Larry H. Miller
Interview by Michael Roscoe
Larry Miller is at the head of a business empire which includes the NBA's Utah Jazz, the WNBA's Utah Starzz, the Delta Center, a large chain of sports apparel stores, real estate developement, a finance company, a TV station and of course, automobile dealerships. Not bad for a guy who didn't really think of himself as an entrepreneur. In this interview, Larry shared with me how he got where he is today and also, where he's going.
Tell me, Larry, how did you get into the retail automobile business?
By accident, actually. I came in through the parts side of the business. Peck & Shaw Fine Cars had a strong need for a parts manager. They had a one-man parts department and had caught their parts manager stealing. They fired him and went looking in desperation for a replacement. They made some calls to local transmission shops and garages and such and asked for referrals for a parts man. My name was the first one to come up twice, so they interviewed me two or three times and decided to hire me. That was in 1968, I was 24 years old, working at a parts counter.
I have met a lot of dealers who have become dealers through unusual career paths, but I have never met one who came through the parts department.
I don't think that there are many. I'm not sure that I have met one either. I stayed in that position for a couple of years then I moved to Colorado in 1970. I went to work for a small dealership group which owned a Chevrolet store and a Toyota store. I went to work at the Toyota store. It was an opportunity with remarkable growth potential. I had a dealer who said, "I don't know about parts, that is why I am hiring you. I am going to hand you the ball and let you run with it as long as you keep running. If you start to fall we will talk about it." At that time he had a $23,900 inventory and his average monthly sales were $6,000. Remember, it was a one-man operation at the time. He turned me loose and within 30 months we became the No. 1 Toyota parts department in the nation.
Number one in 30 months?
That was the goal that I had from day one. We grew from just under $24,000 in inventory to something a little north of $400,000 in 30 months. Our receivables were somewhere around 60% of that number. All of a sudden, the dealer had a $700,000 investment in his parts department. Most dealers couldn't or wouldn't let a young upstart parts manager grow that big that fast. He gave me a great opportunity, which led to a lot of exposure in the business.
To what do you attribute that explosive growth in your parts department? What was it that you did to make it happen?
Well, first of all let me tell you, as I started out I did not really think of myself as an entrepreneur...
You probably didn't even know what the word meant at the time...
Let alone how to spell it. Chuck Stevinson was the Toyota dealer, but he had a minority partner named Gene Osborn. Gene was the guy who hired me and Gene was the one who said to me, "I'm going to hand you the ball and let you run with it." He was the general manager of that dealership and a minority interest owner. So if I had a mentor in this business, it was Gene. Gene spent a lot of time with me and taught me about people management. I realized when I got in there that, first of all, we were the furthest metro area away from a Toyota parts dealer in the country. With the inventory turn rates that we were able to achieve, I knew we could justify a much bigger inventory. We started selling into other areas...mostly east of us, some south. They didn't have access to a Toyota parts dealer. They were independently owned distributorships at the time. Their fill rates were often in the 60% range. I was in the low-to-mid 90s. I was actually able to supply not only garages and collision repair centers with parts, but also a lot of other Toyota dealers. Even though the margin was low, it was the old, "make it up in volume" scenario. We actually got to the point where we were supplying a number of dealers in the Midwest with their stock orders.
As successful as you were, you could have had a nice career as a $100,000 a year parts manager. What was it that made you want to move on?
