SANTA FE, N.M. -- Buddy Espinosa got his start in auto retail in 1991 when he took a job washing cars at a Toyota dealership here. Nearly 30 years later, Espinosa runs that store, Toyota of Santa Fe, where he's now a part owner.
It's been a long journey for a kid who grew up poor and joined the Marines out of high school. And Espinosa took an unusual route to the top. After working that car-washing job, he became a technician at the store, then service adviser, then parts director and on up the ladder on the fixed operations side of the business. He never sold cars until he'd been working at the dealership for well over 10 years.
Success on the sales side put him on a path toward general manager, a position he assumed seven years ago. But things really changed for Espinosa four years ago, when then-owners Mike and Linda Beaver decided to sell. Retail giant AutoNation Inc. submitted a bid on the store, Espinosa said. But in the end, RFJ Auto Partners, a fast-growing dealership group backed by private-equity money and led by auto retail veteran Rick Ford, bought the store from the Beavers. In the process, Espinosa got a chance to buy his own stake in the dealership, which sold 1,700 new and 1,700 used vehicles in 2018.
Q: What was it like to have the dealership folded into RFJ?
A: There was a lot of big change because we were more of a mom and pop shop. [The former owners] lived in Florida, and I ran the store for them. So I had a lot more say in the day-to-day. When RFJ came in, one of the first things they did is, they wanted us to move from Reynolds and Reynolds to CDK — and understandably because the rest of their dealerships were on CDK. But it was like brain damage here because all these people had worked [on the Reynolds dealership management system] for so long. You just basically got rid of 15 years of experience and started fresh. In some cases, they didn't make the transition. I had a title clerk. She did a great job on Reynolds and Reynolds, but she just did not make the transition. Before you know it, she didn't know how to do her job anymore. So there was definitely some growing pains.
You went from washing cars to where you are now. What was key to your success?
That goes back to the Marine Corps. I was pretty gung-ho. I was at the top of the class, and my captain did not allow me to go to [another] unit because he would have lost me. It was [his] selfishness that held me back. So when I became a manager at the store, I decided I would never try to hold anybody back. I want people to be able to come up in the ranks. When you allow somebody to move up, there's always somebody in the wing. Sometimes, they're better than the guy you just [moved] up.
The key to everything in this dealership is people. People always say that, but I truly mean it. Without the people, we are nothing. I try to make sure everybody knows how much I appreciate them. When it's somebody's birthday, I make sure I say, "Happy birthday." We have about 130 employees, and I know every single person's birthday because I have it on my phone. I never miss a birthday.
Is employee turnover an issue?
There's turnover no matter where you go. But in this Toyota dealership, it's not as bad. I have probably six or seven positions in sales that do revolve. But I've got salespeople that have been here well over 15 years — which can be a two-sided problem. It can be an issue when you have so much longevity all over the dealership. Because you start to increase people's pay. I like the problem I have. But it can be a problem.
Is it difficult finding talent? Do you want more young people?
You have a lot of young people in the industry now. I woke up one day and realized half the staff was millennials. The one thing you can do to attract great talent is to take care of the talent you have. So we pay stronger wages than anybody else in our market. They come to you, so you don't have to be searching.
How do you approach the technician shortage?
That's going be a major problem in our industry. They're claiming that in 10 years, we'll have a huge deficit. You have to be growing your own technicians. We bring somebody in like myself, washing cars. If they're doing a nice job, you can move them to a [pre-delivery inspection] technician or a lube technician. If they show an aptitude, help them to get into the technical schools. In two years, you've got a pretty strong technician. Some of the very best technicians come through those programs.
Is being part of a big group key to a dealership's longevity? Will mom and pop shops exist in the next five to 10 years?
Yes. Mom and pop stores will still exist. But [bigger groups] bring a lot more structure to the whole situation. I don't think that's a bad thing. It's been really good for my development to have worked on both sides. [With] a corporate situation, when you start shopping for systems, they can leverage their size, and that can help an awful lot.
