Saban’s new challenge: The auto retail world

on Jul1

In Alabama, Nick Saban walks on water.

The former Miami Dolphins coach, who took over the University of Alabama’s Crimson Tide football team 10 years ago and restored it to national champion status, is popular enough to do just about anything he wants in the football-crazy state.

And what he wants to do now is sell cars.

To do so, he’s entered a cutthroat industry that is not unlike the game he coaches. Being successful consistently is not easy, and fans only show up when the product is worth spending money on.

Saban — along with partner Joe Agresti — have two Alabama stores that compete in a market that is filled with stores owned by Sonic Automotive Inc., one of the largest dealership groups in the U.S. And Saban is set to expand this month beyond the friendly confines of Alabama to Nashville, home of Southeastern Conference rival Vanderbilt University as well as, again, competing Sonic stores.

Saban and his wife, Terry, along with Agresti, own Infiniti of Birmingham and Mercedes-Benz of Birmingham, both in the Birmingham suburb of Hoover, Ala. Agresti is CEO of Dream Motor Group and owns Mercedes-Benz of Baton Rouge (La.) and Mercedes-Benz of the Woodlands (Texas).

TV pitchman

It’s not uncommon to see Saban, 65, starring in a TV commercial for his stores. In 2016, each store received “Best of the Best” awards from Mercedes.

“I wanted to have the same level of excellence to maintain with customers that we have with our football team,” Saban told Automotive News, adding that he wouldn’t have gotten into the business if he hadn’t partnered with Agresti.

In late 2013, when rumors emerged in the Birmingham market that Coach— as his intimates as well as fanscall him — was about to enter the retail world, the existing Birmingham Mercedes dealership, Crown Mercedes-Benz, sued Mercedes-Benz USA to stop it.

When Saban called Joe Agresti to discuss a partnership, Agresti thought it was a prank.

Although the dealership did not mention Saban by name in the suit, Crown complained that putting a second Mercedes dealership in the Birmingham market would violate its franchise agreement and that the development had hampered Crown’s plan to sell its store.

Crown and the factory ultimately settled out of court. Saban and Agresti wound up purchasing Crown Mercedes-Benz and Crown Infiniti in a 50-50 partnership. Today, Saban and Agresti own the only Mercedes dealership in the 1 million-plus- population Birmingham market.

Agresti, 45, said Crimson Tide fans are happy to spend time and money at Saban’s stores.

“Those people love Coach,” Agresti says. “And of course, they prefer to do business with someone they love.”

Sweet home Alabama

And the business is growing. Since buying the two stores in Hoover, Agresti said, sales and service revenue are both up around 50 percent. Profits are up significantly, too, he added.

At the Mercedes store, sales are about 1,200 new and 1,000 used vehicles a year. The dealership also sells around 3,000 commercial vans a year, Agresti added.

Agresti said the Infiniti store sells 600 new and 400 used vehicles a year. It’s the only Infiniti retailer in the market.

The Infiniti store, which was part of the deal when the partners bought Crown Mercedes, has experienced increases that are similar to that of the Mercedes store right next door, Agresti added.

“It fit nicely, both physically and vehiclewise,” Agresti said, noting that the original plan was to sell the store. However, after Agresti went to an Infiniti orientation session in Nashville and learned more about the brand and its products, he was impressed, and the plans changed.

“We decided to keep it, and it’s been a critical part of our success,” Agresti said.

Tom Dart, president of the Automobile Dealers Association of Alabama, said it’s great having arguably the biggest name in the state as a dealer.

“He can be someone who can add attention to the business,” Dart said. “The staff I’ve gotten to know is top-notch, very thoughtful and smart.”

Agresti said he hasn’t heard from a competing dealer about his partner, but he knows that they’re aware.

“I’m sure they consider Coach’s ownership a formidable obstacle to overcome,” Agresti said.

Tough competition

But the competition Saban and Agresti face in Birmingham is formidable, too.

In fact, the Audi, BMW, Jaguar, Land Rover, Lexus and Porsche retailers in the market fall under the Sonic Automotive umbrella. Sonic ranks No. 5 on Automotive News‘ list of the 150 largest dealership groups based in the U.S., with retail sales of 134,288 new vehicles in 2016.

“There’s definitely a scale advantage in the industry, and Sonic takes a unique approach to its business,” said Rick Nelson, analyst for Stephens Inc., noting that the group has managed to grow its share, which is reflective of its strategies such as having a dedicated staff to value used cars.

But Agresti isn’t intimidated by the group’s size.

“I don’t really look at it as us versus Sonic,” Agresti said. “It’s about Mercedes and Infiniti versus Lexus, Audi, BMW, etc.”

Mercedes connection

It’s no coincidence that Saban’s foray into dealerships included Mercedes, a brand with deep ties in Alabama.