I had never really had any great desire to go into business for myself. Gene and Chuck acquired three more dealerships, so they had a total of five. For the first four-and-a-half years, I worked as parts manager in the flagship store, the Toyota dealership in Lakewood, Colorado. Then I became General Manager of that same dealership, which was kind of unusual in that I had never sold cars. Gene Osborn was moving from the capacity of General Manager of that dealership to Operations Manager over the five dealerships, so he tapped me to take his place. Actually a year earlier he had come to me and said, "Look, we are going to be making this move with me moving up in the group and I would like to prepare you to become General Manager of this store." For about a year Gene began reviewing with me how a financial statement looked and worked, management of people, conducting sales meetings, personnel reviews and those kinds of things. January 1, 1976, was when the transition was supposed to occur. He was going to keep me in his hip pocket for 30 days and then move onto his new job. I didn't see it at the time, I was too naive, but on December 15th, which was 16 days early, he called me and said, "I've got to go up to the other store, where my new office is going to be. I need you to come to my office." Now here I am in my powder blue parts shirt with my pocket protector, my Levis and my black canvas Chuck Taylor Converse All-Stars, sitting behind the desk in the General Manager's office at Stevinson Toyota. Gene said, "I need you to answer my phones, open my mail and I will be at this number if you need me. Call me any time." He then left the store...for good. I just jumped in. I think it dramatically accelerated my learning curve. It also got me into a situation where, come springtime, in 60 days or so, I was an effective General Manager. It was proven by the performance on the financial statement. Plus Gene was very accessible by phone. The first week, I needed him a lot. The next week, a little less and so on. Within about a month, I was able to do most things myself.
Genius! What was it like when you had salespeople who had been selling cars for years and you hadn't spent any time on the sales floor? That's kind of like bringing a coach in who has never played basketball to teach Stockton and Malone how to run a pick and roll.
You are exactly right. What I realized was that both in terms of product information and sales technique, whether it is meeting and greeting, standing demonstration, riding demonstration or closing, I pretty quickly could learn what most of them knew. A lot of them were fairly undisciplined.
There is only so much to learn. It is mostly a matter of having the discipline to do it consistently.
That's exactly right. Doing it consistently. Gene Osborn and I are still close friends and involved in a couple of businesses together. He told me at the end of that first year that the Toyota dealership had been the most profitable of the group that he had run. It had set the profit record for one year, during his last year there. My first year, we tripled that profit. He came to me and he said, "How did you do that?" I said, "I just did what you taught me."
When people ask Gene, he will say that the difference between Larry Miller and most other people is, "Larry will do it consistently every day."
One thing I would like to look at more closely is how you tripled that record profit from one year to the next.
I think that there were a couple of things. As I look back, at that time Toyota had been growing in the late '60s and early '70s. Then in 1974 we had the first oil embargo. When that happened, it all of a sudden made fuel-efficient vehicles very high in demand. Toyota operated under a "turn and earn" systemif you sell 100 a month, you get 100 a month. You have a hard time ever getting off that treadmill. About the only time that you can ever get extra cars is when the market slows down. So when the market slows down enough that other dealers turn units down, that's when you can get them. They call them opportunity vehicles, but it is scary because it is usually available only in the face of an adverse market. That's how it was coming out of the winter of 1974, when I was a brand new GM. I said to my district manager, "How do I get more cars?" He said, "You can't very often, but once in a while something will happen." Well, that spring the snow was flying, we had a lot of snow on the ground and it was a seasonally very slow time of the year. He came to me and said, "I have some extra cars. But I only have them once. You asked me the question; if you want them, now is your chance. I have to warn you that they can sit here and gather dust, because the market is slow now and people worry whether or not we are in a recession." I went ahead and bought about 700 extra cars.
That's a lot of extra cars.
That was what we were selling in three or four months at the time. It was pretty scary. The first month we had very high finance charges. The second month, well, those two months were about break-even. I can remember Gene and Chuck, the two owners, came in to see me one day. It was a snowy March day, the wet heavy snow that comes late in the year. They stood in front of my desk and they looked at me and they looked at each other like, "Who is going to ask him?" I didn't know what was going on. I said, "Can I help you guys?" and they said, "Yeah. We just want to make sure of something. You said that we were going to really hit the ground running and have a great year. Well, when are we going to start?" I looked at them and I couldn't figure out what was going on and I asked, "Oh, are you nervous about all of the cars?" They said, "Yes." I said, "I'll tell you what, you can't tell yet, but we are going to break out this month and when we get the statement by April 8 or 10 you will see it and then you will breathe easier. In April, May and June we will be on a roll."
