Executive Profile with Jim Fitzpatrick, Powered by CBT News

Mike Maroone reveals how knowledge transfer and equity partnerships fuel dealership growth.

• CBT News • Season 1 • Episode 4

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Mike Maroone's automotive journey spans generations, beginning with childhood memories of his father purchasing his first dealership in 1955 for $30,000. That foundation led to an illustrious career including 18 years at AutoNation before launching his current dealership group with locations in Florida and Colorado.

The COVID pandemic revealed two critical insights for dealers: the viability of remote sales and the incredible power of margin over volume. "If you look at the profits we've all enjoyed in the last three years, they came from margin, not volume," Maroone reflects. As inventory normalizes, the industry faces the challenge of retaining those margin lessons while returning to a more competitive environment.

Affordability stands as Maroone's greatest concern for the industry's future. With average new vehicle prices at $47,000+ and used vehicles at $35,000+, many consumers find themselves priced out of the market. "Our used car prices are about $5,000 a car too high," he notes, creating significant challenges when combined with rising interest rates. Yet he remains confident in the industry's creative approaches to financing and the increasing availability of more affordable vehicle options.

The electric vehicle transition presents another fascinating challenge. While Maroone supports the environmental benefits, he identifies three critical barriers: inadequate charging infrastructure, consumer confidence issues, and manufacturers struggling to achieve profitability. "No one has figured out yet how to make money at it," he observes, predicting these elements will take 2-3 years to align properly.

What truly sets Maroone's business approach apart is his talent strategy and operating model. "I look in the mirror and say you've failed if you've got to look outside your company to get talent," he shares. His "freedom frame" philosophy establishes clear boundaries while allowing operating partners (who receive equity ownership) to express their personalities and leadership styles within those parameters.

For those looking to thrive in today's automotive retail landscape, Marooney offers perspective gained from decades of experience: "Don't get too high when things are good and don't get too low when they're not. Just stay true to your principles and work really hard." Subscribe now to hear more wisdom from industry leaders who are navigating today's complex automotive marketplace.

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Jim Fitzpatrick:

This is the Executive Profile exclusively on CBT News. Today's Executive Profile was sponsored by Cox Automotive. Hi everyone, thanks for joining us today for the CBT News Executive Profile. The last time we had the chance to sit down with industry legend and former AutoNation executive, Mike Maroone, in person was in 2018 at his Honda dealership in Colorado Springs, Colorado. In the five years since, the car business has undergone transformation after transformation, with dealers adopting new technologies and strategies to navigate the post-pandemic market, to learn how the nation's top performing retailers have stayed ahead of the curve on EVs, labor shortages, supply chain disruptions and other headwinds. We had the honor of once again speaking with Mike, this time at his new dealership in West Palm Beach, Florida. Take a look, Mr Mike Maroone. Thank you so much for allowing us to come into your beautiful Chevrolet store here in West Palm Beach. Congratulations on the purchase of this store. This is one of the newer ones to your group right it is.

Mike Maroone:

We've had this for a few years in a partnership, but we're now on 100% of this store. This is one of the newer ones to your group, right it is. We've had this for a few years in a partnership, but we now own 100% of it and we're thrilled to be here and really, really happy to have you here, Jim. Thanks for coming.

Jim Fitzpatrick:

Well, thank you, thank you. This is like coming home for you, right?

Mike Maroone:

It is. Yeah, this is the only store we have in South Florida and this is home and this store well beyond my lifetime.

Jim Fitzpatrick:

Well, that's great, and it was. We should mention it was a Roger Dean store right For many, many years. That was a huge name down here it was, and.

Mike Maroone:

Roger Dean was one of the first mega dealers and put numerous people in business, including some of the more prominent dealers in America.

Jim Fitzpatrick:

That's right. That's right, no question about it. So, before we get started, for those few people that don't know who Mike Maroney is and I know we've talked about this before, but it's such a fascinating story Take us back to how you got into the industry. Obviously, your father was a very successful car dealer and you became his partner, but I'm not going to take the story, so why don't you share that with our viewers.

Mike Maroone:

Well, my dad in 1955 bought his first store for $30,000, and he had no money, so he borrowed $5,000 from this relative $5,000 from that relative $5,000 from this relative $15,000 from the bank and started in business.

