Executive Profile with Jim Fitzpatrick, Powered by CBT News

The Dealer Partner Model That Keeps Joe Serra Sleeping Soundly

• CBT News • Season 1 • Episode 1

Share episode

What happens when you build an automotive empire by actually giving up control? The remarkable 50-year journey of Serra Automotive provides a masterclass in trust-based leadership that challenges conventional wisdom about running dealerships.

Chairman Joe Serra and President/CEO Matt Serra have cultivated something extraordinary: the 12th ranked automotive group nationally (6th among privately-held groups) spanning 54 dealerships across 7 states. Their secret? A decentralized model that gives dealer partners genuine autonomy and equity, creating a fundamentally different relationship between ownership and operations.

"If I'm paying you to run a store, let me run it," explains Joe, who purchased the company from his father in 2000 after working his way up from partner. This philosophy permeates everything about Serra Automotive's approach - from how they structure acquisitions to their remarkably successful employee retention strategy. Matt adds, "Really good people want authority and responsibility," noting their partners make all key decisions about strategy, processes, and compensation at their locations.

This approach creates something rare in automotive retail: clear career paths from entry-level positions to dealership ownership. One current partner began as a used vehicle porter right out of high school. Their focus on developing technicians internally through apprenticeship programs and competitive pay plans has similarly strengthened their fixed operations during industry volatility.

The model proves particularly valuable during challenging times. When COVID shutdowns hit, Matt used the opportunity to reimagine the Auto Plaza's operations, implementing sustainable changes benefiting customers, associates and the business. Meanwhile, partners across the organization had the flexibility to adapt to their specific market conditions.

Looking toward an uncertain future with electric vehicles, digital retailing, and changing consumer preferences, the Serras remain focused on what won't change: the importance of people, relationships, and solving problems effectively. This foundation, combined with their decentralized approach, positions them to continue growing while maintaining the family values that have defined them for five decades.

Want to build a business that gives you the confidence to sleep soundly at night? The Serra story offers a compelling blueprint worth studying.

Thanks for tuning in to this episode of Executive Profile with Jim Fitzpatrick.
For more interviews with the leaders shaping retail automotive, visit CBTNews.com and subscribe to the show on your favorite podcast platform.
If you enjoyed the episode, please rate, review, and share it with someone in the industry.

Jim Fitzpatrick:

This is the Executive Profile exclusively on CBT News. Today's Executive Profile was sponsored by Cox Automotive. Hi everyone, I'm Jim Fitzpatrick and welcome into another episode of the Executive Profile. Recently, I had the opportunity to visit the headquarters of Serra Automotive in Fenton, Michigan and speak with Chairman Joe Serra and his son Matt, who's the president and CEO of the company, celebrating its 50th year in business. Serra Automotive is ranked number 12 overall on Automotive News' top 150 dealership groups list. However, it is the sixth ranked privately held group in the country.

Jim Fitzpatrick:

Serra Automotive operates in seven states and employs over 3,000 people, with a network of 54 dealerships, 66 automotive franchises and 25 brands. But one of the most impressive things about this group is their ability to attract and retain great employees the best of the best. This is a challenging area for many dealerships, but Joe and Matt will tell you it makes all the difference. Now please enjoy my interview with Joe and Matt Serra from Serra Automotive Group. Joe Serra and Matt Serra, thank you so much for joining me on the Executive Profile here at CBT. We very much appreciate all the time you've given us today. So, Joe, let me start with you. For those that are not as familiar with the Serra Auto Group. Tell us a bit about the company.

Joe Serra:

It was founded in 1973 by my father, Al Serra. Matter of fact, we just celebrated our 50th anniversary. Wow, congratulations, June of 73. You know, as you know, as a founder, first of all, my father was an amazing individual, not just as a car dealer but a mentor, coach, captain and, as you know, founders, you know they get the foundation, you know any organization that's strong, it's the foundation you don't see. And that foundation, things like values, treatment of your associates, treatment of your clients, relationship with manufacturers, lenders, sure so he, that foundation he built and it sort of gave us and that's what um, I carried forward and Matt has today, and you can't discount that that's invaluable.

Jim Fitzpatrick:

Yeah, yeah, it really is. So. When did you take over the operations?

Joe Serra:

So I joined my father. He started 73, I joined him in 82. Okay, so I've been here 41 years and was with him, and in end of 99 2000, I purchased company officially in January of 2000. Okay, negotiates, negotiations, not negotiations.

Speaker 1:

Yeah, it was negotiations.

Joe Serra:

They started in 99, early part of 99, and then we closed the transition in January of 2000.

Jim Fitzpatrick:

Okay, okay, so here we fast forward to today. And now you're kind of passing the torch to Matt, right?

Joe Serra:

Yeah, correct.

Jim Fitzpatrick:

Taking the chairmanship role and, of course, you're taking the presidency of the organization, so congratulations to you on that. I know you've been in it for a little while now and how's it feel?

Speaker 1:

No, it's been good Again. We're really lucky. I have two roles within the company. One, I am the dealer partner for the Alistair Auto Plaza. It's a 12-franchise campus in Grand Lake Michigan. I have a fantastic team there that, I think, allows me to have the bandwidth to play a second role, which is president of Serra Automotive, and really the way we're structured is we have 20 dealer partners that run their individual store, or stores could be a campus, so I'm one of those 20, and I'm also responsible for being a sounding board of the other 19.

Jim Fitzpatrick:

Okay.