Were you saying that because that is what they wanted to hear or were you saying that because you believed it?
That's what I believed. But I was going totally on faith because I had never been through something like that before. But I felt the market strength was there. My district manager said that this is probably the only chance I was going to have all year to get additional inventory. So I had a plan. Now, whether or not it was luck or instinct, I don't know. It had never been my style to tell people what they wanted to hear. I wore my emotions on my sleeve too much. I was hoping I was right. I had noticed in the spring, generally on or about March 1, it is almost like somebody turns a faucet on. December, January and February had been our slow times. About March 1, it just changes. We had already experienced that for about two weeks when they asked the question.
Larry, you had said a little earlier that you really didn't have the desire to go into business for yourself, so how did it happen?
Gene Osborn had told me that he was going to prepare me to become General Manager. That tour of duty only lasted two years. He next prepared me to take his job as Operations Manager for the entire dealership group. Chuck Stevinson was very heavily involved in real estate. Gene was running the car side, but Gene wanted to go out on his own. Of the five dealerships, I think Gene owned 10%, 10%, 10%, 20% and 25%. Ultimately, he traded all his interests for ownership of one store and used that as a springboard. I was his ticket out. Chuck had eight sons. The oldest was about five years younger than I. But they were all spaced about two years apart and good young men. I still interact with a number of them even today. Part of my job was to take four of them and teach them some of the concepts and different parts of the business. Whether the accounting side or the fixed operations side, parts, service, body shop, all of it...kind of an early course in general management. That was part of my stated responsibility as Operations Manager. It got to a point where Chuck must have felt his sons were ready to move into the stores. He came to me in early '79, very unexpectedly from my standpoint, and told me that he wanted to move back to the car dealership operations. Gene had now gone out on his own and Chuck wanted to work with his boys. Basically, he wanted my job so he could interact with his sons. I understand that. He assured me that it wouldn't affect me financially, and it didn't. He was good to his word. However, in terms of the development of my career and the opportunities I had, I saw a very obvious and immediate limiting to my horizons. I wanted to take a little time to digest ita day or two. I did that rather than to immediately react emotionally. I am glad I did it that way. Still in the wake of it, the second morning after, I thought I just really needed to move on. It could be an amiable parting, making for a smooth transition. But I just needed to move on.
Move on to what?
It happened about six weeks later. My family and I were in southern Utah vacationing. We went down there four wheeling. We had come back through Salt Lake City to visit a friend who was getting married. In doing that, my wife was visiting her family and I went to see a friend who owned a dealership. He owned a small Toyota dealership doing maybe 35 cars a month average. He would come to Denver to buy cars and would borrow a car from me when he was going to the auction. Once in a while I would say to him, "Why don't you sell us your store?" At that time I was thinking of it being for Gene and Chuck to buy and for me to go back and operate as a General Manager. Then it kind of became a little ritual with us over the years where I would ask and he would say, "Why would I want to do that? I am making too much money." It so happened that I stopped in to see him while we were on this vacation. It was about 11:30 in the morning, we were going to have lunch and we were just leaving his dealership. I said to him, "When are you going to sell us your store?" And he looked at me kind of funny and said, "How about today?" I about fell off my chair. I asked, "Are you serious?" and he said, "Yes." And I said, "Let's talk about it." That was on April 6. We were running the store on May 1.
Wow. What year was this?
1979. What had happened was that he had had a very adverse experience the day before. It was just a case of my being in the right place at the right time. We took one of those three-part checks, where the top part is the check and the bottom part is the voucher and we went back to his store with a $20,000 earnest money check. At the bottom it said, "To buy the assets of" and it listed the real estate and the address and the parts that were estimated to be $212,000. It was enough detail that the following week, after he had found that maybe his problem wasn't as immediate as he thought and he wanted out of the deal, even his own attorney said, "I think you sold the store." So we went in and finished the transaction. I took it over on Tuesday, May first, and away we went. Even though we hadn't formalized the buy/sell agreement, there was enough detail on the bottom of that check. I still have it. We really scrambled to get it set up, working our tails off, but I'll tell you it worked. We sold 172 new vehicles our first month.
