This expanding car dynasty is betting that US auto manufacturing is here to stay. Bryan and Sil Gonzales explain.

As headlines routinely proclaim, these aren’t the best of times for the domestic auto industry. Rising healthcare costs and shrinking demand for formerly popular sport-utility vehicles have conspired to make life difficult for everyone, from Detroit executives and shareholders to rank-and-file workers.

But among the sunny freeways of greater Los Angeles, one family-owned business is betting big on the future of American cars. And it’s not just because Southern California seems to have an unlimited appetite for new vehicles of every make, model, and size.

This fall, the Gonzales Automotive Group plans to expand its network of dealerships, where most new cars on the lots are domestically manufactured, from four to six. Doing so is no small task since it means growing from 400 to 500 employees in a matter of weeks.

“We’re going from medium-small to medium-big,” said executive vice president Bryan Gonzales. “Those are things we read about, and now we have to deal with them in the most efficient way we can and still keep our quality of life.”

For the Gonzales family, domestic automobiles represent the latest in a long series of seized opportunities. President and CEO Silvestre “Sil” Gonzales, a third generation Mexican-American, bought his first dealership in the mid-1990s after 30 years in business, first in banking and later as a real estate investor. Real estate assets provided necessary collateral for the purchase of what became the first “Casa de Gonzales,” a brand that now carries strong recognition among Hispanics in the South Gate, Calif. area.

Today, the company owns four dealerships: Casa de Gonzales Chrysler Jeep, Casa de Gonzales Kia, Whittier Chrysler Jeep Dodge, and Gresham Ford. With the exception of Gresham Ford in Gresham, Ore., all the dealerships, including two domestic-dealer acquisitions in the works, are within an hour of Southeast Los Angeles.

“In our area, not everybody can afford a Mercedes, Lexus, or Toyota, but more people can afford Fords, Chevys, and Dodges,” Sil Gonzales said. “I set the tone by saying, ‘Transportation is expensive, but the lack of transportation is more expensive.’”

Longevity counts
Domestic dealerships present an especially good opportunity at the moment, Sil Gonzales said, because they’re undervalued. Throughout his career, he has aimed to make money buying low and selling high. When looking at dealerships, now’s the time to buy low because certain
dealers can’t see light at the end of the tunnel and want out. Dealers who attend meetings and bemoan how they can’t make a profit anymore are just the kind of people Sil and Bryan Gonzales like to meet.

“When you’re looking for an underperforming store, it becomes somewhat like hunting—you’re going for the weak animal,” Bryan Gonzales said. “The operative question is, if we bring in our team, can we make money here?”

That team counts family members in all the top positions. Sil’s daughter, Melissa Gonzales Coale, has an accounting background and serves as controller. Bryan, a lawyer, has a background in real estate. Sil’s other son, Sal, worked in the business until recently when he bought his own dealership. All the children have degrees from the University of Southern California.

In day-to-day business, family members hold responsibility for managing the biggest expense line items, such as insurance, inventory, and information technology. After that, they’ll put non-family members in charge of dealerships, but only after those personnel have been with the company for at least five years. And even then, family members make a point to visit stores at least once a week to keep an eye on financials and other factors. “If I’m going to invest the family money, we’re going to be there to watch it,” said Sil Gonzales.

Word of mouth is best
As the company grew, systems needed to evolve. With the purchase of a fourth dealership in Oregon in 2003, Gonzales Automotive Group consolidated several functions in what turned out to be effective cost-saving measures. For instance, the firm now handles IT, human resources, and payroll management from a central location.

Turning around dealerships to become profitable, however, requires more than consolidation. Family members apply a lean budgeting formula that bucks an industry norm, namely to spend as much as 25% of gross income on advertising. Gonzales-owned dealerships seldom spend more than 10% on advertising, instead relying on word-of-mouth promotion within tight-knit communities.

One place where the Gonzales family won’t cut: employee compensation. They regard retention of skilled talent, both in sales and administration, as important priorities. A salesperson works on a commission-only basis but gets a $100 bonus for every new car sold, and that person doesn’t have to wait more than a few days to receive it.

“I make sure he has money in his pocket every Friday,” Sil Gonzales said of each salesperson. “It’s walking around money, WAM. It’s cash to put gas in the car, take his wife to dinner, and pick up his dry cleaning. I make sure everybody has WAM at the end of the week.”
That compensation structure, coupled with incentives to win such coveted items as Los Angeles Lakers tickets, helps keep workplace attitudes positive. But growth nevertheless presents challenges.

At this point, the Gonzales family is weighing the possibility of more consolidation, such as by bringing advertising design inhouse. The firm also needs to weigh at what point growth might jeopardize family members’ quality of life. After all, if management stumbles, family members must be ready to step in at any time.

In the meantime, Gonzales Automotive Group is bullish about the future. The US government isn’t apt to let the domestic car industry fail, Bryan Gonzales said. Plus, this year brought promising signs in the form of new agreements between manufacturers and the United Auto Workers union, which has agreed to shoulder a larger share of so-called legacy costs in terms of healthcare expenses and retirement benefits. All this points to a day when domestic dealerships once again command strong value in the marketplace, and by then, the Gonzales family expects to be sitting very pretty for a new set of opportunities. E

G. Jeffrey MacDonald is a correspondent for the Christian Science Monitor. Based in Newburyport, Mass., he can be reached at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it