Speaker 1:

And I think it's gone well. One we're really lucky. We've got 19 amazing partners, yeah, so I learn a ton from them. I really enjoy working with them and helping them, and so we've had a great foundation that I stepped into. And then, quite frankly, I think my role at the Auto Plaza has helped me be a better support for our other partners and vice versa, learning from the partners, trying to be better support for the partners is maybe a better operator at the auto plaza.

Speaker 1:

So there's been some really good synergy in the role so far.

Jim Fitzpatrick:

And when you say partners, let's drill down on that a little bit. These are people that actually have equity, that are running these stores right.

Speaker 1:

Correct. So the way we're set up, we run what we call a very decentralized operating model, and it starts with just getting an A-plus dealer partner. We absolutely want and need the best of the best.

Speaker 1:

And the reason we do, quite frankly, is like we like to. We look at the business from. It's just a great platform to serve and support and have a huge impact on our associates and customers, and the best way we can do that is give them the best leadership possible, right? So it starts with us getting a plus dealer partner. From there we truly let them run in terms of vision, strategy, process, pay plans, decisions, so on and so forth. They have full autonomy to run that dealership the way them, their leadership team, the market, the brands brands they best see fit right sure um, now from there we've got 19 other operations and you got myself.

Speaker 1:

That can kind of help and support, and if dealer a's got a problem with this, dealer b might have already solved it. I can connect them. Okay, our team's really good about helping and supporting other, helping and supporting each other, but they really do have full autonomy yeah, that's great joe.

Jim Fitzpatrick:

What was the idea behind setting it up? Like that, many dealers you know like to own their own stores and put in their own GMs to run their stores and have complete control over them, so this is a little bit of a unique setup yeah, it is different.

Joe Serra:

And, um, quite frankly, I was a partner at one time for my father, okay, so I've been in the partner role and I've also now been in the ownership role. So what I tried to do when I bought the company in 2000 is say what did I want if I was an A-plus dealer per se? Don't know if I was, but if I were, what would I have wanted from my investor, my partner, and I tailored it that way and, quite frankly, what I wanted is the ability to run a store. Yeah, I, I mean, you're paying me to run a store, let me run it right.

Joe Serra:

And if now, does that mean I'm not gonna be open for counsel or for advice, or I'm open for it, but I need to make the decisions. I have to get involved with the community, get involved with the manufacturer, the brands, with our team, and decide what's best. So I just felt that from a partner standpoint, that's best for the partner. I think I can attract the best people that way. Right, because I think best people want authority and responsibility. So we're going to give it to them Right Now. The negative of that is they have to be good. Yeah, because if I give them authority and responsibility. If they can't produce, that's a problem, but best people want that. So that was one thing. And then, quite frankly, from an investor or an owner standpoint, I didn't want to spend time going into different markets and seeing stores. It wasn't what I was looking for in my lifestyle either.

Joe Serra:

So it just seemed to work. It's worked well for us, I can tell you. I have many dealer friends and every model works, and so it has to be what's best for all the parties. That's just what we settled on Sure, sure, Matt.

Jim Fitzpatrick:

What are some of the characteristics that you look for in these A-plus partners?

Speaker 1:

Yeah, so again, it helps. So our current 20 partners, majority of them come from within, so come from within an existing store store and the benefit of that is we get to work with them. They understand our culture, they understand our expectations. We get to really see not only how they're able to help, through their team, produce great results the right way, but also just how they treat and lead others right. Really hard to gauge that from folks from the outside. So the majority of our partners do come from within, but we've gotten really fortunate. We brought in some great partners from the outside and a huge benefit of that is you bring in some things that you didn't really know existed.

Speaker 1:

It's a good shock to the system. So it's good to have a mix of both, and really what we're looking for is one is someone that shows a great deal of resiliency, because when things get tough like take COVID as probably the most recent example you want partners that are not gonna run away from the problems and get worried and tighten up, but really just gonna lead from the front, attack the problem head on and figure out a way to get through it, and we're really lucky that our partners definitely have that competency. So, again, resiliency starts there. The ability to attract and develop a great team. Um, our view is, our business really comes down to the quality of your, your people, quality of your team and how in sync everyone is. So, someone that's able to attract and develop a great team, um, someone that's able to be responsible for really thoughtful decisions. They don't have to always be the one with the idea or to make the decision, but they got to know what a good idea, a good decision, looks like and one that's not so good.

Speaker 1:

Again, we can help and support to be a good sounding board, but you got to have someone that understands that. Yeah, good communicator I think a lot of the leadership role is getting people in sync on directions, getting good ideas, good vetting and pushback from all different directions so someone is able to communicate and paint a really good picture. And then, ultimately, someone that drives results, and not just scorecard financial results, but in terms of how we're treating and growing and improving people, how we're understanding and solving customer problems and how we're setting the organization up to produce good results today and in the future the right way. Again, and that's what you were saying earlier, I think really good people want to be on that platform, want to be, responsible and accountable to both good and bad results and learn from it.

Speaker 1:

That's a key piece of what we look for in our partners.

Jim Fitzpatrick:

It would seem to me, joe because, as you know, I've been in the car business a long time For the people that are working in the organization, this gives them a path like no other in the retail automotive side, because, as you know, many times people say I'm not going to become an owner, so the best I can do is maybe a GSM or maybe a GM, but you're actually giving these people a path forward to become a dealer principal.

