We welcome Aaron Zeigler, President of Zeigler Automotive Group, to CBT Automotive Network. Aaron discusses the expansion of their operations to 25 dealerships and the considerations that lead them to their continuous expansions.
Aaron says that since the recession the automotive industry has had a great run and they believe that all signs are pointing towards the continuation of these trends within the industry. With the SAAR staying above 17 million and the great people within their dealership Aaron tells that they would love to continue their current dealership growth.
Additionally, Aaron discusses the importance of inventory to the industry, and why that drove them into a larger market and bigger volume stores. He says this is also where we might see smaller hometown dealerships struggling to keep up within the market. Finally, he explains the factors behind his dealership’s low employee turnover rate and the four steps that have helped them to achieve this.
To hear more from Aaron Zeigler check out the full interview above.
VIDEO TRANSCRIPT:
Jim Fitzpatrick:
Hi everyone. Thanks so much for joining us on another edition of CBT News. Today we’re excited to have with us Mr. Aaron Zeigler, who is President of Zeigler Automotive Group. Thanks so much for joining us Aaron.
Aaron Zeigler:
You’re welcome. Happy to be here.
Jim Fitzpatrick:
Sure. So you were recently written up in Automotive News and really focused more on the expansion of your operation since, under your leadership, you’ve grown the auto group to 25 dealerships, so I have that right?
Aaron Zeigler:
That is correct.
Jim Fitzpatrick:
Yeah, you’re pretty courageous nowadays doing that. I mean, there’s a lot of dealers out there that are kind of taking a wait and see because of some of the headwinds that are out there in the industry and such. Talk to us a little bit about your bold move.
Aaron Zeigler:
Well, we’re pretty bullish on the industry. It’s been a great run since the recession and all signs are that we think that it’s going to continue moving forward. The SAAR’s still running over 17 million and things are kind of cruising along and we’ve got a great group of people that want to continue to grow.
Jim Fitzpatrick:
And from what it looks like, you’re going kind of from outlying markets to more of the larger markets, right? Talk to us about the decision to make that strategy or create that strategy.
Aaron Zeigler:
It’s really a volume game today. Obviously there’s a compression on margins out there, so you’ve got to do a lot of volume, and when you go to the bigger volume stores, it allows you to be able to pay higher and get higher quality people and advertise more and carry more inventory and whatnot. And that’s really the name of the game today in my mind. And that’s why we’ve looked at the bigger markets, the bigger volume stores, to grow with.
Jim Fitzpatrick:
In your opinion, what are the next 10 or 20 years look like for the smaller hometown dealerships that are maybe getting 50 to 75 units out a month?
Aaron Zeigler:
You know, I think there’s certainly still a place for them, but it’s going to be more difficult to compete because of the technology pieces, so we’re able to get technology and lever it across all of the dealerships. And with the advent of the Internet and the selling over the Internet, a lot of times whoever wins the car sale is whoever has the car, so inventory’s become a really big deal as well, and I think in the smaller stores, that’s something that they’re going to struggle with going forward.
Jim Fitzpatrick:
Were there any apprehensions on your part with regard to expanding during these times at all?
Aaron Zeigler:
No, it’s been, like I said, a great run the last 10 years. It’s worked out really well for us. We’ve got a great group of people that are all on the same page in our organization that want to be able to grow, and grow with us, and that creates opportunities for people within our organization to move up as well.
Jim Fitzpatrick:
Speaking of people, Zeigler Auto has a really low employment turnover, unlike the rest of the auto industry out there. Talk to us about your secret in keeping people.
Aaron Zeigler:
Well, the only way that you’re going to be able to grow is to have a stable workforce in the organization. I think there’s four things that we’ve done that have created low turnover. The first part is we really like to take our time when we hire people to make sure that we have the right person that’s going to fit inside our organization. Once we get the person in our organization, we’ve got a really extensive development program and it starts day one with a new hire orientation program and it never ends. So if we hire the right person and we’re developing them, then we’ve got to have a world class culture. If we’ve got a world-class culture where it’s really exciting to come to work every day, and people are having a lot of fun and they’re playing offense and it’s very vibrant, then they’re going to want to stay in that type of culture.
Aaron Zeigler:
And then ultimately as we grow as an organization that creates opportunities for them to move up inside our company. So they don’t need to go anywhere else to move up in the organization, they can do that right here with us. So all four of those points, if we continue to hit on those, then we’re going to continue to have low turnover.
Jim Fitzpatrick:
What does the auto industry need to bring to the table in order to attract that good quality candidate that might be a college graduate coming out of school and looking to start their career and choosing the retail automotive sector?
Aaron Zeigler:
We do a lot of recruiting through unconventional means and we do all of our recruiting in house and we’ve got six full time people that are going out and working with college students and whatnot. And a lot of times somebody isn’t thinking, “Hey, I’m going to go to college for four years and then go sell cars.”