Mike Maroone:

I was two years old at the time and the person I was deeply in love with all of his life, and still up in heaven, was my dad. So what did I do? I went and hung out with him and he had a really nice business, then moved to a suburban location, became the largest Ford dealer in Buffalo at one time one of the largest dealers and then he recognized some limited growth in western New York and started looking in Florida and bought his first store in Florida in 77. And that just kind of snowballed. I went down there to run it and we bought other stores, ultimately ending with nine franchises and, as you well know, merged with Republic Industries, later AutoNation, that's right Of which you headed up for 18 years, right?

Mike Maroone:

Yeah, we did that in 1997, and I was employee number two in the new vehicle division. And when I left, there was 26,000. Oh my gosh, wow. We enjoyed a great run there, worked with some fabulous people, and after I left, I set out my non-compete, which is the right thing to do, and at midnight the night my non-compete ended, I was at NADA trying to hustle and find my next store.

Jim Fitzpatrick:

Which was the case with a lot of the dealers that obviously you jumped on a plane and went out with a big checkbook and said, okay, let's go buy a bunch of dealerships. But that actually is the same story, right? Very similar story to a lot of dealers that sold to AutoNation and then said, okay, I'm going to sit on the sidelines for a couple of years and then right back at it right.

Mike Maroone:

Yeah, it's an addictive business and I've loved it every day of my life and I'm not a big car nut, but I love the car business. We came back in and then we started in 2017 and bought four stores and then created a partnership with Joe Serra, who you know well and later have picked up a number of additional stores. We'll close on another one in December.

Mike Maroone:

Really, it's not publicly announced, and that'll be store number eight and we're just having a lot of fun and we've been able to attract the right talent and the right business model to grow.

Jim Fitzpatrick:

And you shared with me then back in 2018 that it was really more about that next generation right, that you're kind of doing it for them.

Mike Maroone:

Yeah, it's. We call it a knowledge transfer phase and I guess both you and I and others of our peers in the business we think we've learned a lot along the way. Certainly, the world changes, but at the end of your career you'd love to share that knowledge in a in the right way. That's right and that's what we've tried to do, and luckily I've attracted three family members in and some great equity partners, because our model's different, our operators have equity in the store and that model's worked well for me and it's been a lot of fun.

Jim Fitzpatrick:

Sure, sure. If we were sitting here 10 years from now, what might the Mike Marooney Auto Group look like? Are you just going to keep acquiring stores, or when is enough enough?

Mike Maroone:

I don't know when enough is enough. I think it's about do you have quality partners that you can build on? Is there capital out there? Are there lenders out there that will help you along the way, and is there attractive opportunities? We've limited our geography to Florida and Colorado, just selfishly, and so we're looking in those markets, but we don't have a goal of how many we want to acquire. We just want to run the ones we have extremely well, create opportunities for people, serve our guests well, and then we'll see what happens. Sure, sure.

Jim Fitzpatrick:

Is there a month that goes by that you don't get a phone call from somebody that says hey, mike, I love your stores. You do a great job with your customers. You got a great staff. We want to acquire you.

Mike Maroone:

To be honest, I haven't gotten too many of those calls and I have absolutely no interest in selling stores. I have an interest in acquiring stores, so I get more on the would you like to buy rather than would you like to sell.

Jim Fitzpatrick:

As I mentioned in the opening of this segment, last time we met it was before COVID, which really changed the world in so many different ways. It changed the automotive industry, for sure, and of course, back then your father was still with us. I should say he passed away in 2021. Then your father was still with us. I should say he passed away in 2021. I'm very sorry about that. And just a great guy. What was his take on the industry and I know that you were very active with him in those last years of his life and what was his take on the industry?

Mike Maroone:

He just thought it's a great business and a great place to invest your capital and a great place to go to work. We think we find the auto retail business very exciting and very competitive and he liked the competition. He liked our sales numbers and even when he was in his middle and high 90s he'd say what'd you sell today and how'd it go?

Jim Fitzpatrick:

And what'd you make in the store?

Mike Maroone:

And his other thing was no matter how many cars you sold, he said, you could have sold one more.

Jim Fitzpatrick:

You could have sold. You left some on the table.

Mike Maroone:

So that's the lesson that'll stay in my head forever, that's right.

Jim Fitzpatrick:

So let's talk about COVID. Here we are now three, four years outside of I guess, three years outside of COVID. What were some of the big takeaways and what was the impact that that had on your group moving forward?

Mike Maroone:

I'll give you a predictable one and then maybe an unpredictable one. The predictable one is it taught us how to serve guests in a totally different way and it taught guests that they didn't need to physically be there. Well, I knew that from my Carvana duty of how many people would be interested, but our business was always the auto retail business, was always a step behind, and I think it opened up this horizon of saying we can sell cars out of state, we can sell things remotely, we can do things. It changed the way we marketed. So I think that was all good. I think the other thing it did that isn't talked about is it taught the new vehicle dealer the power of margin If you look at the profits that we've all enjoyed in the last three years they were 3x, 2x, but it all came on margin.