Joe Serra:

Yeah, you know one of the things about our industry is that everybody always says can a standalone store survive in today's world? I get asked that a lot. That's right, and I always answer absolutely yeah. And the reason I say that is because you know a store is the leadership, the people, the whatever In our group. Even though we're larger, you'd think there's a bunch of advantages, and there maybe is there's fewer advantages than you think but the one big advantage we offer that a single standalone store cannot, and that's opportunity for growth, because we have much more to offer.

Joe Serra:

You know, if I'm at a store as a technician, I want to be a service manager, unless that service manager there leaves, where we might have 20 other stores they can go to. So just the opportunity for growth. We have an example. I mean we have beautiful examples and the best part about our job and why. My wife always asks me why are you purchasing another store? Well, the reason is to give somebody the same opportunity I was given, that Matt was given. That's what it's all about today, and then the domino effect from that.

Joe Serra:

Right but it's rewarding to give people an opportunity, and we have people in our organization. We have one who literally started as a used vehicle porter out of high school. That's now a dealer partner with us. Wow, it's pretty cool. Well, I should get credit for putting up with him that long. That's for my mind.

Speaker 1:

No, he's wonderful. But, that's neat, right, that's very neat. That's what it's all about. Personally rewarding for you.

Joe Serra:

Yeah, because we're in business to. Obviously we're in business to make money, but morning for you?

Jim Fitzpatrick:

Yeah, because we're in business to. Obviously we're in business to make money, but we're also in business to grow people, give back, build friendships. Would you say this idea are you doing this in the spirit of your dad? Because he did this.

Joe Serra:

Everything's in the spirit of my dad. Quite frankly, Every day I wake up not just him, my mother, the family, my siblings and, quite frankly, our brand is our name. So we have an obligation, we being our partners, Matt and I, to each other. We have an obligation, all of our associates to each other, to protect that brand. So we always say so. We know how to. You're going to do the right thing and we're in it long-term.

Jim Fitzpatrick:

That's right, and there's so much right now that's taking place, as you know, in the way of these huge acquisitions that are taking place as we see. Where does that stand with all of you? I mean, do you get calls constantly that say hey, joe Matt, you know we're ready to buy the next big chain here and we're a publicly traded company and we need to hit some numbers and we're prepared to give you a great number and what? What's your take on that?

Joe Serra:

I don't know if we get any calls well, if we do, we try not to answer, okay, but I think if we did.

Speaker 1:

Again, I can answer from my perspective I'd love to hear. Take is, as my dad said, like we really do love what we do, sure, um, and not because we're huge car people. We just, I think, first, I just love what the car business allows you to do in terms of impacting people and, yeah, helping people reach their goals and dreams and, above and beyond that right, and we enjoy it. I think we're pretty good at it.

Speaker 1:

We keep getting better at it yeah of course, and the way that I've always viewed, like exiting or selling a company is all you're doing is you're transferring wealth in the form of a privately held business. You know well, yeah, in terms of wealth in the form of cash, which you're then going to invest in businesses you don't privately own and control. That you don't know well, it's true, it's true, good point like

Speaker 1:

what we do, we, we enjoy it, and um so, no, it's not something that's really on my radar, and don't believe it's something that's on our radar.

Joe Serra:

yeah, that's great, and our responsibility is to make sure our company never gets in a position where we need to sell. So that's where our associates got a look at us to make sure we're treated in a way that we never put ourselves in a position where we need to sell. So the fact that we don't need to sell and we never anticipate needing to sell, then we can just continue on and enjoy and benefit and take care of everybody.

Jim Fitzpatrick:

Sure, let me switch gears a little bit and talk about COVID and maybe some of the takeaways, the big lessons learned. I've spoken to a number of dealers on this and it's interesting. One dealer said to me, you know, out of respect of all of the people that we lost during COVID and the people that suffered from it, he said, putting that aside for a second, he said that event might have been one of the best things that happened to Retail Automotive because it really had us all, as dealer principals, take a closer look at our business and tighten up where we needed to and kind of do away with some of the waste. And just take a really hard look at our business. A did you find that to be the case and what might have been some of the takeaways for you on that?

Speaker 1:

That's a good question. So I'm a big believer and we talk about a lot with our team that there's a gift in everything.

Speaker 1:

So no matter how good or how bad or how different a situation, you just can only focus on what you can control and influence, and if you really look, there's a gift and opportunity in everything, and so for me personally, running the Auto Plaza as our dealer partner, one of the challenges I always struggled with is I came into a really well-run machine right and I didn't want to mess it up. Well, when the state of Michigan gets shut down for a couple of months and revenue goes to zero, can't mess that one up right, so I did.

Speaker 1:

The gift in that was allowed us to really be thoughtful and intentional about. Okay, what kind of dealership do we really want to run? What are all the things that we've always maybe wanted to do, but just were too nervous, too scared. I say we it starts with me, yeah, but didn't want to take the risk to do. Well, now there's no risk, now we can run this thing. Any change we make period has got to be a win for the customer, the association of business, now and in the future we're not going to make decisions just because we could get away with it okay, momentarily.

Speaker 1:

every change we made had to be sustainable and for the right reasons customer associate and business um, and that's more of an autopositive ethos and one that we're, I think, our partners, all share, and it's one of the benefits you talk about, kind of really being proud and protecting the brand and the name. It sure helps when your partners are long-term owners. Think like owners right they make very different decisions when you're a partner, when you're an owner, versus when you're just in the position for a moment.