And it was doing 35?
Yes.
How does something like that happen, Larry?
Well, again, it was just some entrepreneur stuff. At that time trucks were very hard to get. I, being a parts guy, knew that there was a way to get commercial cab chassis. I bought 80 of them. Some of them were light green; most of them were white. We had a couple of red ones and a couple of yellow ones. I painted them all white. Then I bought bed assemblies. At that time, Toyota beds were manufactured in Long Beach, California. I asked, "Is it possible for a dealer to buy 80 bed assemblies," including taillights, taillight ribs, hardware, everything? He said, "Sure, plus I can save you a couple hundred bucks apiece because, if you are a parts dealer, I'll ship it to you in metal recyclable racks and that will save you $200 apiece on the crates. I had the technicians work a couple of weekends to make whole trucks. I got the fleet department to change them from J status, to G, which is retail, so it would count on my travel rate, and I sold those 80 trucks. We made about $400.00 back of invoice, which doesn't sound like a lot, except that was at a time when the invoice was about $2,100. We could sell them for dealer invoice and make a $400 gross and get a turn rate. That, combined with Toyota giving new dealers extra vehicles to see where the travel rate should be, got us off to a great start.
They assume that the previous dealer wasn't doing the job.
Right. He was getting 35 and I probably got 90 to see what I could do with them. We sold all of them the first month. We started out with seven salespeople, all who had been in the store when we got there. We brought a couple more in during the month when we saw that the traffic flow was enough to justify it and away we went. We were profitable right from the beginning. Then in September, I had a call from the regional office that asked if I had ever thought about buying a second store. They said that there was a store that was in another region and the people up there have basically pulled all of the money out of the store. They had been essentially shut down and they had two failed buy/sells in the previous six months. This store is within 24 to 48 hours of closing. I said, "Holy cow, I don't know if I can respond that quickly." So I jumped on a plane and went out and looked at what they had. This is when prime was at 20.5%. The state of Washington had passed an usury law. When you sold a car, you could not charge above 12%. So with prime being at 20.5%, when we sold a contract to the bank, we had to pay 8.5 points, which was enormously expensive. We had to build it into the deal and hope that the interest rates would come down back to something resembling normal, which did happen in a year or so.
But you didn't know that at the time.
It was totally betting on the come. Anyway, we did it because those kinds of opportunities don't come by every day for a metro Toyota store. Ironically, even though this was in Spokane, it had been in the top ten in the U.S. for a few years in retail Toyota sales.
So you knew that the market was there.
Exactly. Anyway, it worked out fairly well in that we were making enough in our first store to subsidize the second store. The third store came a year after that, in September of '80 in Phoenix. Similar distress situation to the first one. So we had our third store. At that point, Spokane was hurting us badly because of that usury law, so we sold that as soon as we got it profitable. We sold it and used the proceeds to get into a Chevrolet store in Murray, Utah. In fact, the Chevy store was right next to our first Toyota store. In 1983 we had four Japanese imports and a Chevy store. At that point, I would say that the treadmill of our lives, as I look back, kinda settled down. It was really helter skelter, cut, paste and glue, Band-Aid fixes, everything just to survive. Prime had gone so high and there were so many dealers failing or at least struggling, I realized that I had developed a little bit of a "kid in a candy store" mentality. I would buy stores because they were there. I had to realize, after we bought the Chevy store, that I needed to be careful not to get us in over our heads.
You've got to find somebody to run these stores too.
Exactly. I can handle two or three or even four myself, but when we are spread out geographically, that's when I can't do it all myself. So, I had to slow down and survey the landscape objectively. I realized I really needed to develop a plan; up until then it had just been buy it because it was there.
Obviously the plan worked. So what was this plan you developed when you stopped, took a step back?
