Matthews Auto Group expands into Pennsylvania

VESTAL — On Nov. 11, Matthews Auto Group, Inc. opened its sixth location at 3512 Birney Ave. in Moosic, Pa., about six miles south of Scranton.

The dealership features “Planet PreOwned,” a trademark of Matthews Auto Group for its used cars. Moosic is the third used-car location for Matthews, in addition to the firm’s Norwich and Vestal locations. It is the family-owned business’s first venture into the Pennsylvania market.

Matthews Auto Group bought the property that was formerly the Santo Volvo/Lincoln dealership. In 2013, the former owner sold off the Volvo franchise to the Pollock Auto Group, and in 2011 it had sold the Lincoln franchise back to Ford.

“We bought a 20,000-square-foot building on 2.8 acres of land,” says Rob Matthews, president of Matthews Auto Group. “It was a turnkey operation. The only thing we had to change was the signage.” Matthews did not reveal the purchase price or any financing details, but did announce the creation of 15 new jobs, which he projects to grow to 40 employees within two years.

Headquartered at 3721 Vestal Road, Matthews Auto Group now boasts six locations with 10 franchises, including Buick, Cadillac, Chevrolet, GMC, KIA, Mazda, Subaru, Mitsubishi, Ford, and Lincoln. “The company is the largest dealer group in a two-county area,” says Matthews. “With the Moosic deal, we now have 200 employees and project $200 million in annual revenue … The retail side of the business is 40 percent [of our revenue] … from new-car sales and 60 [percent] from used-car sales. This year, we will sell 5,700 cars … Our dealerships cover 115,000 square feet [of building space], and we need 30 acres to accommodate our staff and vehicles.” Matthews Auto Group is a sub-S corporation with five siblings as stockholders. Each location has its own real-estate company.

That’s a long way from the 2,200 cars sold and $60 million in revenue when Matthews joined the family business in 2005. His late father, Jim Matthews, was a legendary entrepreneur who migrated from Ontario, Canada to the Binghamton area. He founded Matco Electric in 1965 and went on to create businesses in manufacturing, insurance, real-estate development, publishing, and brought the first professional hockey team to the area. His venture into autos was accidental.

“Doug, the second-oldest Matthews son, [was prone] … to carsickness,” remembers Rob Matthews. “For some reason, he didn’t get sick riding in Chryslers. In 1973, dad went to buy a Chrysler, but the dealer was unable to sell him one because the dealership was in poor financial shape and the inventory was on credit-hold with the lender. My father guaranteed the deal with the lender and bought the car. Shortly [thereafter], the dealership failed, and the Matthews family found itself in the auto business.”

Rob Matthews got the call from his father in late 2005. “Paul Brown had run the company for 20 years and done an incredible job. My father didn’t get involved [typically] with the day-to-day details of running a business. He much preferred to start them and focus on the big picture. However, Paul had a medical issue in 2001 that forced him to leave the business, and for several years, there was no overall direction. The dealership had fallen on hard times.

“I was in Boston at the time, working as an escrow-account officer for State Street Bank. I had an MBA from Babson [College] and sold shirts online at curse/reverse.com, a business I started for Red Sox fans hoping to end the ‘Curse of the Bambino.’ Curse/reverse.com sold shirts with the logo and a ‘Yankee Fan Conversion Kit,’ which included a vial of water from the Charles River. Red Sox fans would sprinkle the water on Yankee fans [to change their allegiance.] … I was convinced I would stay in Boston.”

The younger Matthews didn’t anticipate the effort needed to turn around the company. “I don’t think I slept [a wink] in 2006,” remembers Rob Matthews. “The business was really struggling. The Internet had put pressure on prices and driven down the margins on car sales. Consumers were in the driver’s seat, because the public had so much information. The industry was also consolidating, which put more pressure on small dealerships to compete. Then came the recession, which forced General Motors and Chrysler into bankruptcy [protection]. For us, it meant the loss of the Chrysler, Jeep, Saturn, and Pontiac franchises.”

 

A time for change

The Matthews Auto Group began to change in 2006. “I went to my father with a radical idea of how to restructure the business,” says Matthews. “First, we needed to re-connect with our customers. So, no more haggling about price. We’ll give our best price on every vehicle, every day and call it ‘One-Price.’ No more fake sales at the end of the month. If you have a trade in, we’ll quote our purchase price, regardless of whether you buy a car from us.

“And to prove that the customer is getting the best value, we’ll give any customer 110 percent of the difference in AutoAward points up to $1,000 if he [or she] finds a lower advertised price in New York state. We’ll call it ‘Price Assurance.’ Matthews wants a customer for life, not just to sell one vehicle.”