Mike Maroone:

It didn't come on volume. So we were all tuned to volume, tuned to margin. Well, the world's changing and it's changing back the other way. And now it's back to a volume mindset. But the profits were all driven by new vehicle margin, Right right.

Jim Fitzpatrick:

There were a lot of dealers during that time, after COVID hit, that said hey, we got the car and guess what? We're throwing a big sticker on this thing, an addendum sticker, to maximize that even greater gross profit. A were you one of those dealers? And B what is your take on that?

Mike Maroone:

So we tried to take a long term approach and, yes, there was a couple of specialty vehicles we sold in. You know additional dealer profit, but very, very few. We held the line. We could have made more money. I think we did the right thing for our guests. I think our guests have very good memories of who treated them well.

Mike Maroone:

And listen, there's plenty of gross margin in the business just doing it right. So my view was let's stop at MSRP other than value added options, but not big packages not additional dealer profit for the most part and I'm very comfortable that we made the right decision.

Jim Fitzpatrick:

And it should be said that you know, for anybody that's been in the business longer than a week, there's always those specialty cars that somebody might come in. Maybe it's a Corvette, or maybe it's a particular Mercedes-Benz model or whatever that the dealer just doesn't get that many of, and they're going to put a sticker on that anyway, right yeah, even without COVID.

Mike Maroone:

I think that's it. But again, those are very, very few. Yeah, msrp gives us plenty of margin. Yeah, it's when we compete with each other and cut the price, and cut the price, and cut the price that it doesn't really make a lot of sense that's right.

Jim Fitzpatrick:

That's right. What is your take on the factories going? Okay, we're getting back to 60 day supply of vehicles and you guys are going to be now dog eat dog out there against your competition. Is there any-?

Mike Maroone:

I think that we're coming back to a more normalized inventory. It varies tremendously by brand, but most of our inventories are back. We look at our in stock, in transit and total available separately, track them multiple times a month so we can kind of see what's happening. What's interesting is the incentives haven't yet caught up and yes, I know the incentives are slightly higher than they were at the bottom. But there's a little hesitation right now in the purchase process because, especially in the 24 models, there's very low or no incentives and very high prices in a consumer that's being pressured on affordability in our products and everything and every other part of their life, that's right.

Jim Fitzpatrick:

That's right. Evs, as I mentioned, we didn't talk about that last time we spoke in person. You talked about it on CBT News since then. But what is your take on EVs? I talk to dealers all over the country all day long and it's a mixed bag out there. You know many dealers are like wait a minute, we've got to pump the brakes. We don't have the consumers that want EVs, while other dealers are saying give me all the EVs you can send me and we'll sell them. Now that might be in California, that might be in New York, it might be in South Florida here.

Mike Maroone:

Do you think the industry is moving too fast or are we on pace? I think the industry has moved too fast. So first of all let me say I am pro clean air.

Mike Maroone:

I look at my grandchildren and my children and say I want clean air for them, not just for myself, and I think it's socially the responsible thing to do. What's happened is we've got a government pushing incentives where there's no infrastructure in place to deal with it right, and you've got OEMs that don't know how to make money at it. Yeah, it doesn't mean they're dumb, they're very smart people. Yeah, but no one has figured out yet how to make money yet. The capital flowing into the EVs is in many cases eight to ten billion a year, like the majority of the capital from the big OEMs are going into EVs. So it's a very complex situation. I think.

Mike Maroone:

As costs come down, range goes up, infrastructure charging infrastructure comes up. I think EVs will be quite a powerhouse, but those things haven't happened yet. Now, if you happen to have a charger in your garage, you can consider an EV. If you don't, you're living in an apartment building or you're renting a car. We've seen all the reports recently about how, in the rental agencies, people are going. No, I won't take that. They don't know where the charging stations are. They don't have confidence. So it's a matter of confidence and trust, but, most importantly, I don't think either the dealers or the OEMs know how we're going to make money at EVs Right right.

Jim Fitzpatrick:

How far out do you think we are on that? When do you think it'll all align and the EV business will be there, the infrastructure and the profitability from the OEMs?