Jim Fitzpatrick:

Sure good point. So that's kind of what I think we've taken from it. Joe moment sure good point. So that's kind of what I think we've taken from joe. You saw a lot of change in the last 50 years. Uh, working with your dad and then acquiring the business, uh, we had ups and downs in 2008, 2009. We had gas shortages, I mean you, you name it and car dealers seem to have been dealing with it and they seem to deal with and come out on the other end pretty well, but what were some of the takeaways for you going through that time?

Joe Serra:

So the one big takeaway earlier I mentioned the advantages of group being the fact that internal promotion of people, you know, during this time it was nice to be part of a group. Yeah, because financially, quite frankly, in our case, our stores in Michigan were literally we were shut down.

Joe Serra:

The governor shut us down. Wow, well, if I was standalone I mean, it was sleepless nights anyways but if I'm standalone, didn't know I had this company up here that had resources that would have scared me. So the fact that we could reach out to our partners number one we could communicate with one another and just reassure them that, hey, we're going to get through this I didn't know how at the time because we didn't know how long but we're going to get through it, we have capital, we can get through it. So that was, I guess that was comforting, so we had that going. The other thing that did come out of it, I thought, was more dealership side, obviously, but consumer side. So consumers were forced to use technology and I think it sped them along, and so that, to me, was a big advantage. Now there's consumers certain ages, age like myself that maybe wouldn't have done transactions, but they had to, they were forced to. So I think it sort of helped push us, push both consumers and the retailers in the right direction?

Jim Fitzpatrick:

Yeah, for sure, matt. Let me ask you this During that time, we did see an increase in digital retailing. People were doing a lot more of the process online. Everybody jumped up and said, ok, we're there, this is the future. We better gear up for this, because 50% or 60% or 70% of our sales are going to be done online, but we didn't really see that come to fruition. It kind of came back down and people actually wanted to come back into the dealerships when they could. However, that being said, technology and AI, as you know, plays a huge role in everything today. What's your vision for the company as it relates to the technology that's out there? Do you think 20 years from now, we'll be sitting here and buying cars completely online?

Speaker 1:

So, in terms of predicting the future, the way I've always approached it is what are the things I'm confident will not change? Right? And what I think won't change is people value time, right? So I don't mind investing time if it's valuable, if it's productive, if we're learning together, but I don't wanna invest time for something that's really not a good use, right?

Speaker 1:

I think that's where technology can trim a lot and that's what we've learned through COVID is things the customer doesn't need to physically be there for things they don't wanna be there for yeah, people don't think that's going to change.

Speaker 1:

I think people are always going to value time and simplicity, right, right, um. I think they're always going to value, especially on a bigger purchase like a vehicle, whether it be a sizable monthly payment or a big cash purchase. I think they the the relationship, the trust they can have with the dealership, the brand, with the individual. That's always gonna be really important. Sure, and how you build trust. I think it's hard to do via text and email.

Speaker 1:

You can maybe do it via video sure helps in person, so I think that piece won't go away and again, ultimately, from the rest of it. We're there to serve as a secondary market for used cars. Don't see that changing. Much and same. As we're there to fix and keep people on the road right, and we do the car does need to physically be in the store, the shop right. We do need to have technicians physically working on the cars. Sure that stuff I don't think is going to change. So that's from a vision perspective. That's where we just keep investing time, energy and effort improving those capabilities. The rest of the stuff will be open-minded. If technology can give us good opportunities to do things more efficiently or more effectively or eliminate waste, we'll keep taking advantage.

Joe Serra:

Sure sure.

Jim Fitzpatrick:

That's kind of how we approach it. Yeah, I mean, joe. We see Elon Musk. You know every OEM out there is envious at some level about the company that he's built, and obviously technology plays a big role in that and they brag that you can buy a Tesla from your cell phone and have it delivered when the car is ready and they'll pick up your vehicle. Have you heard more and more of that from OEMs that have said this is something we need to chase or we need to look at or we need to compete with in order to win tomorrow's customer over that? There needs to be more of a technology to this.

Joe Serra:

Yeah, I think the manufacturers are obviously looking at the wins that maybe tesla had. What are they doing right? And trying to figure out how they can incorporate an entire our business, which they should. We should always be looking at ways to improve and um, so there's been discussion on that. We, as we, as retailers, we need to show the manufacturer where we bring value right. So that's that model, that model. So what is that model missing? And where can we, as retailers, bring value that maybe doesn't exist today in that model?

Joe Serra:

And there are some obvious ones. Fact that, from a capital standpoint, we're putting up the brick and mortar. We have the personnel side, but we have to conduct business in a way that works for both parties.

Joe Serra:

You know so and fortunately manufacturers, through their dealer agreements. They have some control over how we do things right and as long as they, you know we have communication on that and makes it's the right thing for our clients, right thing for our associates. There isn't a retailer out there that wouldn't support that right. We all have the same end game and that's to continue to grow, continue to grow our customer base continue to grow market share continue. We all have the same thing yeah and so no, there is discussion with manufacturers on that.

Jim Fitzpatrick:

Sure. So talk to us about the recruitment of associates into your company. That's a very difficult thing nowadays. Right to get that right employee in that you can train and motivate and retain. At the end of the day, every company is suffering from that, but obviously in retail automotive we still suffer from a pretty high turnover. What's your philosophy, matt, on that and what does that look like?

