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Executive Interview: Dan Freeman, Industry Veteran Of 50 Years, Takes A Look Back And A Look Ahead

Dan Freeman, who’s been at the helm of Automotive Parts Associates (APA) for 25 years, looks back on his storied and successful career, and looks forward to giving back to the industry in his well-deserved retirement that begins this month.

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A Cleveland, Ohio, native, Dan Freeman’s career began in 1964 working with his father who was in the wholesale/retail tire business, leasing space in a large discount store and selling passenger and truck tires. After college, Dan’s father asked him to become his partner and help expand the business. And expand they did, opening a second and third location. By this time, they had broadened their offering from selling only tires, to selling accessories and appearance products as well. In the late ’60s muscle cars and high-performance were all the rage, so they added speed equipment to their offering. And then, the next step was adding replacement auto parts in the 1970s.
 
Fast-forward 50 years, and Freeman, who’s been at the helm of Automotive Parts Associates (APA) for 25 years, looks back on his storied and successful career, and looks forward to giving back to the industry in his well-deserved retirement that begins this month.
 
March 1 begins a new era in APA’s proud history; Gary Martin becomes the third president and CEO of APA. Gary is a veteran of two decades at CARDONE Industries prior to his hire at APA in February of 2013. The yearlong transition is now complete. (Editor’s note: see the additional announcement about Martin in today’s issue of AMN.)
 
Automotive Parts Associates Inc. is a member-owned cooperative made up of more than 110 member shareholders, distributing auto parts from more than 300 locations.  APA shareholders create more than a billion dollars of purchasing power annually.

 
1. What was your affiliation with AI Automotive in the 1980s? Was this the beginning of your career in the aftermarket?
 
I developed a startup company, Seagate Automotive Distribution Co. It was a private brand packaging company of replacement auto parts. The warehouse was located in downtown Cleveland, Ohio, and we serviced northeastern Ohio, western Pennsylvania and a portion of Michigan. The concept was such that I purchased in bulk from expediters (co-man) and OE Tier One suppliers. This allowed us to purchase at pricing considerably below WD cost.
 
Seagate was sold to AI Automotive (whose parent company was located in Kuwait; a Fortune 500 company that was privately owned by one family).
 
We had a series of meetings to develop a strategic relationship where Seagate would supply the AI warehouses with private label products to distribute to their company-owned stores and affiliates. At this point, AI was starting to aggressively acquire large WDs, growing at fast pace. The strategy was to have Seagate become the import/export packaging arm of AI Automotive. A buy/sell agreement was executed and Seagate was renamed Resource Automotive Products, and was moved to New Orleans to supply the 26 company-owned AI warehouses and the independent Bumper-to-Bumper WDs. I headed up the project as the president of that division.
 
2. Describe how your role has evolved from your early days with APA to what it is today.
 
In the late ’80s, AI Automotive began selling off the warehouses and I started to look for a new challenge. In 1989, I joined Automotive Parts Associates (APA) as its national sales manager. APA had an intriguing business concept; it wanted to develop a private brand of replacement auto parts for its member warehouses. The brand would be Quality Auto Parts and a national sales force, performing all the functions of a factory sales rep, would support the pull-though at the jobber and installer level.
 
We negotiated a commission from the manufacturer for performing the sales function paid to Quality Sales Co., a division of APA. This became a profit center. Quality Sales Co. would train a salesperson from each member warehouse that supported the product lines and paid a commission to the warehouse. We now had a national sales rep group that made dealer calls, changeovers, handled defects and performed all facets of a national brand direct salesperson.
 
At this time, APA was a privately held company. In 1995, APA became member-owned and our direction changed to more of a traditional group and the Quality Sales Co. was discontinued. In 1999, I became president and CEO of APA.
 
3. With you at the helm, discuss APA’s growth through the years, and what programs, initiatives and strategies were responsible for taking the group to the next level?
 
We began to look for a niche, something overlooked by other groups. We discovered though our affiliation with Bosch that import specialists were ignored by the program groups because their product mix was different and they buy different brands than traditional WDs (they want to buy from the OEMs), and nobody knew how to deal with them.
 
So, we set out to discover these needs and wants of import specialists. APA began to add the key import lines to our traditional domestic brands. At the same time, the foreign nameplates were gathering traction in vehicle sales and the brands we had recently endorsed were OE on these models. Now, our members were “first-to-market” with these brands and we now had a unique story to tell; something different to attract new members.
 
Another factor that differentiates APA from other groups: We’ve developed an incentive trip for our members’ customers, now in our 15th year, and have had as many as 800 installers on these trips. The first week of February was APA’s Sun Splash 2014 Hawaiian Cruise.
 
Everyone wins with this program. The manufacturers win because the shareholders are promoting their parts. It’s also a loyalty program for the shareholders’ installer customers. And, once they are on the cruise, they are making great memories with their customers and building relationships. Some members have changed lines because the line that they’ve got isn’t supported by the trip.
 
We also have initiated two annual promotions — a scratch-and-win contest and a sweepstakes. The next one is a giveaway to the Kentucky Derby. We also awarded an exotic driving experience.
 
APA’s Data Solutions data warehouse has been developed to help our members have the right inventory at the right time to make the sale. We have morphed the AAPEX Show into a second-annual meeting for the APA members to enhance their show experience. Seventy-five percent of the membership attends AAPEX.
 