Then, Matthews put its sales people on commission based on volume and customer satisfaction, so they were focused on what was best for the customer.

Next, the Matthews Auto Group instituted a member-awards program. “Every customer is automatically enrolled in our AutoAwards program,” Matthews continues. “They earn points for every dollar spent on service, for referrals, and for bonuses. (Bonuses are issued for becoming a member, buying an extended service contract, choosing a Matthews financing option, rust-proofing, collision work, and out-of-state inspections.) The program can save members thousands of dollars while they own a vehicle and when they go to buy a new one [from us]. AutoAwards also offers discounts at 95 area merchants, ranging from restaurants, landscapers, hotels, clothing stores, and laser eye-surgery to athletic clubs and spas, carpet dealers, and flower shops. The merchants are happy because it drives traffic to them.”

Rob McLaughlin, the company’s operations manager, shared the following program statistics: On Oct. 24, 2013, AutoAwards included 19,478 active members who have earned $6.5 million since the program’s inception, of which $2.3 million has been redeemed.

“The … [fourth] step was to create free-standing, used-car locations,” continues Matthews. “We understood that people don’t think of new-car dealers having used cars. But, the impetus to change really came when we lost the Chrysler franchise and had an empty building. That was the time to create Planet PreOwned and brand our used-car business, even though all of our stores have used cars on their lots.

“Dad backed me on the changes,” says Matthews. “He also agreed that we needed a diversification strategy that included more dealerships and a wider geographic reach. All I can say is that it was a real leap of faith.”

 

Growth

Despite continuing consolidation of the industry, pricing pressures, and stiff competition, Matthews is feeling better about the 40-year-old family business. “Our sales have grown 40 percent because of the One-Price program,” avers Matthews, who is far more relaxed than he was in 2006. “We took a gamble that if we focused on what was best for the customer, our business would … [flourish]. Customers are interested not just in price, but in the whole relationship with the dealer. That means concern for service, customer relations, and recognizing that an owner’s expenses only start when … [that person] drives off the lot. We want to help to manage and control those expenses [throughout the entire ownership period].

Success has come in large part because of the management team assembled at Matthews Auto Group. In addition to Rob Matthews as president, Larry Davis is the company CFO, Megan Kosar is controller, Nelson Van Atta is the COO, and Tara Connelly is the manager of human resources. Matthews’ sister Theresa serves as the company spokesperson.

The auto group also relies on area professionals to help steer the company on its growth path. “J.P. Morgan has handled our floor plan for more than 20 years,” says Rob Matthews. “We also work with Piaker & Lyons [P.C.] for our accounting and Hinman, Howard & Kattell [LLP.] for our legal work. But our success is mostly due to the great staff at Matthews. We have a number of long-term employees who are not only well trained but also focused on the customer. I think we are doing the right thing, because people are coming to us looking for employment.”

The Matthews Auto Group has also embraced the Internet and social media to help fuel its growth. “While consumers can now search a wide geographical area in a short time and gather a lot of information, the Internet and social media give us a much broader customer base to draw from,” says Matthews. “Our competitors may now be 60 miles away, but that also means we have the opportunity to reach new customers. That’s why we put so much emphasis on our website and on Facebook, where we already have 4,200 fans. Communications is critical in our business … We have four people on staff who are posting updates.”

Matthews communicates regularly not only with its customers but also with its employees. The company’s Facebook page is filled with news about the employee-of-the-month, weddings, engagements, births, community volunteers, new hires, and promotions along with photos snapped by the staff.

At age 37, Rob Matthews is feeling more confident about the direction of the eponymous auto group. The company’s first move out of the Binghamton area came in 2012 when it bought Smith Ford/Lincoln on Main St. in Norwich. In addition to retaining the Ford/Lincoln franchise, Matthews Auto Group opened its second used-car operation at the same location. Now, in 2013, the company has expanded again to the Scranton area.

“I feel comfortable that we can manage this expansion, including extending our geographical reach,” says Matthews. “We are always looking for new dealership opportunities, but there has to be a fit and the numbers have to work. We are also interested in [acquiring] new franchises, [such as] … Hyundai and Toyota. The recession [of 2008] taught us the importance of diversifying the operation.”

Jim Matthews entered the auto business by accident. The second generation, however, has set a clear direction for the company’s future. Rob Matthews has combined his skills honed at Babson with his natural, creative spark. A guy who could figure out how to convert Yankee fans to Boston fans with Charles River “holy water” can certainly steer Matthews Auto Group on a track to continuing prosperity.

There is no “Curse of the Bambino” in Vestal.

 

Contact Poltenson at npoltenson@tgbbj.com