Mention Herb Chambers to anyone around Boston and more likely than not they know who he is: The guy with tortoise-shell glasses on billboards who sells more cars than anyone in New England.
Now you can add this about Mr. Chambers: He’s a billionaire with a $1.5 billion fortune, according to the Bloomberg Billionaires Index. The value of his 55 dealerships, selling everything from Buicks to BMWs, got a nice bounce in March after Warren Buffett purchased the nation’s largest closely held car retailer, Van Tuyl Inc., at a big premium.
“I’d be disappointed if I wasn’t a billionaire, after working all these years,” Mr. Chambers, 73, says with a laugh in a recent interview.
Car salesmen are inherently optimistic but Mr. Chambers has a reason for feeling good these days. U.S. auto sales are at their highest level in more than a decade and the number of dealers has fallen 20% since the recession, lessening competition.
All this should push up revenue from his dealerships about 6% this year to almost $2.7 billion, Mr. Chambers said. Berkshire Hathaway Inc.’s purchase of Van Tuyl, which does business in 10 states, showed how strong the market is for the handful of very large closely held dealerships such as Mr. Chambers’s, the 12th largest overall.
He achieves billionaire status based on the $4.1 billion cash Mr. Buffett paid for Van Tuyl, as well as accounting for a smaller fortune Mr. Chambers made in his first career as the world’s top copier salesman.
PHOTO WITH MR. BUFFETT
Mr. Chambers is hardly in hiding, of course. About one in seven people in the state buy a car from his dealerships each year, nearly all of which bear his name — Mercedes and Bentley bar dealer names. Off hours, Mr. Chambers is often found dining at Davio’s, a Beantown power spot owned by his best friend. Now and again his 197-foot yacht, the Excellence V, makes an appearance in the harbor.
Photo: Herb Chambers billboard in Malden, Mass.
While the billionaire says he’s enjoying the business more than ever, the prominence in his office of a photo of him with Mr. Buffett from a recent National Automobile Dealers Association meeting begs the question: Is he going to sell, too?
“At some point in time I absolutely would sell,” Mr. Chambers said. “There’s a lot of private equity money trying to get into the automobile business. A lot of the investment banking firms, several of them in the Boston area, have been talking to me.”
In the past, he’s rebuffed interest from AutoNation Inc. and Penske Automotive Group Inc. because the timing wasn’t right, Mr. Chambers said.
DEALER PROFITS
Auto conglomerates as well as investors including George Soros are interested in acquiring large dealers, said Mark D. Johnson, president of MD Johnson Inc., a Seattle-based automotive mergers and acquisitions firm. U.S. annualized auto sales are up 70% from their 2008 low. Dealer count totals 17,000, half the number when Mr. Chambers began in 1984.
“Dealer profitability is at an all-time high and Mr. Chambers has big, profitable stores,” said Mr. Johnson. Half of his locations sell higher-margin luxury brands such as Lexus and BMW. All are within 75-miles of Boston, the sixth-wealthiest city in the country.
“The level of concentration is going to bring a premium, just like Van Tuyl did,” said Mr. Johnson, who estimated Mr. Buffett paid about a 20% premium.
COPIER SALES
Mr. Chambers became fixated on cars as a 10-year old boy, when a 1953 Skylark appeared in the window of a Buick dealer in his native Dorchester, a blue collar part of Boston. Each day for a month Mr. Chambers would ride his bicycle to admire the car, until it was gone.
His business career started as a copier salesman at age 22 following a stint in the Navy. Mr. Chambers built his firm, A-Copy America, into the largest copier dealer around. He sold it for about $80 million in 1983 and it’s now the Ikon division of Ricoh Co. Ltd.
A year later, Mr. Chambers went shopping for a Cadillac in New London, Conn., and was so disgusted with the experience he made an offer to buy the business for $1.7 million on the spot. He needed something to do, he said, and figured improving customer service would boost sales. He was the first dealer to clean cars when they came in for service, he said, industry standard now.
Within a year Mr. Chambers added Hyundai, Porsche, Mercedes and BMW franchises. Today, in addition to the $300 million of inventory on his lots, the billionaire‘s personal car collection includes a 1953 Skylark.
Mr. Chambers says a sale of his company isn’t a foregone conclusion. After all, he has a 49-year-old son in the business. Still, the impulse remains.
“You get to be 70 years old,” he said, “and you start to think about ‘What am I going to do with this business?'”