Mike Maroone:

You think we're a year, two years, I think it's going to be two to three years. And again, I think the charging infrastructure is the number one thing. I was in California recently and my Uber driver was driving an electric vehicle. I said tell me what it's like. He said we've got high speed chargers everywhere, it's no big deal. Well, when you go outside of California and outside of a lot of metro areas, there's not that infrastructure. So I don't know how it works. But it will work long term. I think the reality of it is is people are now starting to put some capital back into ICE engines because they know they can make money at it. It's a more defined business model.

Jim Fitzpatrick:

One of the times that you were on CBT News we talked about Ford's program. When they came out and they said hey, if you're a Ford dealer, you have to adhere to five different pillars. If you want to sell EVs, you were one of the first to come out and say I have no problem with that, let's get on with it. A how is that going? And B are all of the dealers on board or are many of your colleagues with you on?

Mike Maroone:

that I think most people have made the investment in the store investments. The reality of it is now finding out how to sell them, and you know people and pundits that observe the industry consultants all talk about. We have to re-educate the whole industry, jim. It's just a different powertrain. Yes, there's questions, but they're not complicated questions. Where do I get chargers? What should I expect? What's my battery life going to be? What's the warranty? It's not that complex and I'm excited about EVs, but most of our brands only have a model or two, so I think we're going to see it change a lot. At GM, we've had the Bolt and the Volt. Well, we're about to have a whole new generation of product. In Ford, we've got the F-150, Lightning and the Mach-E both great products, but as they come into wider models, it's going to be really interesting. And then we're going to be faced with the price issue.

Jim Fitzpatrick:

Is it affordable? Right, right, that was my next topic. What a perfect segue. Average price of a new car $47,000 plus and the average price of a used car $35,000. I just read a report this morning on the way in that says delinquency rates of vehicle loans are a 30-year high. Is this catching up with us, this affordability issue?

Mike Maroone:

Well, I think affordability is the issue. It's the only part of the whole equation of auto retail that really concerns me, and the problem is I don't see prices coming down On the used car side. I think it's going to be a couple of years at least. There's an imbalance in supply and demand and it's not going to bring prices down. I think our used car prices on average in the industry are about $5,000 a car too high and that's a lot to a consumer, on top of the increase in interest rates.

Mike Maroone:

So, I think it's a big challenge and I think affordability is going to continue to be the challenge. But we're a very creative industry. Whether we use, you know, one pays, or leasing, or balloon payments there's a lot of ways to skin the cat and I think that as an industry, we'll figure it out. But the pressure is on. What's nice is we're now starting to get a full spectrum of vehicles being built. So the last couple of years it was high end trucks, high end SUVs, high margin product. Well, it was high-end trucks, high-end SUVs, high-margin products. Well, that was great because we sold them and made a lot of money doing it, but it left behind the guests that really needed a $25,000 or $30,000 vehicle or $20,000 vehicle. So we're now starting to see those products. The good news is the trade-ins on those vehicles are much less so. We're now seeing more affordable used and we're stocking more affordable new. So we're beginning to get out of it. But there's still lots of issues at affordability.

Jim Fitzpatrick:

Yeah, for sure. You touched on it earlier and that was the fact that you can sell a car online and have it delivered to somebody's front door. We refer to it obviously as digital retailing since COVID. Are you doing any of that today? I know a number of dealers that I talked to said, yeah, spiked a little bit during COVID, but then people still wanted to come back into the showroom to complete the transaction. That being said, they wanted to do more online of the transaction maybe the credit app, the trade allowance and what have you. Do you?

Mike Maroone:

think where do you think that is Well? First of all, we've developed the capability to sell remotely, to deliver remotely, and one of our many, or one of our core brand promises is free delivery anywhere in the state, whether it's Colorado or Florida. So we've expanded our trading range a great deal and it's worked really well. You know, money-back guarantees and free delivery are both good, good, foundational pieces, but it depends on the guest. So our job is to do what the guest wants. Right, and yes, some people want to kick the tires, some people want to take test drives.

Mike Maroone:

The reality of is in the in the vehicle shortages caused by covid. People would test drive at a local store and then shop in a broader audience. As inventory is normalized, I think they'll come back to buying closer to home. But we're happy to serve either way. The big challenge for the industry is the tools are not yet caught up. It's a very complex piece and I know that a number of the DMS providers are working on it and a number of the big consolidators are working on it, but no one has one that I'm aware of that can take it to end to end, which is what the consumer wants, that wants to shop that way, right right, right.

Jim Fitzpatrick:

What is the future of the individual dealer that's got maybe one or two stores? Maybe they have a Chevy store. Maybe they've got a GMC Buick Chevy store or a Toyota store somewhere. Maybe they're outside of Metro? Is it going to be increasingly more difficult for them to be profitable and compete with companies like yours and other big groups out there?