In a nutshell, it’s all about engaging your customers and your suppliers, and offering them a value-added program. It’s this networking/engagement factor that keeps business relationships strong.
 
So you have to have some intrinsic value that they see and a connection to continue to do business with you. We do it with these types of programs that are unique to APA to hook them for some period of time.
 
4. What are the crucial elements to successful vendor/supplier relationships and what role have your vendors played in APA’s prominence in the market?
 
First and most important, it has to be a win-win for both the manufacturer/vendor, as well as for the group. The expectations need to be clearly identified and measured each step of the way. Our vendors have given APA the opportunity to succeed with programs, changeovers, promotions and funding. In return, APA has grown the volume within the group. We work hard with the membership to try to get them to change over to our vendors. We treat our relationships with the vendors as an equal partnership.
 
5. Similarly, what are the crucial factors in maintaining solid relationships with your shareholder companies, and to what extent have they helped build the APA brand?
 
The APA shareholders demand the group provides two elements. 1. Keep them competitive in the marketplace (with better pricing for one thing) and; 2. Provide them with a venue to interface and network with fellow members. They can ask each other, “How do you incentivize your sales people? How do you pay your countermen?” They can get great ideas and share best practices with members in other parts of the country, because they are not competitors. In return, they’ve supported the initiatives of the board of directors.
 
6. What opportunities and challenges do you foresee for APA in the next several years?
 
First, the challenges: A consolidating market (like the recent example of Advance’s acquisition of CARQUEST and more mergers that are likely on the horizon) makes it difficult to continue to grow the group. The continuing growth of the retailers and big box players compresses margins for our members. The complexity of vehicle repair, requiring a huge investment in scan tools, will drive shops to focus and concentrate on select repair work, and the proliferation of SKUs will be difficult to manage. Telematics will drive more repairs to the dealers.
 
Now, the opportunities: E-tailing (mail order businesses that do not have brick and mortar buildings for walk-ins) and niche markets will continue to be fertile grounds for growth. (A lot of our members say their largest customer is eBay.) There will be more specialized repairs, repair by nameplate (i.e. Honda-only repair specialists), European repair specialists (even luxury Asian specialists focusing only on Lexus, for example), light- and medium-duty truck repair and restoration-only shops.
 
With labor rates that are still well under $100 (versus more than $125 at the dealer), independents can be really competitive on price. And, by specializing, their consumers will feel like they can get a quality repair for less than at the dealer. Shops can recoup the cost of the necessary equipment through the increased volume of specialized work.
 
We will begin to see the Chinese and Indian cars in our market (Chery Motors, Tata Motors). That’s great news for independents because they’ll find new avenues to grab a little business here and there. The big box retailers do not do well with these niches.
 
The future is bright for independent repair shop owners who identify new service opportunities and run a good business.
 
7. How will your legacy live on? What accomplishments do you most want to be remembered for?
 
A legacy is about the people who help make you successful and all the great employees I’ve worked with through five decades I have had hundreds of them that I am proud of. You have to encourage them and ask for their ideas and help. Give them ownership in the success of the company. And my mentors — the people who invested their time in me to fuel my growth in this industry.
 
I’ve been lucky enough to be in the right place at an opportune moment, several times during my career. Before it became SEMA, I attended the Speed Equipment Show in Anaheim, Calif., where I met people like Vic Edelbrock and Dean Moon. I was importing before mainland China was a factor, and I was there at the very beginning when program groups were being formed.
 
8. Recall some interesting stories or wonderful memories during your remarkable industry career that you’d like to share.
 
When AI Automotive bought my company, I had the same realization that Lee Iacocca detailed in his book about his experiences as the CEO of Chrysler. Iacocca said that he not only didn’t know the answers, but he didn’t even know the questions. That was a realization — God gave you two ears and one mouth, you better listen twice as hard as you talk. So, only open your mouth when you absolutely know the answer.
 
Another interesting story … When we started to get into the traditional side of the business, we needed to call on wholesale accounts. I had never done that. We were buying parts from Jobbers Supply, and their No. 1 dealer salesman Mike Pryor said, "I’ll teach you how to be a salesman." The No. 1 lesson he gave me: if you want to make a sale, when you call on a customer, call on him at the same time of day every time, say 8 a.m. on Tuesdays, because they like to have a schedule. Then, keep working them and working them until you get a sale. The best way to make a sale is to walk over to the tire machine and pick up the swab that is used to swab the bead. Every one of them is worn out. You will always make that first sale.
 
9. What words of wisdom do you have to share?
 
Be humble, the industry is hallowed grounds; great people have walked this way before us. This is a great industry. Stay grounded. It’s a personal industry that’s built on relationships.
 
10. What about your career in the aftermarket will you miss the most after you retire?
 
The people; this is a people business. It’s a tough, demanding business but it’s very personal. I have enjoyed every day. It’s been a great time!
 
11. What are your plans for your well-deserved retirement?
 
I’m going to spend more time with my family; I have two daughters. When they were growing up, I was working hard and I missed out on a lot of the activities they were involved in. I also have two grandchildren, so I’m also going to spend some time with them.
 
My wife Judy and I love to travel, so we’ll be doing some more traveling.
 
I’d also like to pay it forward. I’d like to do some mentoring to younger people, maybe through Northwood University. I can teach them how it used to be.
 

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