Gulf States delivers for Toyota
Automaker’s new connection to Texas will be another plus for Houston distributor
GULF States Toyota tops the Chronicle 100 list of private companies for the fourth year in a row, and president Martin Collins expects the company to continue to grow and benefit from Toyota moving its North American headquarters to a Dallas suburb.
The company brought in the most revenue in 2014 of private companies surveyed by the Houston Chronicle. Collins expects 3 percent growth this year as more cash in customers’ pockets from lower gasoline prices offsets less spending in the oil and gas industry.
Houston-based Gulf States, which delivers Toyotas and Scions to 155 dealerships in Texas, Louisiana, Mississippi, Arkansas and Oklahoma, will soon have its supplier close to home.
“The fact that Toyota will have 4,000-plus associates and their families residing here in Texas, I think is going to give us a boost when you look at the tremendous advocacy that Toyota employees have for their products,” he said. “There’s no doubt that they will provide us with a competitive advantage in the marketplace in the Dallas area.”
After several years of growth, the regional Toyota distributor grew 4 percent last year by number of cars delivered, Collins said. It brought in $7.6 billion in revenue in 2014, up from $7.5 billion the year before.
More than 300,000 new Toyotas pass through the company’s processing center near Bush Intercontinental Airport each year, Collins said. The company, founded in 1969, employs 2,000, mostly in the Houston area. It also carries $35 million worth of Toyota parts in inventory.
He said the foundation of its success in recent years has been the economic recovery coupled with high crude oil prices that lifted many Gulf States Toyota distribution areas. The drop in oil prices in 2014 and this year has mixed effects on the company.
“There’s no doubt that the job growth, due to the price of a barrel of oil, has dampened, and business investment and capital investment has been reduced in many of those companies,” Collins said. “However, the consumer is experiencing lower prices at the pump, and that’s putting more discretionary income in their pocketbooks.”
Having that extra cash makes a difference for Toyota customers.
“The individuals and families that buy Toyotas obviously are mindful of budgets,” he said. “And if they’ve got extra money available to them in any given month, it’s being spent in the general economy at restaurants and movie theaters and theme parks, and ultimately it makes affordability of an automobile better.”
He added, “We certainly see growth tapering off.”
But with growth of 11 percent in 2013 and 5 percent in 2014, those increases weren’t going to last, he said.
Steve McDowell, who publishes TexAuto Facts with Houston-area cars sales data, has said that 2014 was a record year for auto sales. Even though he predicts a drop in sales this year, local demand remains strong, he said.
And it’s strong enough across Gulf States Toyota’s five states that Collins said the company is at a peak level of re-investment, updating technology systems and its vehicle processing center and equipment, to prepare for growth.
For Gulf States, growth comes in step with a growing population, Collins said.
Toyota rarely opens new franchises, he said, on the idea that it’s more efficient to have a smaller number of large dealerships. But with population growth in Texas, a dealership in Fort Worth opened last year, and two more will open this year, in Brownsville in the Valley and Palestine in East Texas. In addition to Dallas, Collins expects growth in the other major Texas cities: San Antonio, Austin and Houston.
Mac Haik, with 16 car dealerships in Texas, just added its first Toyota dealership when it took over Star Toyota in League City in April, changing the name to Mac Haik Toyota, said the president of the company, Terry Shields.
“I think it’s one of the top franchises in the country,” Shields said of the Toyota brand. “Gulf States has been great to work with.”
The Toyota Camry and Corolla were in the top six best-selling cars in the U.S. in 2014, Kelly Blue Book reported. Collins said these models were top sellers at Gulf States’ dealerships, as are the RAV4, Tundra and Tacoma. The Tundra and Tacoma have the added appeal of being assembled in Texas.
Last year and through May 2015, 54 percent of the vehicles Gulf States delivered were trucks and 46 percent were cars.
“As the price of fuel becomes more stable and at low levels based on historical norms, people’s willingness to buy small and midsize SUVs and pickup trucks has replaced the desire for them to buy cars,” Collins said.
Toyota is planning to unveil a new Tacoma and Prius later this year, and two new Scions, the iM and iA.