Herb Chambers Expands His Auto Empire As Industry Tanks
SOMERVILLE, Mass. — He is everywhere. If you’re looking to buy a new car, it’s not hard to run into one of his ads — or a Herb Chambers dealership.
While many auto dealers are struggling in this economy — more than 70 have gone out business in Massachusetts in the last two years — Chambers is expanding. He owns 44 franchises, including 32 dealerships in Massachusetts and Rhode Island. He’s building or renovating several more and, in the last year or so, Chambers has gone from the 14th top dealer in the nation to the 12th.
We recently visited Chambers at his corporate headquarters in Somerville, Mass., to talk about his business in this recession.
Chambers’ business is characterized as an “empire,” but he’s modest about that label. “It’s flattering, but I don’t view myself as having an empire.”
“I’m a guy that grew up in Dorchester and went to English High School, and I go to work every single day. We’re not really trying to build an empire.
“And we really had no intention of winding up being the twelfth largest retailer of cars in the country. It’s always been, ‘Just do a great job for today and try and build a future for our company.’ And as a result of that, we wind up where we are today.”
Not bad for a guy who started in the office machine business, sold it, made a fortune and purchased his first car dealership — which was failing at the time — in New London, Conn., 25 years ago.
Now, Chambers sells everything from the least expensive of Chevys at a dealership in Danvers to the most expensive Bentley in Boston. Bentley is his favorite personal automobile, by the way, of the dozen or so cars he owns.
There’s plenty of buzz among Massachusetts auto dealers who are struggling while he’s expanding. “I spoke to somebody about it yesterday,” Chambers says, “and they said, ‘What are you doing?’ And I said, ‘We’re not building these dealerships for today.’ If we were building them for today, we would never build them.
“I have a vision that this business is going to bounce back and we are going to have the facilities in place and the people in place to grow even further and faster.”
Down, but definitely not out
Statistics from 2007 show that at the wholesale level, Chambers’ Massachussetts and Rhode Island sales totaled about 64,000 vehicles. In 2008, however, that number dipped.
“I’m going to say that we wound up being down someplace in the vicinity of around six or seven percent,” Chamber says. “In the first quarter of this year, comparing it to the first quarter of last, we will be down at about 22 percent.”
Despite the down economy, Chambers says those figures are still unacceptable.
“Totally unacceptable. I want to be growing the business, I don’t want to be going down 20 percent. But you can find comfort in that you’re the survivor, you’re doing much better than those around you. But it certainly doesn’t please me.”
On the struggling automakers
While many other dealers are very much focused on the present — at possible bankruptcy filings for General Motors and Chrysler, and at President Obama’s June 1 deadline for the big automakers to overhaul their business plans — Chambers is looking down the road, predicting attrition among the dealers, meaning there will be fewer of them out there.
“It’s a negative, but for our company we view it as a positive because there are many vehicles on the road that require parts and service and those vehicles will wind up coming to us and we’ll service more cars than we’re currently doing,” Chambers says. “And, when the times are tough, we do have brands that other domestic dealers do not have. Three Mercedes dealerships, four Honda, two BMW, Bentley, Rolls Royce, Range Rover — we’ve got all of these things and these are very profitable dealerships.
“Those can carry us through the storm while — people who are focused primarily in domestic dealerships — it’s very, very difficult for them and I don’t know whether they’ll be able to get through it or not. President Obama says bankruptcy may not be the worst thing for two of the giants, Chrysler and GM, and that they might emerge on the other side as leaner with less costly labor and more hungry for new business. Chambers agrees bankruptcy might be what the automakers.
“I hate to hear of any company going bankrupt, however, if they could become more competitive in their cost of building an automobile through labor, that would be a good thing.
“I want to see these companies do great. The products that the American car companies are building today are terrific. They’re terrific.”
The Chambers method
So, what’s made Chambers successful? He’s simply big enough to ride out the turmoil at present and over the years he’s become single-minded about catering to his customers.
The Chambers method: Greeters in the parking lot, greeters at the door and apples for anyone who walks in. Chambers is particularly enthusiastic about the apple idea. “We have apples that we give to every dealership that we have, so that when people come in to pick up their car, there’s an apple there and they can have a snack and all of a sudden you start to feel better.
“It doesn’t reduce the price of the bill, but it does make you start to feel better about it.”
But what’s most interesting is that Chambers addresses customer concerns head on, and puts negative experiences out there for all to see. On his customer-driven Web site, HerbCares.com, customers blog — whatever they want, there are positive comments and others that some dealers might prefer to stay hidden. Here is an excerpt from a customer who lives in Sharon:
My husband and I purchased a 2009 Lexus and signed up for the tire warranty for $495. Subsequently, I changed my mind and called the finance person. He told me I would have the refund back within seven to 10 days. Since then, I have made three phone calls and my husband even visited the dealership. No one has gotten back to us and there has been no check in the mail.
Chambers turns this, and all the other negative comments on the Web site, into positives by forcing his managers to answer every one and solve every problem. That customer followed up with another blog entry, cooing about her treatment.
“How we handle that customer will determine whether they ever come back to see us again,” Chambers says. “What do they say on the golf course? What do they say at work? What do they say to their family at a party? I want to create these memorable experiences.”
Expanding the empire
At his headquarters in Somerville, which is also a Mercedes dealership, Chambers leans against a car in the middle of the showroom floor for a photo. His hands are planted squarely on the hood of a convertible only inches away from a sign that requests hands off — after all, the price tag is $520,860.
And then, minutes later, he’s talking about how he’s constantly urging his staff to keep the dealership windows clean because customers shouldn’t see fingerprints when they walk in the door.
Even though he’s been at it for more than two decades since buying that first lot in New London, he’s far from through. The empire will expand even in this economic downturn. “If there are dealers out there who are saying, ‘My god, he wants to own everything in the greater Boston area, in Massachusetts,’ what would you say to that?”
“They’re probably right. I do. If only if we can grow it at a sensible pace where we take good care of our customers. And we want to continue to do more dealerships, we’ve got a few more dealerships that we’ve got in the queue to buy, and we want to keep expanding.”