safe, but seen.
“I’m just a little schmuck like everybody else when I take a trip or go to a restaurant or someplace else,” Hankey said. “Here, I am treated with respect.”