Speaker 1:

So, again going to the decentralized model, our dealer partner and their leadership team have full autonomy around how they recruit, select, retain and develop their people. Some of the principles we give them, though, is one the importance of the local dealer partner meeting with every new hire during the interview process. They need to sign off on every new person they bring on board right as a person when.

Speaker 1:

I'm interviewing somebody. If they get the final interview, which is me and either my fixed op director or GSM, we assume that the team likes them, they want them on board, they have the competence to do the job well. All I'm looking for is character. Are they a good character, fit for us? So that's the first piece.

Speaker 1:

I think it's so important to have a really good team. Good people wanna work with good people. So really vetting and selecting for the right character. And then the second piece that we owe them. We've got to earn the right to keep them in the dealership and growing and developing it. We have to have a thoughtful career path. So, again, from the autopilot's perspective and I think our partners do a good job of that every role in the dealership is part of either a sales associate career path, service advisor career path or technician career path. They're one of those three branches and again, whether it be entry-level porter, lube tech, whatever it might be, they've all you know, come on board, get a good feel for the different paths. We get to know you, you get to know us, and then let's get you on one of those paths. We can keep growing and developing India.

Speaker 1:

So I think it's so important to have a career path and then we got to earn it right. We got to keep helping. Three year personal professional goals are we got to support them? We got to we owe them to create that environment. Sure, so that's kind of like the principles we try to work with our partners on that we think are like universally effective in attracting and keeping great people.

Joe Serra:

Right right.

Speaker 1:

And then, going back to it, as we grow, you got sales managers or service managers are going to go be dealer partners, which creates opportunity, which you promote from within and keeps the whole thing flowing mm-hmm so that's really kind of our approach.

Jim Fitzpatrick:

Yeah, yeah, the industry is suffering, and has suffered over probably the last hundred years, of not attracting enough females into you know the dealership operation it's. It seems to be a you know a guy's business. Long hours, the pay can fluctuate. We haven't in the past given much time off for family leave or to attend the little league game or the soccer game or what have you. This is all about sales. Where does that stand today? Do you make it an effort to say we've got to bring more females in and, if so, are there any accommodations made for that in the area of scheduling or compensation or such?

Speaker 1:

Yep kind of the principles we operate on at both the Auto Plaza and with all of our partners, is really looking at the whole person. So I want them to be super successful at work. I want them to be super successful at home. I want them to feel really good about their own personal growth and development. I want them to feel good about how we're conducting business, really doing the right thing, and I think, looking at things that way, we've been more thoughtful on how we can shrink ours because, again, that was one of the big changes we made during covid is one of the the biggest constraints we had to bring on, and keeping great people was the hours. Right, right, right. And I get that maybe we're classified as retail, but I really push on the assumption. People just drive by a dealership. You know I'm gonna go buy a car right.

Speaker 1:

There's always some premeditated thoughts it was really let's operate in hours where we can be really productive yeah on appropriate hours where people can live a really well-balanced life. Betting on that. That'll help us attract and keep really good people right that's what we're after. We just want the best people possible and try to create an environment where we can do that right which then?

Speaker 1:

helps with what you're talking about in terms of that's the diversity and mix of people we have and if, if we've got the best people, we're confident we're going to be able to run the business at a high level and serve customers.

Joe Serra:

Yeah yeah, for sure. I did not also add the fact that we have local partners and the partner store. So the people that are our associates at a store, they they're working with their owner and we treat it as their store. It is their store. So I think they like that, versus maybe not knowing who actually has a vision, who's a leader, who who cares, and our owners care about their associates.

Jim Fitzpatrick:

They I mean literally they care right, right, yeah, and now it makes good sense to really care. Right, when you and I were in the business years ago it was, you know, you got that leaderboard or you get that motivator board and if you weren't on the top half and you're on the bottom half your job was on the line right and you had to work key to key and it was crazy, and you know the greatest asset of any organization's people, yeah, so we spend a lot of time making sure we have the best people and one of the you know the fact that we have a local partner that cares.

Joe Serra:

That's their store. They're gonna make sure they're invested in trying their jobs to get the best people come join them. Right, that's their job, sure, so they're gonna sell themselves. They have to sell. Why, why me? Yeah, why come here? And one of the advantages I think our organization has over some is that they can look and say we have longevity. Yeah, you know, if I was here without Matt somebody, somebody may say, well, what's the future look like? Well, they now know the future. They know the future has direction, has what I call runway, and I think that's important, not just important to our associates, I think it's important to future manufacturers.

Jim Fitzpatrick:

They wanna know.

Joe Serra:

That's one of the areas, if I was a manufacturer, I'd be concerned about today is the aging population of the dealer body and where does it go from there? Yeah, so that's in my opinion. We can show them we have runway.

Jim Fitzpatrick:

That's right. That's right. Today's average, the average age of today's dealers 69 years old. From what NADA?

Joe Serra:

says Really so I'm under the average. That's the best news I've heard today. That's right.

Speaker 1:

That's right. But you're right.

Jim Fitzpatrick:

I mean, we do have to look down the road right and not everybody's got a mat to come in and take over.

Joe Serra:

That made my job easier Absolutely made mine easier. But it's also tough to look down and talk about and look at when you're not there. It's hard to do, in all fairness.

Jim Fitzpatrick:

You guys do a great job of letting your dealer partners run their store. It's a theme I've heard over and over again, which is really appealing to those dealer partners to be able to do that, to say, look, you've given me the opportunity, I've proven myself, I'm going to run the deal. When do you think you'll turn the keys?

