Chapter 19: Let's Make a Dealer

Reform business when business is good. - Hiroshi Okuda, Former Toyota Chairman and President

As a longtime race fan, I’ve noticed that drivers who consistently win seem to take the same approach: when they’re ahead, they floor it. In fact, Mario Andretti, the only driver in history to win the Indianapolis 500, the Daytona 500, and the Formula One World Championship, once said, “If you feel like you’re under control, you’re just not going fast enough.”

Andretti, and those who end up in the winner’s circle, believe that being in the lead is no time to admire the scenery and wave to the crowd; it’s time to put the pedal to the metal. I feel the same way about business. That’s why, after many successful years of primarily selling directly to our customers, we decided to change our go-to-market approach and set up a network of dealers who could champion our products and give us a much wider and more effective distribution.

Like most good things that happen in our business, the creation of our dealer network started with our customers themselves, who came to me and asked whether they could start selling our products. Needing a better method of distribution, I agreed to give it a try. It worked immediately and still does. More often than not, dealers who start out as our customers are the most successful. Why is that?

To begin with, when dealers have been customers first, they don't have to guess what it’s like to live life in a wheelchair. That goes for whether they themselves are disabled or they have a friend or family member who is in a wheelchair. As a result, they don't have to imagine what their customers are going through and then try to explain it to them. They know, firsthand, the frustration and inconvenience of not being able to do whatever they feel like doing, when they feel like doing it, and go where they feel like going. They know what it’s like to encounter stairs where there should be a ramp or an elevator. They know what it’s like to go to a restaurant or any other building where the proper accommodations have not been made. They know what it’s like to try to drag themselves in and out of vehicles that are ill suited to transporting them. They know what it’s like to sit at home because it’s too hard to deal with it all.

At the same time, because many of our dealers started out as customers, they know the freedom our products give them. They know the concerns that visitors to their dealerships have because they have the same concerns. I’m not saying dealers who have not experienced life in a wheelchair aren’t good dealers, but throughout our company’s history, the fact is that some of our best dealers started out as customers.

The idea of selling motor vehicles through a dealer network was of course not new. Though I’ve been in business almost 50 years, automobile dealers have been around more than twice that long. In that time, dealers have undergone tremendous change; in many ways, our evolution has been much like theirs.

To put the extent of the change in perspective, let’s look at history. The first gasoline-powered car in America, built by the brothers Frank and Charles Duryea in 1893, had its first road trial on September 21 of that year in Springfield, Massachusetts. It was a crude device—a used horse-drawn buggy with a low-tension ignition, spray carburetor, friction transmission, and four-horsepower, one-cylinder gasoline engine. Apparently, this test-drive was not the success they hoped it would be because they drove it once more, one and a half months later, and then shelved it.

Three years later, Henry Ford sold his first car, a Quadracycle, for $200. He used the proceeds from the sale to build another car and then some prototypes, but he didn’t sell another car until 1903.

In 1896, Ransom E. Olds, who was the first mass producer of gasoline-powered automobiles in the United States, built his first model, but he didn’t start selling his cars until 1899.

With the Duryea, Ford, and Olds stories as a backdrop, perhaps my first motorized wheelchair, which I test-drove in my mother's kitchen, and my first conversion of a van, which was the lift I installed in the post office Jeep in my parents’ garage, weren’t that bad after all. The minute I finished both of them, like Henry Ford, I used the money I made to build new and improved ones, and then I repeated the process each time I made a sale.

As for the automakers, although they had gotten off to a slow start, they soon went into overdrive. However, while dozens of manufacturers were making thousands of cars by the year 1900, they still had to figure out how to sell them. As was the case with our wheelchairs and vans, these upstart automakers tried numerous methods of marketing and selling—through factory-owned and factory-operated storerooms, consignment, catalogs, and even traveling salesmen.

At Braun, we tried many of the same routes to market, including driving all over the country with a converted van. Ultimately, we discovered that just as the early auto manufacturers had needed a better distribution system, so did we. Like the car companies, we soon realized the answer was to cultivate a network of independent dealers and businesses. Besides being an efficient and effective way to get our products in the hands of our customers, working with dealers was a good idea for everyone involved.

Our first dealers were customers who opened a dealership in Georgia after buying one of our first converted vans for their son, Buddy. Until they sold the business many years later, they were one of the most successful dealers in our network. Just as my parents had done, Buddy’s mother and father were committed to giving him a mainstream life—so much so that they had driven straight to Indiana to get him one of my early conversion vans. As a result, providing mobility became a passion for them. Before long, that passion grew to the point they put their hearts and souls into helping others meet their mobility needs. They worked hard at understanding our business, and I personally spent a lot of time helping them along.

You know, I’ve had people ask me why I haven’t used my knowledge and experience from a lifetime of manufacturing to offer my services as a consultant to other companies. My answer is simple: I did act as a consultant, but I did it with my own network of dealers. I taught them, and they, in turn, taught me. We created the mobility industry together, and with any luck, we'll sustain it together far into the future.

