In 1897, W.T. Jones built his wife a Victorian mansion, still standing on Carthage’s main street a few blocks from where it circles Moore County’s courthouse. He was the president of Tyson & Jones Buggy Manufacturing Co., which in 1890, its best year, built more than 3,000 horse-drawn carriages and shipped them all over creation. The company put the tiny town of Carthage on the map. Then came the automobile.
In 1987, with four used cars and $800 in his pocket, 21-year-old Richard Yow opened Rick’s Auto Sales across from the old limestone courthouse. He fixed and spiffed up the vehicles he sold himself, swabbing Joy dishwashing detergent on the tires to make them shine — “they looked great until it rained” — because he could not afford the Armor All dressing big dealers used.
The business shared a building with a fish market, and once upon returning from vacation, he discovered the owners hadn’t paid their electric bill. “The power was out and the cooler was off, so the fish went bad. They’d dumped them down the storm drain.” Rick’s Auto Sales expanded, taking the whole building. “It took me two years to get the smell out.”
This year, what is now Rick’s Auto Marketing Center, three miles away on the outskirts of town, will sell more than $4 million of cars and trucks whose leases, held by some of the state’s largest companies, have expired. That’s up from $2.8 million in 2004, when sales increased $430,000 from the previous year. Most buyers are Tar Heels who visit the lot on U.S. 15-501, rolling through the Sandhills between Sanford and Southern Pines.
Others shop by Internet, then fly to North Carolina, pick up their cars, take a vacation and drive home. Some have them shipped overseas. For them, Rick’s Auto Marketing Center has put Carthage — estimated 2004 population: 2,169 — on the map. That’s one reason it’s Business North Carolina’s Small Business of the Year.
“I like the notion that you can still build a fair-sized enterprise somewhere other than in one of our big cities by finding a niche and working it,” says Scott Daugherty, executive director of the Raleigh-based Small Business and Technology Development Center. “Also, his success is attributable to his service attitude. I don’t care what kind of business you’re in, that’s got to be pervasive.
Daugherty was one of the judges in this year’s competition, sponsored by BB&T Corp. The others were Ann Garner Riddle, vice president of T.W. Garner Food Co. in Winston-Salem, which was last year’s winner, and David Kinney, the magazine’s editor in chief.
Yow is a big small-business owner — he’s 6-5 — whose small-town surroundings conceal as much as they reveal about his business. As he walks through the shop in the 6,000-square-foot metal building he built in 1998, one of his nine full-time employees details a panel truck. “He doesn’t speak much English, but he has a talent for fixing anything.” Next door, pickups pull up in front of Luis General Store — Bait and Tackle.
In front of the glassed-in showroom are lines of nearly new Ford Tauruses and Explorers, Nissans and scattered Buicks, BMWs and Mercedes-Benzes. To one side of the lot rests a row of identical Chevrolet commercial vans. At first glance, little distinguishes this place from hundreds of other used-car lots that dot the state, though in truth there are hardly any similarities. But here Richard Yow, 39, sells cars, which is all he ever wanted to do.
“My father worked for a Chevrolet dealership, and I thought that was the greatest job on earth. I love the concept of buying and selling something for more than you paid for it. If I bought a skateboard for $10, I’d want to turn around and sell it for $12. Once out of high school, all my friends went off to four-year colleges. I wanted to do cars, but my parents said, ‘No, you’re going to school.’ ” His associate’s degree from Central Carolina Community College in Sanford is in industrial maintenance. “My parents said, ‘Pick something — you’re going.’”
But he came back to Carthage and opened his car lot across from the courthouse. “I remember sitting at my desk, thinking, ‘Gosh, what am I going to do next?’ Some days I had nothing to do.” Yow had a 1972 Dodge wrecker, but he had to wait until his mother got home from work to retrieve the trade-ins he bought from dealerships that considered them too old or too worn out to bother trying to sell. “I had to take the tag off her car and put it on the wrecker.”
Gross sales his first year in business totaled $43,630. But the owner of the building in which he had his one-room dealership offered to sell it to him for little more than the $200-a-month rent he was paying. He established a credit line with a local bank. That allowed him to buy better cars. Then he got lucky.