Joe Serra:

over and say, okay, I'm not coming in anymore, matt, it's all you. Well, you know what? I think we've already started that process. You know, april of last year is when I gave myself. I made Matt the president, yeah, so I had to give myself a title and I thought about it. I came up with chairman. Should have been the chairman, but anyways, the chairman. You can always add the, the. I might do that.

Joe Serra:

And that was the first yeah, that was the first step and in that we seek advice what's the best way to start to transition, and I think it was your YPO group that suggested that we define responsibilities and clearly define them, and so we did that and fortunately, matt took over the operational side, which has been invaluable to our organization because he's in the deal on a daily basis, he's running stores, so he operational is. He gets where. When you're sitting in a management company, you, you lose it fast, I mean so. So he took operational, which leads me to the. I can spend more time on acquisitions, growing the company, construction, capital, things. That means I don't have to maybe be here day to day I still am, which is my problem.

Joe Serra:

That's a personal problem I have, but I'm working on it, working on it slowly. So it's already started. Transition started. If you went out to our partners and they would know Matt's the future, that's all that matters. When do I not come into work? Hopefully, you know. I don't know if that day I want to be able to have a place to come to. I think you need purpose, that's right, and I think it keeps you going.

Jim Fitzpatrick:

Quite frankly, of course, yeah of course, and you're probably not ready for him to completely step out anyway, right, I mean, you guys have got a great thing going here don't ask that question.

Joe Serra:

I don't want to know the answer. He'll tell me later. Yeah, that could be dangerous. It has been nice, though, because again given our decentralized model

Speaker 1:

even though I've been in the company for a long time, I've never really actually worked with him yeah, right, so in this, this role, whether we're talking about constructions, acquisitions getting his and then our other leadership team at Serenomoto, just as a sounding board for things I'm trying to help or support the partners with. It's been the first last year and a half's first time we've actually worked together.

Jim Fitzpatrick:

Yeah, it's pretty good. So it's been really. Yeah, it's invaluable. It's going good as far as you're concerned.

Speaker 1:

Well, you're the judge of that. Yeah, I couldn't be happier. Yeah, that's great. I couldn't be happier.

Joe Serra:

And it's just going to continue to progress.

Jim Fitzpatrick:

Let's talk a little bit about some of the things that are in the in the business model that you're looking for. When you talk about an acquisition or look at an acquisition, what is it you're looking for? A does it have to be geographically close to the headquarters here? Are you open to other states? Is it somebody that you've got to put in there that's within the organization, or an outsider that you've got to get to run it? The multiples right now, as you know, are all over the place because of the last three years, but I know I threw a lot at you there. But what is?

Joe Serra:

that little question, no, no, no, it was great, great question, and I'll tell you. So. Let's start with geography. And because of our decentralized model, we literally have the ability to go anywhere.

Joe Serra:

That's one advantage. Does that mean we want to go everywhere? Probably not, but for the right opportunity we can go anywhere and we're open to it. That's nice. So when we look at an opportunity, we look at first of all size. We prefer larger operations to smaller ones. We prefer larger operations to smaller ones and only because, if we're going to put a partner in there, to me, larger stores gives them more opportunity.

Jim Fitzpatrick:

To me they're easier to run. And what's the definition of a large store? Excess of 200 cars a month? Yeah, bigger the better, bigger the better.

Joe Serra:

I mean literally the bigger the better. But, that being said, we love campuses too. So if you had a situation where we have multiple brands in an area, a town or a campus, please call.

Speaker 1:

We're all in on that one.

Joe Serra:

Please call and we know how to manage those, and we like that because, again, it's scale, it's size. But the other thing that's vital to me is the culture and what the what, the operator, what the dealer is looking to accomplish. That's really the first question I was asking what are you looking to accomplish? Because if I can't meet what they're looking to accomplish, it doesn't matter.

Joe Serra:

Forget price right price always important, and I've never under. I've never bought a deal that didn't pay all the money because you're not going to. Yeah, so that's. But what are you looking to accomplish? And what we find a lot of times times is we look at the right. This is their family right, so they want to make sure their people are taken care of. And one of the things we offer, because we are decentralized, is we don't change the way they do business. We don't change the DMS system. We don't change literally. The only time we change anything is possibly the name. Sometimes we don't even do that, so we want to keep it.

Jim Fitzpatrick:

We want to as least change to the associates as possible.

Joe Serra:

Okay, we keep their benefits the same. Everything stays the same. Transition now, over time there could be some changes, but it'll be what may refer to as thoughtful change right, that we think is going to make it better for the associates, the clients or whatever might change is going to be driven by the local dealer partner right and their team there that's right yeah, and really the only person we bring in when we buy a store would be the dealer partner, unless, unless, and here's where it's- interesting.

Joe Serra:

So if I'm a dealer and I say, hey, I care about my people, well great, we're not going to mess with them, yeah, and it's easy to check us out. You can call any of our stores you bought. People are still there right now in the. Another unique thing that we offer is that if and this happens a lot where I've got a dealer who has a person who they've groomed for years and sadly, the price of these acquisitions gone crazy, this person can't afford it, that's right. But they'd love that person to be the future, that's right. That's where we come in, because we partner with that person. Now they might not have any ownership today, but over time they could, if they so. Because we partner with that person Now they might not have any ownership today, but over time they could, if they so desire.