I love working closely with our dealers because, like me, they are risk takers and pioneers. I still talk with many of our dealers every day and ask and answer questions, listen to their concerns, and give guidance where I can. For their part, our dealers make good use of the product and service training we provide at our company headquarters. Each year, they flock to Winamac to see the latest products, hear what’s in the pipeline, and become experts on our offerings.

In the beginning of the automotive industry, its development was also driven by risk takers and pioneers. Of course, the Internet did not exist, and, before long, the car dealerships that were housed in storefronts soon expanded into purpose-built car showrooms and repair shops. Because the auto industry was just getting started, carmakers and dealers popped up one day and were gone the next. In order to keep their newborn businesses alive, many of the early dealers carried cars from several different companies so they could spread their risk should some of the automakers fail; therefore, they would be assured of always having vehicles on hand to offer customers. Often, the agreement to become a dealer was simply made with a handshake, an exchange of a small amount of money, and an agreement to accept one or two cars.

With our company, it was much the same. We had no lengthy contracts, no massive commitments of capital, and no heavy-handed agreements that demanded firstborn sons from dealers in order to carry our products. We also relied on handshakes, people keeping their word, and the beliefs that we were on to something and that if everyone worked hard and played fair, we would all be successful.

By 1920, approximately 15,000 automotive dealers and 600 manufacturers were in existence. With many carmakers going out of business after making just a couple of models, banks were wary of lending money to companies in an industry that was still in its infancy. These carmakers may have been inventors, engineers, and mechanics, but many of them lacked the business acumen necessary for banks to bet on them with money. Even automakers that had been in business for a while had a difficult time coming up with the funds they needed to finish their projects and keep the doors open.

Today, a consortium of many large banks handles the financing for our business, but for decades, our company was seen as too great a risk and we couldn’t obtain any credit. When we finally did get a credit line, we didn’t use it, and we stuck to our pay-as-you-go philosophy, which turned out to be a blessing in disguise. For us, getting a credit line from a bank was really more of a way for us to show we had enough customers and enough demand for the manufacturers to take us seriously. I am not the sort of person to say “I told you so,” but I sometimes wonder how the local bank that threw me out when I first asked for a loan would have fared if it would have had faith in my prospects and done business with me.

For the early automakers, independent dealers provided a solution to the problem of raising enough money to keep manufacturing cars. These dealers sent the manufacturers large deposits on new automobiles, which provided the funding for the continued operation of assembling cars. In those early years, selling cars was not difficult. By 1920, consumers bought cars faster than manufacturers could make them. With so much cash flowing into car company coffers from car dealers, carmakers didn’t even need to keep accurate books or predict what future sales would be. The orders rolled in, and the cars rolled out.

With our business, a dealer didn’t have to pay anything to get an agreement to sell our converted vans and lifts. The case was the same with the early carmakers. If a manufacturer thought a dealer would properly represent its products, it got a dealership. Besides the required couple of pages of legal language, the dealer’s agreement included a map and a definition of its sales territory. The agreement stipulated that the dealer did not have exclusive rights to sell in its defined territory and that the manufacturer could still sell from its factory store if it wanted to. The idea was not to take advantage of the dealers but to ensure a steady supply of cars to meet the exploding demand.

The contract also had a stipulation that the dealer would have a building out of which it could make sales and provide service for the products it carried. This might not sound like that big of a deal, but customers needed a place they could come to—with proper signage signifying this was an authorized dealer—so they could “kick the tires” and get their questions answered about this new-fangled product that was not too far removed from being called a “horseless carriage.”

Having a physical presence through our dealer network was—and is—a critical component of the relationship we have with our customers. When the internet came along in the early 1990s, a lot of people talked about how that technology would eliminate the need for the go-between in all industries, including dealers. In the automotive industry, pundits surmised that customers would buy vehicles online and have them shipped to their homes, without ever having to see what they were buying. To them, cars were nothing more than commodities that could be bought and sold online, like pet food, which rather famously also didn’t survive existing solely on the Internet.

In reality, something different happened. Because the internet provided customers with easy accessibility to information, they were flooded with empty claims, both by well-meaning and eager companies and by people trying to make a fast buck. As a result, customers were confused and sought help from knowledgeable experts—like our dealers—who could provide context for all the information they were being bombarded with.

Having a dealer network or a web presence is not an either/or proposition for us; we must have both. Our products are somewhat more sophisticated than others and will always need some explanation. That is where our dealers can explain, in real time, what the products are all about, how they work, and how they can or can’t be altered to meet a person’s specific needs. On the other hand, our customers are smart people who have a lot invested—both in expense and in their need for reliability—in choosing products that meet their needs, and for them, the internet is a vital research tool. For our company, our website is another way for us to communicate with both our customers and our dealers. Instead of making our dealers expendable, the internet enables us to drive traffic to our dealers, which increases their importance that much more.

By 1990, with our dealer network in place, our products firmly established in the minds and lives of our customers, and societal attitudes toward the disabled shifting in our favor, we were ready for hypergrowth, and that’s just what we got.