Jim Fitzpatrick:
That’s right.
Aaron Zeigler:
What we do, is we go in, we meet them, and we show them a career path of how they can move up in our organization and what the opportunities are. We teach a lot of people to run businesses that are 50 to a hundred million dollars per year, and that’s a whole different ball game and really exciting to a lot of people coming out of college. We’ve also recruited a lot of athletes as well because athletes that are college athletes, already it’s almost like having a full time job and you know that they’re very driven already and they have a lot of the attributes that we’re looking for from a competitive standpoint.
Jim Fitzpatrick:
Yeah. As the leader of a large auto group, what are some of the things that you see down the road that are challenges or do pose a threat to dealers today?
Aaron Zeigler:
You know, the one thing that affects profitability dealerships is certainly rising interest rates. You’ve got a double whammy because you’ve got the floor plan costs and then you’ve also got higher costs when customers go to to finance a car. So the SAAR is still extremely high right now, it’s a little bit off from where it’s been, and I think that’s because interest rates have peaked up and it’s a little bit more expensive for consumers to buy a new car.
Jim Fitzpatrick:
And with regard to the culture that you were able to build inside of your dealer group, which I commend you on and congratulate you on because you’re really known for having successfully built a great culture in your store, what are some of the elements that have to go into that? What should other dealers that are listening to you right now, if you had to pick four or five things that they need to focus on in order to build a good culture in their group, what would those things be?
Aaron Zeigler:
You know, the first thing that we had to do is define our culture and we have five key elements of it and it’s passion, reputation, integrity, drive and execution. And each one of those letters spells out pride, so we talk a lot about having pride in the organization. But then once you define it, then you’ve got to live it every single day, and you’ve got to have it in every single dealership, every single department, and then you’ve got to be able to measure it as well. And we measure our culture twice a year. And every single person in our company does a survey. It’s online, it’s anonymous, we only know which dealership they’re from, which department they’re from, and we take that feedback from them and then we go meet with every single department individually. And we come up with three key elements or little tweaks that we want to make going forward.
Aaron Zeigler:
And I always tell our employees that gives them a say in how we run the company going forward. It gives them a say in how we run the company in a totality. And as we’ve done this throughout the years, there’s little things that we may miss as a dealer that we don’t think is important, that our employees think are really important. So we’re able to make those changes inside each one of the dealerships and it’s a consistent process going forward. We’ve been doing this now for 12 or 13 years and every single year the numbers keep going up in the right direction.
Jim Fitzpatrick:
Sure. That’s phenomenal. What do you do with that individual, I’m sure you’ve had them from time to time, that sales you 20 cars a month with good grosses, but is kind of like a renegade? They don’t really adhere too much to the culture, maybe they don’t show up for sales meetings, but man, they’re knocking the cover off the ball with regard to performance. What do you do with an individual like that?
Aaron Zeigler:
Well, your top performers, you’re going to give them maybe a little bit of a latitude, but if it gets to the point where somebody just isn’t fitting into our culture, or is disruptive, we’ll make a change with them. We had, about eight years ago, the number one sales person in our entire organization, I parted company with him because he was just too disruptive. What happens a lot of times as he may sell a lot of cars, but then you bring in two or three people to replace him and you sell a lot more and everybody else raises their sales by a couple of units as well. And ultimately, you’re a lot stronger because it can only can only take one or two people that mess up a culture in a dealership, and if that’s one of your top performers that everybody’s looking up to, that just doesn’t work. [inaudible 00:08:50] a lot of times in sports where you’ve got a great individual performer but they never win the Super Bowl or the World Series because they’re too focused on themselves and that just doesn’t work in our organization.
Jim Fitzpatrick:
There was an article written recently that said that, “In the next 20 years you’ll see about 25 large auto groups controlling 85% of the dealerships that are out there.” Do you agree with that number or do you think it’s still made up of independent dealerships?
Aaron Zeigler:
I do agree with that number and I think that’s where the market’s going. A couple of things have happened. Dealerships are very expensive, the facilities and property are very expensive, and manufacturers require a lot of capitalization so it’s really hard to break into, to be able to buy a store. So most of those stores are going to go to the groups and a lot of them are controlled by manufacturers today. Almost every manufacturer, every dealer agreement they have first right of refusal on, so a lot of times what you are finding out about the dealerships is through the manufacturers these days first, where in years past, manufacturer used to be the last one to know about a transfer of ownership.
Jim Fitzpatrick:
Well, Aaron Zeigler, president of Zeigler Automotive Group, I want to thank you so much for joining us on CBT News. Much continued success to you and your staff there. It sounds like you’re knocking the cover off the ball, so we’re going to follow you closely and hopefully we can have you back on a few months and see how things are going.
Aaron Zeigler:
Sounds great. Love to do it. Have a great day.
Announcer:
CBT Automotive Network, the number one most watched network in retail automotive. This has been a JBF Business Media production.