Jim Fitzpatrick:

But we keep that person in. Wow, that's nice.

Joe Serra:

So I get communication.

Jim Fitzpatrick:

That kind of sweetens the deal for the seller too, when they learn that.

Joe Serra:

He knows what they're walking away with. He or she says, well, my team's still there and I'm stepping aside, I'm taking my chips off the table. They're off the table, sure, they're still coming to the store, they're still hanging out if they want. You know it's there, but it's ran their values right. So that's that's real attractive us, because when we look at an opportunity, we're looking at obviously, um, that you know we need number one's people. Well, if they have a person in there that likes us and we like them, yeah, well, that's that's really that's what we're cooking with gas on that one.

Joe Serra:

Yeah, that one, that one we'll be there tomorrow to talk to. That's right.

Jim Fitzpatrick:

Let me switch gears a little bit with you and talk about this EV revolution that we find ourselves in the middle of, which also has had an impact in the acquisition field and also valuations and such, because I think there's a lot of dealers that are a little bit nervous about this. Are today's customers ready to buy an EV? I mean, obviously your lots are gotta be filling up with EVs. It seems as though that's in large part the inventory that is sitting right now and not moving as quickly, at least nationally. I'm not talking about your group per se, but, matt, is today's customer coming in saying show me an EV?

Speaker 1:

It depends. I think you said it well. What I look at is I think scorecards are a great way to understand and get in sync with reality. And the reality is, for not everyone, but for a lot of EVs, the day supply on an EV is very different than the day supply on an ICE vehicle. That's just reality, no judgment, just is what it is, and our job is to stock vehicles that there is good demand on and sell them quickly and earn customers and fix the cars and those things.

Speaker 1:

So I always just view it through the lens of that right. It doesn't matter to me if it's gas, hybrid or EV. By and large, what we do is about the same. But yeah, that's how I would, I guess, gauge demand is day supply.

Jim Fitzpatrick:

Sure sure your take on EVs.

Joe Serra:

Well, it's definitely coming. We know that and we're definitely participating. All of our facilities have the infrastructure. We're spending the money, so there's tremendous capital expenditure going out which we hope is going to pay dividends in the future. The question is if what we're doing today is what the future needs. As far as chart, who knows Right? But we've got to play right Because that's our commitment to the manufacturers. The question is when does it really become impactful? I wish I could say this whole thing has been consumer driven, but it seems to be more governmental driven, and the manufacturers have to play on that because of CAFE standards. So, once we get the infrastructure, so ultimately they're going to put enough money to make this work, and then, as a manufacturer, we've got to figure out how to produce them to where they're affordable for our consumers.

Joe Serra:

Sure, will it be an easy and smooth? Probably not. There'll be some bumps along the way. We'll bump along with them, sure, but ultimately we'll get there when. Probably not. There'll be some bumps along the way. We'll bump along with them, sure, but ultimately we'll get there. When it is, I don't know Right, and all we can do is focus on things we can control. Yeah, and that's what we're doing and we'll play in both fields for quite a while. Yeah, I think.

Jim Fitzpatrick:

Yeah for sure. The average price of a new car in 1973, 50 years ago, when your dad started the biz, it was probably around $3,500. Today it's budding on $50,000. Affordability is a big factor out there with consumers and dealers. Where do you stand on that? On the affordability issue, I mean, do we have to do something in this industry? Is that a concern of yours?

Speaker 1:

Going back to, can't predict everything that's going to change, but can predict the things that likely won't. Time's important, price is important and trust and simplicity is important, so I think price is always obviously a really important factor to that and affordability is not gonna be not only the price of the vehicle but the ability to get lending and financing for it, the price of that lending. There's a lot of things that go into the affordability equation, but again it goes back to we just focus on what we can influence and control.

Jim Fitzpatrick:

Are you doing more leasing than in the last couple of years? I know leasing took a hit during COVID. There weren't as many subvented programs through the OEM and that was a big casualty out there. Is that coming back?

Speaker 1:

Again, that's something we measure, so I don't know, I don't know, specifically, but to your point for sure, our leasing penetration took a dip the last few years. It seems like it's coming back. Is that the same percentage? It was pre-COVID? Probably not, and we'll see Again. That goes back into the affordability equation and kind of how consumers are thinking about their ownership experience.

Jim Fitzpatrick:

Right, right. And in terms of fixed ops, we saw that do very well. With the average age of a car now exceeding 12 years on the road, these fixed ops departments are just doing phenomenal. Same. That's the same with Sarah.

Speaker 1:

Yeah, that's so again throughout the last few years where we just the whole industry saw just a really big supply and demand imbalance which I think made the the scorecards of financials look a lot better than we probably deserved. Sure, our team did a really nice job of staying disciplined to the capabilities that are always going to be valuable, and primarily that was our used car capability and our fixed operations capability, and with fixed operations, when we think about that, it's all around technician capacity. How do we attract, develop and retain the best technicians to grow our technician capacity, which allows us to then do what we exist for, which is to fix cars really effectively? So our entire focus has been in that and um, I think it's been great for our team, it's been great for our customers and we've seen some really good results from that over the last uh two, three years where do you get technicians from these days?

Jim Fitzpatrick:

every single dealer. I thought you're growing and you keep them. You grow them and keep them.

