Auto pilot | A conversation with Jim Piper, co-owner of LA Auto Co. in Lewiston
Photo/Jill Piper
George Dunn (left) and Jim Piper
Founded: October 2008
Number of employees: 5
Startup costs: $124,000
Projected revenue, year one: $100,000
Projected revenue, year two: $250,000
Contact: 733 Sabattus St., Lewiston 04240
www.laautocompany.com
Why did you decide to start this business?
I’ve been in the wholesale end of the car business, in car auctions, and I just decided it was time for me to sell on my own. I had always wanted to own my own business and I saw the opportunity to try to do it a little bit differently and hopefully a little bit better than everybody else. I also had a partner (George Dunn) who was willing to go the distance with me.
What services does LA Auto Co. provide?
We sell used vehicles, we have a full maintenance facility for all repairs on cars and we do reconditioning: buffing, waxing, steam-cleaning carpets. We sell all makes and models. I seem to be doing well with the foreign stuff: Audis, VWs, Saabs.
How does the system work for buying used cars?
The simple truth is that 90% of used cars on dealers' lots come from car auctions. I go to the ones in New England and compete with other dealers to buy the cars, put them through the shop to make them as perfect as I can and clean them up and sell them.
How do you make a profit?
You pay wholesale price for the car and put it in the shop and sell it for retail price. Most of the goods other people buy, they don’t have to do anything to it, whereas I have to tune the car up and fix parts. I have to pay x, put y into it to be able to sell it for z, for profit. It can be difficult, it’s a lot easier to make mistakes because you can buy a car you think is the right price, but if it takes more to make a car retail-ready than you thought or it doesn’t go for as much as you think, it’s a profit loss. It’s a volatile market, so even though there are pricing guides that come out every month, you have to pay attention to what’s going on in the market every week before you go to auction.
How did you finance this business?
We had loans with Auburn Savings Bank, Royal Canadian Bank and Bank of America and through personal investments.
How do you market your business?
Through local paper advertisements and also through the Internet on AutoTrader.com, Cars.com and our own website.
How has the economy affected your business?
It was tough — we started the process before the economy really started to turn downwards, so by the time we started building the facility, the economy started going down. But we looked at it as people will still buy used cars and if we offer a good product and treat people right we will get the business that’s out there, and as the economy turns around some of the smaller guys who weren’t doing it right might have fallen by the wayside and we’ll be primed to really expand the business. So I don’t think it’s hurt us as much as I anticipated. We just opened in February and our sales have gone up each month since we opened. We knew we had to do everything a little bit better, offer good product, treat people right and the business that’s out there will come to us.
What’s been your biggest challenge?
One of the biggest challenges is finding good quality vehicles in that 2004-2006 year range. Because new car sales are down so much, people aren’t trading in those 4-year-old cars, so the supply through the normal channels we go through has shrunk and the demand is up, so finding the right product has been a real challenge. We haven’t wavered our philosophy in what cars we buy, but we have 10 or so fewer cars in the lot than we’d like, just because we don’t buy cars just to have them in the lot — it’s got to be the right car and a good car.
What are your goals for the future of your business?
We would like to possibly have a second location and get to the point where we can hire a manager to run the day-to-day operations and I can focus on buying inventory and overseeing operations and marketing. Right now I buy all the cars on the lot and manage the store and my partner is more behind the scenes and oversees the financial end of the business.
Interview by Mercedes Grandin
New Ventures profiles young businesses, 6-18 months old. Send your suggestions and contact information to editorial@mainebiz.biz.
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