Well, the plan encompassed a couple of things. One was that we wanted to continue to grow, but in a controlled environment, looking primarily at a couple of things. One, our ability to put equity into the new stores and not leverage them too heavily. Two, to balance between import and domestic, so that we didn't get too vulnerable to either. The third was what you just touched on, developing people to run the stores in a comprehensive way rather than just buying a store and sticking the nearest warm body in to run it. There are three ingredients needed to add stores: franchise opportunity, money and people. Franchises aren't available everywhere, but they are more available than the people to run them. So the money and the franchises were not the restrictive part of the equation. It was the people to run them. We started to develop General Managers on purpose. We took the time to do it. If you asked what do I attribute our success most to, I would say that we always try to promote from within. It takes a lot of patience, sometimes a frustrating amount. There are opportunities out there that you can see, but you don't have the person to put in the place. In the last five, maybe even ten years, we walked away from a lot of good deals that in the past we would have bought, had we had somebody to run them. As much as we have grown, we have had to go outside and hire some people, but we have had mixed results. Recently we have had some very good experiences, but along the way we have had some pretty bumpy ones too.
If a guy just wanted to go crazy and go out and acquire a whole bunch of dealerships, they are out there. I have never had any notion of wanting to be big. If you could chart the number of dealerships owned, or the number of vehicles retailed, I would say our growth line would be pretty consistent from the beginning to today. Naturally, there would be some leveling off and some spikes in it, but by and large it would be pretty consistent growth.
And that's what you are all about, consistency.
I think it is. That is one of our main goals. I don't feel like we are flashy. I think the consistency has served us well. Today, looking back on it, I think that if I were to do it all over again, I would do it about the same way.
What mode are you in now, acquisition-wise?
This may sound funny, but it is true...we have never been in an aggressive acquisition mode. Ever. So I would say that the mode that we are in now is pretty much the same as we have always been in. We do not actively seek dealerships very often. We have on occasion, but we're not actively seeking them now. We are, however, in a situation reputation-wise, financially, and people-wise; that if a dealership is available, we will often hear about it, either from the dealer directly or from a broker. We never automatically say, "No." We ask a few questions. If it seems to have a possibility, we will then ask for a package that will typically consist of three or four years of the most recent financial statements and information on the real estate included. There are only about three factors on the deal that are really important to us. One is rent factor per vehicle. If we know what the real estate is going to cost we convert that to a rent factor. Then, if that is in the ballpark, we look for around $200 or $250 per vehicle retail, new and used. If that fits, we much prefer an asset purchase. We have done some stock purchases in the past, but only when there was a real good reason to do it. Then we establish what the blue sky is. If those three things all work, then we will sit down and negotiate.
How much does location affect your interest?
We have learned that, for us, with our base of operations being in Salt Lake City, the further we get from Salt Lake, the tougher it is for us to manage a store. We have looked at deals on the East Coast, even in the Midwest, but never have bought them. The furthest we have bought is Oklahoma and Oregon. Those have been difficult for us to manage and for no visible reason. We try to stay within an hour and ten minute plane ride from Salt Lake. Basically that's where all our stores areBoise, Colorado Springs, Denver, Albuquerque, Phoenix and so on.
Larry, tell me about a company you started which is retail automotive-related, Prestige Financial.
