After starting as an independent service garage in 1919 and adding its first Chevrolet franchise in the 1920s, Ron Marhofer Auto Family has built a century-long legacy and has no plans of stopping. To find out how this Akron, Ohio auto group has continued to thrive for 100 years, we recently spoke to Chris Marhofer, President and COO of Ron Marhofer Auto Family.
Jim Fitzpatrick: Hi, everyone. Jim Fitzpatrick. Thanks so much for joining us on another edition of CBT News. I’m so happy to have with us today, Mr. Chris Marhofer who is president and CEO of Ron Marhofer Auto Family, and they are located in Akron, Ohio. Thank you so much, Chris, for joining us today.
Chris Marhofer: Glad to be here.
Jim Fitzpatrick: Sure. So you guys have been in business for a hundred years?
Chris Marhofer: Yes, we have since 1919.
Jim Fitzpatrick: Wow, that’s amazing. Congratulations to you. Tell me a little bit about the background of the company.
Chris Marhofer: Thank you. So this was started with my grandfather’s brother, when he came back from World War I working on tanks. He opened an independent service garage and then in the late 1920s, we actually got a Chevrolet franchise and so we’ve been a new car retailer since the late twenties.
Jim Fitzpatrick: Wow.
Chris Marhofer: We currently have six locations, seven manufacturers currently. And yeah, I’m a third-generation and my goal is to get us to the next 30, 40 years.
Jim Fitzpatrick: That’s fantastic. And how many Marhofers are in the business today?
Chris Marhofer: So my father and I, and then I have a twin brother that’s in the business as well.
Jim Fitzpatrick: Oh, that’s pretty cool. Okay. And is it an industry that you think will be around for small dealers? There was an expert recently that wrote an article that said in the next 20 years, the retail automotive industry will be made up of about 25 different large retailers and that’s it. The mom and pop stores of yesteryear will be gone. You agree with that?
Chris Marhofer: I don’t agree with that. I believe that there will be consolidation. I do believe that the number of rooftops is going to condense and the number of owners is going to condense. I think you said to 25 owners.
Jim Fitzpatrick: Right.
Chris Marhofer: I don’t see it being that extreme just because the industry is so large and there’s so many cars, new and used, sold annually that I think it’s going to stay relatively fragmented, but we will see consolidation, owners and the number of rooftops, I believe.
Jim Fitzpatrick: Yeah, that’s great. And you guys are doing some cool things. There’s a lot of talk about one price selling. Does it work, does it not work? I know that you guys do that currently in your stores. Talk to us a little bit about the decision to go to one price and how that’s working.
Chris Marhofer: Yeah, so we’ve been doing one price selling for a while. It’s something my dad put in place when he became a Saturn retailer. So they obviously did one price. He don’t believe in being a hypocrite, so he put it in all of his stores. So for my career, it’s all I’ve known.
Chris Marhofer: I will say that with the way that business has moved with a lot of research being done online and the consumer doing so much work outside of the car dealership, it makes it easier for us to sell cars. It makes it very transparent and it makes the transaction faster. And I think in talking to other operators, at least on the used car side, this business has really moved close to a one price model.
Jim Fitzpatrick: That’s right, yeah. I mean, if your lowest price isn’t listed on your website now, you’ve got a shot, you don’t have a shot at that customer because they’re going to be looking for the lowest prices right on the website. The idea of the customer wanting to come in and spend four or five hours negotiating in the showroom is really just over.
Chris Marhofer: Yes. From our perspective,` it’s gone.
Jim Fitzpatrick: Sure. Talk to us about digital retailing. It’s something that many dealers are trying to get their hands around. I know you all have embraced that concept. Talk to us about that.
Chris Marhofer: Yeah. So going back to what I said earlier, I mean most of the research is being done online. And so our group, we all saw Carvana come out, I think it was two years ago. You start to see the retail cars without a car dealership. So like, wow, they must see a significant demand for that in the market.
Chris Marhofer: So as we looked at them doing that, we looked at internally, we looked at the barriers of us delivering cars to people at their homes and we didn’t discover too many holdups in that process. So we do home deliveries and we have been doing them for about a year now.
Jim Fitzpatrick: Really?
Chris Marhofer: Yeah. We advertise them on our website and we market them in our different advertising. We sell about 1,200 to 1,300 cars a month and we’re doing about 40 to 50 home deliveries a month. A lot of them are used cars, but we are doing some new cars and we just work the transaction through our BDC and then we connect them to our sales team leaders. And then we have a crew of about a hundred drivers that we utilize to deliver the cars to the consumers.
Jim Fitzpatrick: That’s fantastic. And where’s the paperwork or where are the contracts being signed? Is it online or does the driver bring the paperwork to the customer?
Chris Marhofer: The driver brings the paperwork to the customer. We ideally would like to do it online, but from everything we’ve seen, the technology is not there yet. I think it’s going to be. We bring the customer the paperwork.
Jim Fitzpatrick: You guys are doing some cool things in the service department. NADA says that we need about 76,000 technicians a year for the next four or five years. The industry is just going through some major growth spurts and then you’ve got technicians that are retiring or maybe even getting out of the business and pursuing some other careers. What is it you guys are doing to combat that and get good technicians within your company?
Chris Marhofer: Yeah, good question. I don’t know what we’re doing is unique, but a couple of years ago we really stopped hiring skilled technicians from the outside just because we found it was (a) very difficult, and then (b) we really got into a price war.
Chris Marhofer: So we kind of redid our strategy and we really focused on the entry-level. So we were hiring into our lube technician role and we looked at our training process and so we’ve really looked at that as our future talent and we overstaff the lube tech position and we grow them through our internal training program.
