Gene Pankey was stationed at Ft. Lewis when he decided in 1957 to take a part-time job selling used cars on South Tacoma Way. “I wasn’t sure what I wanted to do with my life,” he recalls. “I grew up in central Idaho in a grocery store and butcher shop, so I knew it would be in sales, but I knew nothing about the automotive ind-ustry.” He learned, though. When he began operating his own used-car lot two decades later, he talked wife Margaret into joining him. “She was a loan officer for Pacific First Savings and Loan,” he says. “I convinced her that if she came to work with me, she’d only have to be there 20 to 30 hours a week. She worked 40 hour weeks from the time she started until just a few years ago, when she began tapering off.” Plans call for both Pankeys to retire next January.
Q: When did you open Gene Pankey Motor Co.?
A: After struggling in a partnership for a few years, I came to work for Art Randle as his general manager at this location—7201 S. Tacoma Way—in 1966. He was way ahead of his time, and he a great teacher.
He ran this place like a new-car dealership. There was an in-house accountant. He insisted the men wear white shirts and ties. His dealership always had a service center and its own in-house financing and credit checks. He paid everyone well, paid the medical on the staff. He had clever advertising that relied on testimonials from customers. He really took care of his customers. He’d tell me: “Customers don’t believe what we do to the car before they buy it, what they believe is what we do after the sale.”
In 1978, my wife and I bought the business from Art and his wife.
Q: How has automobile sales changed since you first got into the field?
A: Car sales is a lot more professional these day, especially used car sales. When I first started in the business, used-car salesmen got no respect at all. We were ranked at the bottom of the R.L. Polk surveys.
Our reputation wasn’t entirely justified. We had some good people in our business. We’ve worked our way back up. We’ve worked hard on our image.
The used-car business now attracts college graduates, as well as others who are really serious about becoming knowledgeable industry professionals. Three or four of our sales staff are college graduates and most have attended a community college.
Two years ago, our entire sales staff graduated with honors from the Dale Carnegie Sales Institute.
Q: And the products you’re selling?
A: Cars are a lot better built today. Cars used to have a lot of trouble with engines and transmissions. They’re more complicated to work on these days, but they last a lot longer.
The technical side of the industry, it’s moving very fast. You really have to stay up on it. I have trouble myself keeping track of year models and all the different sizes of engines, the range of options.
Q: What impact will Initiative 695 have on your industry?
A: I don’t know, it’s pretty early to tell. Nobody can complain about the cost of tags anymore. It’s certainly fair now.
I’m not sure what impact I-695 will have on some of the agencies that were dependent on revenue from the fees, though. I guess we’ll just have to trust the Legislature to sort it all out.
Q: Were widespread ads by auto dealers offering to pick up license fees for customers a desperate attempt to counter the reduction in sales or just clever marketing?
A: The first month after its passage, I-695 was no big bother, but by the end of December, there was a pretty dramatic downturn in sales and even customers coming out to have a look at our inventory. You could blame it on the Christmas season or Y2K fears, but I think I-695 did it.
A: I was determined to be competitive but realized customers wouldn’t come in if we didn’t pay their license fees.You either advertised that fact and paid the bill or you didn’t get the sales. That’s what made it a pretty expensive couple of months.
All that seems to have turned around with the beginning of the new year. We’ve been pretty busy. A lot of people just backed up out there and now they’re ready to buy.
Q: Every new car dealership these days has a website. Has the trend reached used car dealerships?
A: Absolutely. We’ve had a website for at least three years. We get quite a few hits every month, but I don’t think anyone finalizes a used-car purchase over the Internet. People want to see a used car before they buy it.
New cars are different. Once a customer specs out a new car, it’s just a matter of negotiating the price and whether the dealer is on this side of town or the other.
When you’re buying a used car, there’s more at stake than just the price. There’s the color, the options, mileage, even the dealership selling it to be considered. In the final analysis, customers can do a lot of research over the Internet, but before they make a commitment, they want to touch it.
Q: So, what’s your payoff?
A: Customers who use the Internet are much better informed when they get here. That’s better for us because they know what they want and come to a decision quicker. It takes less time for us to settle a deal.
If there’s a drawback it’s that because they’re well-informed, they tend to drive a hard bargain. I think people who do that much homework are more cost-conscious than other shoppers.
Q: How big a geographic area are you reaching?
A: We’ve had customers come from as far away as Everett and other cities around Seattle and north of there after finding out about us on the Internet. I find it kind of amazing that they’ve driven right through Seattle and all its lots to get to us.
Q: You’re not like most used car lots.
A: No, we specialize in fleet cars. Our average car is 1 to 4 years old and will sell for $12,000 to $13,000.
Q: What do you mean by fleet cars?
A: Most come from fleets of company cars leased by Fortune 500 companies such as McDonald’s, Microsoft, the major pharmaceutical companies. The cars are leased by these companies for one to four years, then turned in for new ones.
They have anywhere from 30,000 to 60,000 miles on the odometers. In fact, most are still covered by the manufacturer’s warranty. Most have only had one driver. They’ve got great colors, great options, great quality. They have great resale value, but because of the volume we handle, we can afford to price them competitively.
When fleet vehicles are turned in in Washington, there’s a good chance they’ll wind up on our lot.
Q: Where do you acquire the vehicles to flesh out your inventory?
A: Auctions, other new-car dealerships. We’ve got three or four sources we relay on, but primarily they come from auctions.
Q: What does the future hold for companies like yours?
A: There will be a definite increase in the use of computers. As computers become more accessible, people are going to find out how exciting it can be to shop around without leaving home to do it. There’s so much information available out there.
And the next generation of shoppers is going to be even more sophisticated. Young kids coming up are going to be pretty literate when it comes to computers. Technology is going to take us way beyond where we can imagine right now.
I read recent article in Newsweek or Time that talks about smart cars, cars that practically drive themselves. You just point them in the right direction. They keep an eye on the weather and everything.
Cadillacs are already being made with night-vision equipment on them, just like the military night-vision systems. They let you see 150 to 200 yards farther in the dark.
It’s going to be a whole different world.
Q: All that technology is going to drive up what operations like yours have to pay for mechanics.
A: Perhaps. But it hasn’t had a major impact so far. In our business, we use mostly new-car dealers to take care of complicated, high-tech problems.
Our service center has two mechanics who do about 25 percent of the work that needs doing. They do a lot of brake work and minor repairs, but when there’s a major problem, we send it out. When it becomes too complicated and requires equipment or specialized training we don’t have, we take the vehicle to the appropriate new-car dealer whose experts can handle it.
It would be cost-prohibitive for us to install all the equipment and hire all the expertise needed to deal with the vast range of potential problems in the various makes and models of cars on our lot.
Q: Is that pretty much a standard operating procedure among used-car dealers?
A: In my generation, probably. I know of dealers elsewhere who are spending a lot money to put in the kind of sophisticated service centers that would make it possible to do most of the work themselves, but they’re younger dealers.
It’s a part of the business they want to get into. They can sell cars, then service them for their customers.
We prefer to concentrate on sales.
Q: After this year, overhead will no longer be your worry, will it?
A: To some extent, it won’t be my worry. I’ll be 65 this summer and we’re going to retire in January.
Two long-time employees—Vice President and General Manager Pat Feutz and Sales Manager Tom Dyer—already have made arrangements to buy us out. Pat owns 25 percent of the operation already.
But I don’t think they’re going to let me go quietly. I’m told they’ve already put their heads together and have plans for keeping me busy even after I’m no longer in charge.