That is an interesting little company. About the time I was leaving Denver, Denver went through a real downturn. It had been thriving and very prosperous for most of the '60s and '70s. Denver is very much a western oil hub. Due to the geography, the oil deposits were twenty to thirty thousand feet deep and oil at that depth is very expensive to get. But it was justified because OPEC had raised prices in 1977 and '78 and it became feasible to drill these deep wells. Then OPEC abruptly lowered the price of oil which had a major effect on the oil industry and on Denver. I remember Frontier Airlines, which was based in Denver, shut down. A lot of people were laid off. It wasn't a total economic collapse, but there was lot of unemployment and very suddenly. That was the first time that I ever saw the sub-prime finance business at work, but I misread it. I thought it was local and temporary. We were busy expanding our business, and for about 10 years I sat and watched the sub-prime business grow and develop into a legitimate business segment. We decided in 1991 or '92 to stick our toe in the water a little bit and see what would happen. Basically, we took about a half million dollars and started buying seven to twelve thousand dollar contracts and we would have about 50 to 80 of them in effect at one time. What we wanted to do was learn for sure that we had the correct systems in place, that we knew how to buy the paper, we knew how to collect, we knew how to keep our filing systems and our records. We actually did that for about three or four years. We intentionally never really grew the business. We wanted to see what kind of loss ratios would set up and we wanted to have a big enough sample over a couple of years to know that it wasn't just a flash in the pan. Anyway, we messed around with it at the half million-dollar level for about four years. We hired a fellow to come in and develop sub-prime departments in our dealerships, but the paper was all brokered through other sub-prime finance companies. We eventually realized that sub-prime was a separate segment of business, it wasn't taking away from our mainstream business, it was truly an addition to it. I watched him grow in about the first three months to 100 sub-prime deals. His 13th month in our dealerships, he did 403 sub-prime contracts.
And that's through how many dealerships?
At that time we had about 20. So he proved to me that the sub-prime business was more than a flash in the pan and we thought it was probably at least a five, if not a ten percent segment of the market. By the way, today we think it is over 20%. In September of '97, we decided to move out of the experimental mode and develop a real sub-prime deal. So we formed Prestige Financial Services. This fellow's name who I am talking about is Rob Avery, he heads it up. He has just done a great job for us. The difference here now is that Rob was on the finance side of the industry, rather than the production side. He wasn't producing contracts, he was financing them. He couldn't do both, we didn't think. We started the company and I said, "See what it takes to do 50 contracts a month." The first month we had 50. I said, "Try 75, try 100." Every month or every other month we could take it up 25 or 50 contracts a month. We got up to about our sixth month at about 175 contracts. Now we were running out of credit lines because we were growing so fast that we couldn't get credit lines big enough to fund this. We didn't have a big enough track record to convince would-be lenders that this was a stable or steady enough business to manage. Very suddenly, in about a 12 to 18 month period, it was like there was a sub-prime dealer on every street corner. They didn't just have sub-prime departments in the dealerships; they actually became sub-prime finance companies themselves. Try as we might, we leveled off at about 100 to 125 contracts a month. We could not get more unless we expanded our underwriting criteria and we weren't going to do that. I have seen too many guys get into trouble with that and that was a cardinal sin. I just said to Rob that we were going to have to be patient. What is going to happen is this avalanche of individual dealers and finance companies that has emerged here suddenly is going to start going away. There is not a big enough market to support them all. They are going to start dropping out. And sure enough, within a year, year-and-a-half, we were reading almost every week about another company dropping out. So by early '99, it started in '98, and throughout '99 it really settled back in to a market that had matured and seasoned so that you knew pretty much what you had and what you didn't have that was real. It has now settled into a pretty good business for us.
We have very distinct classes of B, C and D business. We are also doing brokering business within it, 40% to 45% of our contracts are still brokered.
Who are some of the lenders you use?
We use WFS a lot. They are the biggest outside provider we use. Our guys like them. They understand the business. It is a different business. You can't just say that this is a business for people with credit problems. You've got to know how to talk to them. They have got to be treated with respect and dignity like anybody else. But you also have to have a system that can verify all of the things that they tell you. Don't leave anything blank. It is kind of like the oil filter guy, "You can pay me now or you can pay me later." We spend the money up front in the credit investigation. It results in a lot of savings.
Let's switch gears here Larry. What is the Internet strategy for the Larry H. Miller Automotive Group?