Chris Marhofer: I was meeting with our fix ops director just the other day and we analyzed it and a little over 50% of our current technician workforce started out for our group as a lube technician.
Jim Fitzpatrick: Really?
Chris Marhofer: Focus on the entry, hire as many as we can, and we have a good training plan and we promote close to 80% of them. Car tech or maintenance team.
Jim Fitzpatrick: And with margin compression in the sales showroom now, it’s tough to make a buck on a new car obviously. Used cars, it looks like it’s even affecting that somewhat because of the competitiveness of the marketplace out there and all that a customer has to their availability online. The service department is kind of the last hope for a dealership, isn’t it? To make any money.
Chris Marhofer: I would say the service department from my standpoint, I still believe that there’s good margin left in the finance and insurance area of the business because we continue to do well there.
Jim Fitzpatrick: Yeah, that’s for sure. And what do you think dealers have to do in order to get more customers to increase their retention level and service? It seems as though we still suffer from a 30%, 40% retention level when somebody purchases a vehicle to try to get them back into that service lane.
Chris Marhofer: That’s a really good question. I can tell you what we’re working on is we’re making sure that we always have available hours for when consumers want the work done. Because the number one constraint of why people don’t come to the car dealership is they can’t get the work done fast. And we have the image that it’s going to take forever and it’s more costly.
Chris Marhofer: So for us, it’s making sure that we have more availability in our schedules and then also making the consumer aware through general marketing, because dealerships do have very competitive pricing. A lot of consumers don’t have that perception.
Chris Marhofer: So it’s (a) making sure we have the availability in our schedule, focus on getting work done fast, and then also making sure the awareness is there. And historically as car dealerships, we’ve just always been very busy on getting warranty work done, getting used cars work done. It’s never come to be a priority and that’s where we really need to shift in order to grow that business.
Jim Fitzpatrick: Yeah, for sure. You hear a lot these days about building the right culture inside of a company. Even more importantly in your situation, to build it inside of a dealership. Talk to us about the culture in your group. Obviously it’s been around a hundred years, you must be doing something right. How do you keep good people? And that really boils down to building the right culture. Talk to us about that.
Chris Marhofer: Yeah, so I think that culture is a big deal and I’m very blessed that my dad is our dealer principal and he’s focused on that significantly over the last 20, 30 years. And so the principles that we have in place, I’ve learned from him.
Chris Marhofer: And one of the biggest things that we do is we focus on teamwork and we’re a very flat organization. So all of our employees help each other regardless of department, regardless of position. And our number one focus is taking care of our customer, creating a world class customer experience. So that’s a big part of our culture.
Chris Marhofer: The other thing is we’re very flat so we don’t have the standard general managers in our stores. We kind of have almost like a two tier level of management and employees. So it really cuts through the communication barriers, or the typical hierarchical barriers that you have in a car dealership.
Chris Marhofer: So a big thing our working together, making sure that we’re taking care of the customer and then we really believe in communication. So anytime that we change anything in the car dealership, we try to use all members of the team from the front line up to the higher level management of the company to get the best idea.
Jim Fitzpatrick: Sure. The industry has suffered from not having enough women in either on the showroom floor or in managerial positions or dealer principal positions. What does that look like in your store?
Chris Marhofer: Yeah, so I like to have a diverse workforce. We have about 320 full time employees and close to 400 total. And last time I looked, we are close to a hundred women employees. So I’d like to have more women in the car dealership just because we have both coming in as consumers.
Chris Marhofer: What I will say is we found success in attracting more female employees by having females in leadership roles as sales managers in the company. They feel more comfortable working in that environment and the thing is that, I don’t know that we did it on purpose, but we organically found a work to attract more females into our organization, which we like to have.
Jim Fitzpatrick: Yeah, that’s for sure. How does a dealership, what changes needs to happen in the retail auto industry in order to attract more females to come work at dealerships?
Chris Marhofer: I think the biggest thing that car dealerships need to do is focus on schedules and hours because the biggest thing for a lot of females, obviously are mothers as well, and historically car dealerships are known for longer hours and rigorous work weeks.
Chris Marhofer: And so I think that if we can focus on adapting our schedules to be a little bit more friendly as far as times that they’re at the car dealership or the amount of hours, I do think that that will help and retain more female talent.
Jim Fitzpatrick: Yeah, for sure. With us being living in a digital world today, and obviously the auto industry is right there at the forefront. Do we look for a different, do you look for a different skillset in salespeople joining your organization today than you did maybe 10 or 15 years ago?
Chris Marhofer: Yes. So the sales people that we’re hiring, because we’re one price, we’re really trying to focus on relationship builders. The people that are selling cars for us don’t need to be traditional sales people who are hard closers. They don’t need to put the pressure on people.
Chris Marhofer: Really what we’ve found is the consumer has done most of the research before they come in the door so they’re really trying to look for somebody that’s going to give them a pleasant experience, answer some questions that they have, and give them the answers they need on the cars.
Chris Marhofer: The consumers, in our opinion, we see a value in the sales consultant role, but it’s changed a lot. These customers that are coming into our showrooms, I don’t feel necessarily need to be closed or sold. They just need to be helped.
Jim Fitzpatrick: Well, Chris Marhofer. I want to thank you so much for joining us here on CBT news. It’s been quite a pleasure and very enlightening. Hopefully we can do a followup with you in a few months to see how things are moving along there at Ron Marhofer Auto Group, and much success to you.
Chris Marhofer: Great. Thank you. It’s been nice talking to you.
Jim Fitzpatrick: Great. Thank you.
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