His best-known customer would have to be Elvis Presley, since David Andrews got his start selling cars at family-owned lots in the shadow of Memphis landmark Graceland.
“Elvis came into my dad’s car lot and bought three Cadillacs. It was pretty cool,” said Andrews, founder of Tennessee-based City Auto.
“(Elvis) gave those Cadillacs away. He said, ‘Here’s your car, and here’s your car and here’s your car.’ He wouldn’t buy a Buick or an Oldsmobile. He wanted his friends, his buddies I guess he was giving them to, to drive Cadillacs. “
Nearly 45 years later, Andrews Motor Company is long gone, and Andrews is at the pinnacle of his career.
‘I’ve had a lot of great help’
He was elected in June as president of the National Independent Automobile Dealers Association.
A trim, gray-haired man who has run every day, rain or shine, for more than 14 years, Andrews sat down for an interview with The Commercial Appeal at his office in East Memphis. He talked about his career and industry but deflected credit for his business success.
“I didn’t do any of this. I had a part in it. If you’re going to be bigger than a lemonade stand, you’ve got to have some help, and I’ve had a lot of great help,” Andrews said.
As association president, Andrews hopes to see some of the regulatory burden lifted from the used car industry, without sacrificing basic consumer safeguards.
Trump’s vow was music to his ears
“The last thing I want to do is for customers to think we don’t want regulations that protect them,” he said. “But if you come buy a used car from us now and pay cash, you’re probably going to sign 30 forms the government has imposed. You sign as many forms as if you were buying a house.”
“When Donald Trump said for every new regulation you get rid of two, that was music to everybody’s ears, whether you’re a hospital or Amazon or who,” he added.
Andrews’ privately held businesses, with corporate offices in Franklin, have annual revenues of $250 million and employ 750.
Five wholesale auction lots broker sales of about 75,000 vehicles a year. Chicago-based Strategic Remarketing Services works with banks, credit unions and others to get used cars ready to sell for top dollar. There also are auto finance and real estate development and home-building subsidiaries.
Best of times for used car sales
Andrews, 65, said the used car business has never been better, as millions of low-mileage, late-model cars enter the market.
“I think the used car business is going to really be good for the next five to 10 years, because you’ve got so many cars coming off lease,” Andrews said.
J.D. Power and Associates has projected the used vehicle supply will reach 14.5 million in 2018, up from 11.9 million in 2015.
While some analysts are concerned a used car glut will tamp down prices commanded by dealers, Andrews likes what he sees.
Used car glut good for buyers
“Anytime you can sell a better product for a lower price, it’s good for the consumer. If anything, it hurts the new car business, because people will buy a used car rather than a new car,” Andrews said.
Andrews believes used car dealers are shedding yesteryear’s “terrible” image.
Consumers became more comfortable buying pre-owned cars during the Great Recession, and the Internet has given consumers more information and forced dealers to price vehicles in a narrower range to stay competitive.
City Auto’s business model was built on the axiom “If you don’t take care of your customer, you’re going to go out of business,” Andrews said. By extension, “I think if you take care of your employee, that they’ll take care of your customer.”
Going digital was a game-changer
Andrews got his start washing cars at his father’s dealership and went into business for himself in 1972. He was an early adopter of the Internet as a selling medium, starting around 1999-2000.
“People told me I was crazy, that I was wasting my time and our money getting on the Internet. I said, ‘This works, guys.’ Immediately, people would come and say ‘I want to see this car,’ and we knew it was working. They’d have a printout of four or five cars they wanted to see,” Andrews said.
With a fixed price, no-haggle policy, City Auto is a localized version of national giant Carmax, while Auto Next competes in the space of lower-priced DriveTime.
Auto Next is recognition that City Auto was missing a key segment: people who couldn’t afford City Auto prices. “If they don’t buy a car, they don’t go buy a bicycle. They go buy a car somewhere else. We spend a lot of money getting them in the door,” Andrews said.
What do millennials want?
In recent years, Internet-only dealer formats have emerged, such as publicly traded Carvana.com, which has a vending machine-style vehicle dispensary in Nashville, and Beepi, which went out of business.
Andrews said dealers must balance Internet convenience with logistics of uniting vehicle and customer. He thinks Carvana’s spending on novelties is excessive, when all consumers really want is a place to complete the transaction and get their vehicle serviced.
Andrew was asked to study what millennials want from car dealers, as part of his work on an advisory board for Wells Fargo.
“What millennials want is the same thing you want and I want, that everyone wants: Transparency; they want one price; they want speed. If I was going to buy a car today, I’d want to buy it as fast as I can get a cup of coffee at Starbucks. I don’t want to spend eight hours looking at cars and negotiating,” Andrews said.
Some millennials are driving vehicles later in life and avoiding car ownership, aided by features of the sharing economy such as Zipcar, Uber and Lyft.
Andrews said he hadn’t noticed an impact from such a lifestyle shift, but it bears watching.
Auction business growing strong
City Auto’s Dealers Auto Auction group operates auctions in Memphis, Murfreesboro, Chattanooga and Huntsville and Mobile, Alabama. It began in 2001 with an auction lot in Horn Lake.
The Memphis auction lot relocated to airport-owned property on Democrat for a five-year term, and Andrews is plotting its next move: to Arlington, contingent on a properly zoned site.
Andrews said the company is looking at three new auction locations as well as new retail lots. The auction lots sell to new and used car dealerships, leasing companies, banks and auto parts suppliers.
Andrews, whose wife Maryanne also works in the business, said they’ve discussed an “exit strategy” but aren’t ready to step away from the business.
‘I like the guy I work for’
“It doesn’t make any sense to quit doing what I love to do to find something I might like to do. So I’m just going to stick with it,” Andrews said.
The possibility of a public offering has been discussed, but “I like the guy I work for,” he said.
Andrews said he admires Enterprise Rent-A-Car, Automotive Resources in New Jersey and Mars Candy because “they didn’t go public. That they take care of their employees.”
Andrews said a successful entrepreneur needs three things.
“You don’t build a great business in a week or a month or a year. I’ve been doing this for 45 years. So I think if I had to advise somebody I’d say you’ve got to have passion, you’ve got to have inspiration and you’ve got to have time.”