Once a gas station, the Chevrolet dealership in upstate New York was in terrible shape. Grass stuck out from the gravel parking lot, and body shop employees worked in an aluminum Quonset hut with dirt floors.
Jane Fox, who at 29 had just become one of the youngest female General Motors dealer principals in the Northeast, surveyed the scene with excitement. “It wasn’t pretty,” she recalled.
In 1976, when Fox purchased it for a pittance, the store sold just 100 Chevys a year. By 1981, when she and brother Bill Fox moved the dealership to Auburn, it was selling 2,000 new and used vehicles a year.
That Chevy store was the first of 13 dealerships owned by Jane and Bill, her longtime business partner who was chairman of the National Automobile Dealers Association in 2015. On Feb. 1, the siblings’ 45-year business partnership drew closer to an end when they sold three of their four remaining dealerships to dealer and investor Jonathan Sobel.
They plan to sell their remaining store to a longtime employee.
Helping that next generation of dealers get started has been important to the Fox siblings, who don’t have children entering the business. But passing the torch proved more difficult than they expected as dealership valuations grew, making it tough for newcomers without deep pockets. In trying to transfer ownership of some of their remaining stores to two employees, the pair realized they needed to invest their own money to make it work.
“No matter how much their salary is, it’s almost impossible for [newcomers] to get the financing they need to be able to buy four smaller dealerships — in upstate New York, even,” Bill Fox told Automotive News.
So the siblings sold three stores to Sobel. Fox declined to share their price.
Bob May, one longtime Fox employee who’d been pursuing store ownership, decided to stay on as Sobel’s platform manager. Another longtime employee, Mike Carrow, plans to buy the remaining store.
It was much different in the 1970s when the Foxes got started and many automakers were expanding their dealer networks. Newcomers were plentiful in auto retailing and had few of the challenges contemporary dealers face, said Alan Haig, president of Haig Partners, a buy-sell advisory firm in Fort Lauderdale, Fla., that represented the Foxes in the sale.
While dealerships’ steady appreciation over the past 25 years helped owners such as the Foxes build wealth, it becomes a double-edged sword when longtime dealers want to sell to veteran employees. Selling to a general manager, for instance, had once been a time-honored way to exit the business while taking care of employees and giving a leg up to a loyal manager.
But nowadays, general managers typically don’t have the money needed to cover the cost of land and property, furniture, fixtures, equipment, used vehicle, parts and the blue sky premium buyers pay to cover a dealership’s intangible value — not to mention the cash required to run a store. Haig estimates the average price tag on the sale of a single dealership is now about $20 million. To be approved, the buyer needs at least $5 million in cash on hand, he added.
Breaking into the business was simpler for the Foxes, who needed upfront capital of just $55,000 to purchase their first dealership.
Opportunity called in 1976, when Jane was working at her father’s wholesale lot in Auburn, N.Y. She answered the phone, as her father had left for the day to sell vehicles at a nearby Manheim auction. On the line was the owner of the Chevrolet store in neighboring Weedsport, looking to sell a Blazer. He agreed to drive the vehicle to their lot. As Jane drove the dealer back to his store, she asked whether he would consider selling the place.
“He said, ‘I’ve talked to your father about it a lot, but he doesn’t want it,’ ” Jane recalled. “I said, ‘Well, maybe we do.’ ”
She and Bill pooled their money and bought the store. “We were broke. GM’s mindset was, we don’t have much to lose. We got a guy not doing any business, and they’re young,” Bill said. “They took a chance, and it worked.”
In 1979, Bill left his law practice and purchased a Cadillac dealership in Auburn. The siblings expanded into surrounding cities, picking up Toyota, Subaru, Oldsmobile, Ford and Honda stores. The Foxes never ran more than nine stores at once. They shuffled dealerships like trading cards, picking up and dropping brands, selling then consolidating.
As Fox Dealerships Inc. grew, Bill and Jane Fox became involved in state and national franchised dealer associations. Jane in 1991 became the first woman to lead the New York State Automobile Dealers Association. Bill in 2006 joined NADA’s board, became chairman in 2015 and stepped down from the board last month at age 79.
In the 1980s, Jane participated in Project 2000, an NADA committee charged with predicting how auto retailing would change in the next 20 years. “I wanted to be proud of the automobile business,” said Jane, now 75. “I’ve worked for 50 years to try and make the public see that we are really a tremendous group of people who give back so much to our community, to our state and to our country.”
The siblings’ final store, Sharon Chevrolet in Liverpool, N.Y., will gradually be purchased by Carrow, 55, who has worked for the family since 1984. Without their help, owning his own store would be impossible, he said.
“The capital requirements are too great today to be able to get in without starting at a partnership level,” said Carrow, who calls the Fox siblings “family.”
Carrow had been sales manager for five Fox dealerships since 2006. In 2014, he bought into the Foxes’ real estate company that owns the land on which the dealerships sit. Pending automaker approval, Carrow intends to purchase a 25 percent stake in Sharon Chevrolet and gradually buy more of the dealership over several years.
Investors such as Sobel have an advantage over individual first-time owners, Haig said.
Lenders are more willing to extend credit to private equity firms and high-net-worth individuals, particularly when they partner with seasoned dealers. Family offices — firms set up to invest the money of wealthy families — are among the fastest growing.
“There’s an overlap here between family-office investing and family-owned businesses not being able to remain in the family,” Haig said. “What’s their exit? Well, it’s to another family, in a way.”
Carrow is the third employee whose path to ownership has been underwritten by the Fox siblings. In the 1990s, they purchased stores in concert with employees Glenn Fletcher and Bill Baird. The employees had to invest at minimum enough to acquire 20 percent of the store and worked to buy out the Foxes over the next five to 10 years, Bill said.
Helping first-time dealers get a start in their community is another way the siblings are giving back to the profession. “We backed those that didn’t have the money to do it, but had the wherewithal to do it,” Jane said. “We feel secure in passing this torch, and it’s just time we do it.”