In 1989, while scouring a dealership for trade-ins, he stumbled across a well-maintained, late-model car. The sales manager was unsure of its origin, so Yow called the N.C. Department of Motor Vehicles, which traced the title. The car was registered to PHH Arval, an international leasing company in Sparks, Md. He called to ask if he could buy the car — and others like it. The answer was yes — if he could prove he had good credit and other factors. “As long as I didn’t have to provide money,” Yow recalls, “I didn’t have any problems.”
He quickly learned that selling cars from a leasing company wasn’t like buying them wholesale from dealerships, car-rental companies or at auctions. The vehicles are uniformly better. Most are assigned to a single driver for two to three years, have been maintained by the leasing company, are well-equipped and have relatively low mileages, usually 40,000 to 60,000 miles.
Yow is able to tell buyers where the cars came from. His crew does minor repairs and routine service, and he farms out any that need more work to a network of local shops. If major work — say, replacing an engine or transmission — is needed, he sells it on the wholesale market that got him started.
The price of Yow’s cars generally falls between wholesale on the lower end and Kelley Blue Book retail on the upper. He can still make a profit, he says, because of low overhead and fewer middlemen. “Normally a dealer would have to buy the car at auction or wholesale. You’d have auction fees, or that dealer would have to make a profit. Then you’d have transportation costs.”
Working with PHH, however, is a pressure cooker. His dealership was designated a PHH marketing center in 2000, assuring him of a steady supply of vehicles. But the company wants to get the off-lease vehicles sold and off its books as quickly as possible. His and the one other PHH marketing center in North Carolina — Edenton Motors in Edenton — must do that.
Yow might get a call to pick up four or five vehicles whose leases have expired from a Winston-Salem company. Only when the cars are on his lot does he negotiate a price with PHH. He has limited leverage. “You basically have to come to an agreement. There have been plenty of times I wanted to pay $2,000 and they wanted $5,000, but you just have to meet in the middle. It all works out over a while.”
Once Rick’s Auto Marketing Center has the cars, he typically has seven to 14 days to sell them. He sells about 50 to 60 a month. “It boils down to time is money. I’m graded or ranked by the time from when that vehicle is returned to them to the time I get it sold. They have already leased their client another vehicle, and they want to get paid immediately.”
In the early 1990s, “I was trying to do everything myself. I went to get the cars, I handled my own transportation and detailing, everything.” During the ’91 recession, when sales slowed but PHH’s flow of cars didn’t, he struggled to keep the business alive. “I had a lot of sleepless nights. They’re going to send me the cars whether I’m selling them or not. I can’t say, ‘Hold it, I’m having a slow month.’
“It wasn’t all the recession. I didn’t have the right retail mix. Now I’m one to put up my safety net quickly. If I see things starting to slow down or fall off, I start looking at other avenues to make money. If wholesale isn’t working, I look harder at retail. If retail isn’t working, I look harder at Internet sales.”
He has learned to delegate, which could become increasingly important. Early this year, he negotiated a deal with PHH to open a marketing center in Chesapeake, Va., relying on towing contractors there and in Richmond to retrieve cars. He bought an 18-wheel car carrier to fetch the 600 cars a year he expects to get from the Old Dominion, some of which will be sold in Carthage.
Another challenge is one he shares with many small-business owners in a small town, especially if they grew up there: Everybody knows your business. “That puts a lot of pressure on you,” says Russ Cribbs, a vice president and business banker with BB&T in Pinehurst. “And you hear a lot of stories about people buying lemons. I haven’t ever heard any of those things about Rick.”
“If we sell a car that has a problem,” Yow says, “I want that problem handled before we sell another car. If I promised your wife I’d fix her power windows and now she’s fussing at you, you’re going to see me in the grocery store and you’re mad. You’re going to catch me over in the fruit aisle and want to know why I didn’t fix your wife’s car.”
Yow’s high profile in Carthage is not only due to his height. He is married to lawyer Kathleen Shelton-Yow, who practices there and in Southern Pines. He has rented and donated vehicles to law-enforcement agencies and recently gave a cargo van to a no-kill animal shelter in Raeford. Yow bought a $30,000 programmable sign for his business to advertise specials but also civic and charitable events. “I didn’t pay but $20,000 for my first car lot,” he says. When he considers the future, it has borders. “I’d like to cover 100% of the state of Virginia — we cover about 50% now — and continue to cover all of North Carolina, like we do now.” Two states, he says, will be enough “if we can get it down to where we’re running like a well-oiled machine.”