Speaker 1:

Yep, the reality is there's probably industry-wide there's not enough technicians. We can't control an industry problem, we can just control. We just can control, not making an industry problem our problem, right. So what we've done is our team's all done a really good job. My team, all 20 partners everyone's got a really well thought out apprenticeship program into an actual technician, um, some really thoughtful investment in terms of tech pay plans and how we're supporting, how we're helping their productivity right, and that just keeps feeding off itself.

Joe Serra:

Yeah, but yeah, you might get lucky and get a really good technician from the outside, but the best way is to to grow and develop your own yeah, for sure, and then keep them, and keep them, and then keep them and we have to keep, we have to earn because they know they know, once they get to that level, they can go anywhere that's investment you know signing bonuses you got to earn that resources, process, culture.

Speaker 1:

It's everything we got to earn the right to keep them.

Jim Fitzpatrick:

Yeah right yeah, for sure it's tough out there but, that isn't a great profession. Yeah, there's no question. Um, let me talk to you a little bit about marketing. Uh, over the last three years, uh, you know that you had dealers that pulled back the lever in marketing and saying we can't even get enough cars, why would we market these vehicles? Has that changed? Is that coming back now? Are you now spending more money, company wide on, on getting that customer in the front door and, if so, where do you spend the money?

Speaker 1:

um, yeah, I think spends less than it was more than it, but then more than it was the last couple years. Yeah, so less than it was historically. Okay, it's growing. A lot of that's driven by the manufacturer, though okay, um through, like co-op dollars.

Speaker 1:

There is a certain growth spend you have to get to. Yeah right, a lot of it's driven by that um and again, whether you've got a lot of inventory or not, so much um. Personally, like, I think it's important to just keep your name out there and keep your brand and positioning out there. So there's always been a decent baseline to just spend there. But you were definitely seeing more shift from traditional TV billboards and newspapers to more digital or like over the top type streaming services like that.

Jim Fitzpatrick:

For sure, as you sit here today, matt over these stores and taking on this position that you've done successfully. Now, what does the future look like? You've got a son right and he may come into the business 20 years from now. What are you doing today to ensure that the companies sound in 20 years and making sure that your son or daughter comes into a viable company and that things are still moving along the same way and that the franchise model is still in place? Because, as we know that, you know that might be under attack as well. But uh, so many technologies out there. There's so many things happening right now in the dealer space. What are some of the things that you look at down the road?

Speaker 1:

yeah, um. So I think the first thing is um, and something you and I are definitely in sync on. We view this as a private company first, with family value. So our motivation to run a successful company for next 20 years is not for my kids, it's for, it's for our associates right so it's just truly run a great uh, a really great organization right.

Speaker 1:

The fruit of that would be if my kids down the road want to get in, there's something for them. If they have interest, if they have passion, if they're at it, then they have the option of doing that right. So we first think about it. From that Then it goes back to again. It's betting on the things that aren't gonna change right, and that is we're here to where we exist to solve vehicle problems for customers, whether it's selling cars, whether it's taking buying cars. One create an environment where you have the best people possible, because we think that is the differentiator now. It's gonna be the differentiator 20 years from now. It's investing and growing our technician capacity and capability right. It's working with our team to be really good problem solvers in terms of understanding, working with each other, create great solutions and effectively presenting those. It's knowing that, yep, the franchise model is likely gonna evolve and change, but new vehicle distribution's one small part of what we do. A lot of what we do is that secondary market and use fixing cars via service, body shop parts, things like that.

Speaker 1:

So, it's just keeping in mind that the entire business, not just one little piece of it, and again 20 years, who knows? But we'll just we'll keep being open-minded and keep, keep evolving as we need to and just keep leaning on those, uh, we view as like timeless principles and timeless things that are always going to be valued, sure, sure and joe.

Jim Fitzpatrick:

What about you? What are some of the things that may keep you up at night, either about the industry or about uh, you know turning the company over to your son at a you know, during these crazy times that we're in yeah, you know, I'm fortunate.

Joe Serra:

I sleep really really well and I think that is I think a lot of it has to do with how we're we structured. Yeah, if, um, I was not decentralized and if I had all these stores that I personally, or matt personally, had to try to manage from afar, that probably would stay up at night. But the fact that I know we have, in every operation or every investment we make, a great partner who it's their business, I don't really need to worry because we have the A-plus player in there doing that. So I think our structure helps me sleep really really well.

Joe Serra:

As far as the future of the organization, well, right, as far as the future of the organization, I, like you said, you get, you know to be lucky, or good, I got lucky that Matt has passion for the business, I think, understands the business, he treats it different than I do, how he thinks is different, which is all good, all positive, and the fact that we have that and the fact that he's earned the respect of the partners and the other associates that's another thing off my yeah worry list, sure, um? So I, quite frankly, I feel good about the direction we're in. That's why I'm out there looking to continue to grow it? Yeah, if I wouldn't? Quite frankly, we're fine as sitting, as we are sure that's not fair to our current associates, um, and it's just not what we will. It's, we love growing, we love that part of it, and so, but I sleep really well at night. That's great. Yeah, I'm fortunate and blessed.

Jim Fitzpatrick:

Yeah, yes, you are, that's for sure. Joe Serra and Matt Serra Serra Auto Auto Group. Thank you so much for allowing us to come into your corporate headquarters here and spend some time with you.

Joe Serra:

Thank you, appreciate you making the journey.

Jim Fitzpatrick:

Absolutely, Thank you. Thanks for watching the Executive Profile exclusively on CBT News. Today's Executive Profile was sponsored by Cox Automotive.