That's a great question. It's one we talk about constantly. Basically the strategy is this: We cannot afford to sleep through it. On the other hand, I have got to give you a little bit of a philosophical answer. The whole Internet scene, whether it is investors on Wall Street, people putting up Web sites for businesses, individuals putting up Web sites or the whole e-commerce deal, the whole thing is in such a frenzy that it is very difficult to know, for any of us, where it is going to land. Here is my personal philosophy and then I will tell you what we are doing about it. My personal philosophy is that in general, the Internet is way, way overloaded for the size of the market that is out there. There are so many Internet companies, so many goods and services being offered, that it just cannot sustain them all. Up to now, Internet companies have been able to get by because they have had investor money to fuel them. I have been predicting this for a couple of years, not to say that I have a great crystal ball or anything, but I have been predicting that what is going to happen is that the time is going to come when Wall Street is going to say, "OK, prove to us that you can make money operating, not just through our investments." Over the next two or three years, individual companies will get exposed as good operating companies or as people who are great at raising investment capital, but are lousy at operating and then they are going to go away. At some point there will be a leveling and we can all see, consumers and business people, how that settles in and where we want to be in it.
Meanwhile, we have had many of our individual dealerships, going back two, three some four years, develop individual Web sites that, honestly, create a pretty fragmented look. We are now developing a site for the whole company that is extremely user-friendly. Then we can begin to find out who you are, what part of it you want to get to, if it is look at cars, and if so, do you want to see a Honda, Chevy, Toyota, or whatever. I believe that the Internet is here to stay. A very high percentage, something like over 50% of our customers, are visiting our Web sites to gather information about products and about individual dealerships. But I think the actual transactions that are being conducted are less than 1%. I think we have got to be Internet-savvy, we have got to be. The way I word it to my people is, "We don't want to be at the bleeding edge, we probably don't even want to be at the cutting edge, but we have got to be someplace around the middle of the top third. Whatever it is everybody wants, we have to be able to provide it."
Where do you see the retail automobile business going in the next couple of years?
I've seen a sad thing occur. I think clearly we would all have to say that the '90s were the best time in the retail automobile business ever. It has sustained for long enough now that, it's not "if" a downturn is coming, it's "when." It has gone on so long now that it has got to be someplace out there in the next one to three years. Dealers have been 15 to 20, 30 years in the best of times, and have gotten a mindset in that they are nervous and maybe even scared that the sky is going to fall in. They don't know if it is going to fall in from the north or the south, east or west, but they believe it is going to fall in. It may be that they fear the Internet or they fear the public companies, and I think it is sad because the result is that they want to get out. The business has been very good for them for most of their business lives. What we are trying to do is we are trying to be positioned to take advantage of opportunities that are going to come when that occurs. Basically we are being fairly conservative in our acquisition mode. We are in the middle, as we speak, of three different acquisitions. I think we will probably buy at least two of the three. Not huge ones, just medium-sized. One is two dealerships and the other ones are one dealership each. So we are looking at it carefully, analyzing with a little bit more caution than we usually would. We have seen the multiples that are being required to buy come down. The public companies had them at four-and-a-half to five-and-a-half times including capitalization as recently as a year, year-and-a-half ago. That has slipped now. If you take capitalization out, we are down to the 2.2 to 3.0 range of multiples to buy these things. Because the biggest publics have announced that they are not in a buying mode, the biggest players have been taken out of the market, so it has softened. I am one who believes a downturn will come, but I don't fear it. I don't think it is going to be 1929 revisited, I think it will be similar to the recessions we had in '80 and '81 and then again in '89 and '90. We worked through it in 12 to 18 months and kept going. I think that in that period we have to be very careful of our financial and human resources and manage a little better then we do in real prosperous times. January and February were so hot; April leveled out a little; at least for us April was off a little bit. All in all, the market is holding up well. I think buyer attitude is good. I think the retail industry will change over the next two decades, but I don't think that it is going to be shocking change. I don't think, for example, that a dealership, with a $5 million investment today, is going to become valueless tomorrow because the Internet is going to be selling 98% of the cars. I don't think that that is going to happen. I think it will happen in transition. Twenty years from now, the entire populous will be computer literate and comfortable with it. It is going to be an evolving change. But I truly believe that there is more opportunity today then there has ever been. Whether on the Internet side or on the traditional retailing side. Because enough people are afraid so that they are abandoning their opportunity and making it available to somebody else...to those who have the courage.