Were there big changes beyond the DMS switch once the store was folded into RFJ?
As we got to be more structured, more changes took place. I tried to keep the store feeling like a mom and pop shop. Most of my staff doesn't see anybody from corporate very often. Everybody feels like they can go to Buddy for anything. I have an open-door policy. Everybody knows my cellphone number. I answer, day or night. Sometimes, it's not fun. I was dealing with a problem Sunday morning at 7 o'clock, from a customer. But that's a general manager's job. We try to solve the problems as best we can from all different directions.
How are dealer-automaker relations generally? And how are they with you and Toyota?
I've never worked for any dealership except Toyota. So I'd hate to speak for other manufacturers. Everything I read, I see some issues with stair-stepping. And I see a partnership that might be a little bit more one-sided in a lot of cases. However, that's not how I feel with Toyota. I've got true partners. I've never been on [a stair-step program]. That's a very dangerous situation. I don't think it's sustainable. Yet they continue to do it, and some dealerships buy into it. But as floorplan interest rates continue to rise, dealerships that have been on stair-step programs so deep are going to have to say enough is enough and get their inventories healthy so it can be sustainable.
What is your outlook for the U.S. industry this year?
We are living in great times. I know that they're saying, 'Well we're starting to go down, and it's [going to be a] 16.8 million SAAR.' I personally, fully believe I can beat last year's numbers this year.
Are you preparing for a potential downturn?
You always have to be preparing. In Toyota, we are very lucky. We run about a 45-day supply of new vehicles, which is very tight. But we're always tightening up. Our used cars — we're very strict about when they have to go away. We're always trying to do expense reduction.
What is the health of the franchise system?
Recently, I've been going to the [state] Capitol because Tesla is trying to come into our market. (Proposed legislation would change New Mexico law to allow Tesla to sell direct.) We welcome Tesla or any company. We just want them to follow our laws. We don't think it's healthy for Tesla to be able to come in, change the laws and have a manufacturer just go ahead and start selling cars.
And it's not about Tesla. Tesla is [a tiny fraction] of registered vehicles in New Mexico. It's more about all the manufacturers that could come after the fact, let's say Chinese manufacturers, any manufacturer, that can come in, set up shop, not go through the franchise system and not have a mechanism to service the vehicles they're selling. That's where it's dangerous — for the consumer. I truly believe in the franchise system. I don't think it's going anywhere.
How are Toyota's products? Are you getting enough crossovers?
Akio Toyoda has really changed what Toyota is like. We used to be so, so conservative, and he's bringing back the excitement. He truly listens to the dealers. We keep asking for more all-wheel-drives, and they're hearing us. The outlook is strong.
What is the biggest threat to dealers today?
I worry about tariffs. I don't know where Donald Trump is going to go with that. But it has the potential to disrupt our market greatly. I don't know exactly how you hedge against it. It'll just be a tax to consumers. If we charge more for cars, we're going to pass that on. It's a major disrupter if it goes that route.
What big opportunities do you see for dealers right now?
We all need to be heavily involved in used cars. I'd even separate used cars and certified vehicles. Certified is an opportunity to have one more profit center, if you're not already separating it. Having the right used-car manager, which I feel I do, makes all the difference in the world.
What's the biggest lesson you've learned in your career?
If you take care of people, they will take care of your customers. And if they're taking care of customers, everything is a positive. You truly have to care, and you can't fake it. People know when you're faking it. Nobody wants to work for that person.
I see a photo of you and Toyota President Akio Toyoda. What is he like?
He is fun. In the little bit of time I spent with him, he made me laugh. He gave me a sticker that said, "We can do it." It was him with his hair just kind of standing up. When I got to go to Plano, Texas, and see the new headquarters, I actually went to his office and left him a note on his desk. I was surprised he answered. He sent me a letter. He's that man that everybody wants to work for — make things happen.