Saban said when he took the University of Alabama job, he got the opportunity to meet with people and employees at the automaker’s massive manufacturing plant in Vance, about 20 miles east of the university’s campus in Tuscaloosa.

Saban would eventually meet with Steve Cannon, who was CEO of Mercedes-Benz USA.

This relationship would prove to be pivotal, as Cannon helped Saban identify a business partner for a dealership when Saban was ready.

“When we started talking about opportunities, he recommended Joe out of all the people he knew,” Saban said.

Saban knew of Agresti during his time as head coach at Louisiana State University in Baton Rouge, where Agresti has a Mercedes store.

“People always had good things to say about him,” Saban recalled.

However, nothing developed in Baton Rouge. Saban eventually left to coach the NFL’s Dolphins.

But in 2013, Saban called Agresti.

When Saban left him a voicemail, Agresti thought a friend was prank-calling him by imitating Saban’s voice.

Agresti did his due diligence and figured out that the call was for real. He called Saban back, and, ultimately, the two met in Tuscaloosa for what was supposed to be an hourlong meeting. It turned into a four-hour session of discussing business and what the two could do together. A deal was worked out.

“He was the right guy to expand with, and he was ready,” Agresti told Automotive News.

Agresti’s role

Agresti, who’s spent much of his professional life in the dealership business and has served on Mercedes’ dealer board, directs day-to-day operations at the stores.

“My job is to run a successful business,” Agresti said of the partnership. “But one of the core things I need to do is to be a steward of the Mercedes-Benz and Saban brands.”

Although Saban is beloved by countless fans — at a NASCAR race in May, a man was spotted with the likeness of Saban’s face tattooed on his back — customers don’t always know he owns the stores.

Automaker rules mean the dealerships can’t be named Nick Saban Mercedes-Benz or Nick Saban Infiniti. Because of this, Agresti said, it’s difficult to say just how many customers are aware that Saban is a co-owner.

“I know we’re doing our best to promote it,” Agresti said. “It’s a bit of a challenge.”

For example, there are commercials starring Saban, which are filmed a couple of times during the year and then released at later dates.

“For customers that do know, they have an expectation that the dealership will be run as well as his football team,” Agresti said.

And at the end of the day, a lot of people who walk through the dealerships’ doors are football fans.

“There are two kinds of people in Alabama,” said Agresti. “The ones that like the University of Alabama, and the ones that like Auburn University.”

As for those who are not fans of the Crimson Tide football team, Agresti believes they admire Saban as a person and leader.

That belief will be put to the test when Agresti and Saban’s newest store goes online this month in Nashville.

Music City

Agresti said he and Saban looked at different expansion markets before deciding on Nashville.

“Nashville was a no-brainer,” Agresti said. “It’s SEC country with people who know him and respect him.”

Indeed, Nashville is home to conference foe Vanderbilt University. The University of Tennessee is three hours east in Knoxville.

Given how hot property in Nashville is as its population booms, Agresti said finding the location for Mercedes-Benz of Music City wasn’t easy.

In fact, he looked at 57 properties and made offers on seven before getting the land they picked, which is near the Nashville airport.

Saban serves as TV pitchman. Commercials for his new store in Nashville are already running.

The 40,000-square-foot store is set to open July 26. TV commercials featuring Saban promoting the store have already appeared in the market.

To be sure, Saban and Agresti will be setting up shop in a competitive market also dominated by Sonic. The group has a BMW, Porsche, Audi and its own Mercedes store in the area.

Agresti noted that he and Saban are actively looking at markets for additional stores, but he declined to name them. The partners have also bought a stake in Infiniti of Coral Gables in Florida.

Nashville is not the only ground Agresti and Saban have broken. The Mercedes store in Hoover will be moving to a new 60,000-square-foot location in nearby Irondale, with an opening date of February. The current Mercedes location, which with the Infiniti store is roughly 60,000 square feet combined, will become a satellite service and certified pre-owned center as well as handle commercial van sales. The Infiniti store will stay at its current location.

‘Football, business, anything’

Though Saban has been a coach far longer than he’s been a dealer, he’s noticed correlations between the two.

“I think to be successful, it takes the same energy no matter what you’re trying to do,” Saban said. “You’ve got to have a vision and a goal, passion to the thing required to accomplish the goal, or process, and the discipline to execute that every day. That’s in football, business, anything.”

The connections between Saban the coach and Saban the dealer don’t end there.

When the University of Alabama football team kicks off its 2017-18 season, the matchup with Florida State University is set to be played at the Atlanta Falcons’ brand-new home: Mercedes-Benz Stadium.

Saban’s roster

Nick Saban, along with partner Joe Agresti, owns these stores:

  • Mercedes-Benz of Birmingham
  • Infiniti of Birmingham
  • Mercedes-Benz of Music City (set to open July 26)



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