Mike Maroone:

I don't think so, jim, and I've been on both sides of the fence, as you know. I've been with the largest and I've also been in a single store environment. I think it's about your ability to attract and retain talent and if you can do that, you can compete. Yes, there's some scale advantages, but they're not mammoth. But it's on the talent side that you've got to be able to, to get that talent and keep that talent and develop that talent right and make sure they know they're at the right place right. And I think I think you can compete on one, two, three, four stores against the bigger players.

Jim Fitzpatrick:

Well, let's go there on the talent, because that was again, but you must be reading my notes, I'm not. It's a very hot topic in the industry. It's a real challenge. We talked about it a little bit before we got recording. Today Dealers are struggling with this, you know, to bring in that top quality candidate and train them and then keep them in retail automotive. As you know, it's still a kind of a rough and tumble industry, or can be. What do we do as an industry to attract more of that college graduate per se that comes out and says I want to make retail automotive my career?

Mike Maroone:

I think that we've got to be ready to adapt to a changing environment. So, as you know, our overall mantra is we want to be a great place to work and a great place to shop. Well, underneath that, you've got to build a culture and a structure that let people know they're valued, let them know that you are highly ethical, that you're going to do the right thing for the guests and you're going to reward them for doing the right thing. So when we're recruiting people, I look in the mirror and say you've failed if you've got to look outside your company to get talent and we do that sometimes. Since we've been in business in Colorado and Florida, we've promoted 30 people into management jobs or higher management job. We tell people we want you to come here and grow. We want you to fulfill all your aspirations, whether it's more authority, more money, more success. That's my job to create that kind of atmosphere, and I think we've done a really good job.

Mike Maroone:

We do go outside occasionally Techs obviously we've got to go outside, although we've got 30 apprentice techs in development programs. So we're really working hard to develop people internally, but we do have to go outside. Now, when we go outside, what I think is important is that we make really good selections, not just getting hand raisers that want to work for us, but going through a very rigorous process to interview, multiple interviews, background checks, most importantly, creating the right expectation and saying here's how we work and, yes, we'll have some flexibility on hours ours here. We'll have flexibility on pay plan. As you learn, we'll do all these different things, but we want you to be here and we want you to make a commitment to us and if you do that, we're going to make a deep commitment to you, sure, sure, and do you find that you're getting that, that quality candidate to be able to, to be able to do that with?

Mike Maroone:

I think we are. I don't think there's ever enough. I don't ever want to say we're overflowing with talent, but we are able. We think we've got a good reputation in the markets we're in. We treat people really well. We're very professional about the spirit and the culture in our stores, so I think we are doing fairly well at it. The other thing is all of my what used to be called general managers today we call them presidents and operating partners. After a period of time they all have equity in the store and significant equity in the store.

Jim Fitzpatrick:

That's nice that's.

Mike Maroone:

That's a big lure and so that other people coming up say, hey, I want aspire, to be like jeff, to be like kurt, to be like pj, to be like Alex. Others see that and that's right and I think it's a great motivator. Yeah, I want my partners to be very, very successful and, yes, if I didn't do that, could I make more money. Yeah, but I have better quality operators, we have better run stores, we have people that are vested in the stores and then we create a structure in the store so it can be fun for the operator. It's not all corporate top down.

Jim Fitzpatrick:

Yeah, yeah, during COVID we also saw a number of dealers maybe you were one of them that did anything they had to do to get that car into service. They'd pick it up, they'd bring a loaner to the house, they'd bring the car back. All sorts of different things to make sure that that customer is taken care of that guest, as you call them, which is the right reference there but to keep that guest happy in fixed ops by doing everything you can do to make them happy. Do you do things like that?

Mike Maroone:

We do, and I would tell you, it's a major challenge.

Jim Fitzpatrick:

Yeah, I bet.

Mike Maroone:

I bet you know remote service and the mobile vans and things like that. Staffing those is really hard, sure, I mean when that same tech could stay in a stall, have parts delivered to them 50, 60, 70 hours in a week to go out and call on people for basic maintenance or mechanical breakdown. It's hard. It's hard to find people. We're doing it and it's imperfect, but we're going to work really hard at it because if that's what our guests want, that's what we want to deliver. Pickup and delivery is easier. We've been doing that. One of our stores has a huge fleet business where we're picking up trucks. We have dozens of vehicles being picked up daily and being brought in and it's easier on the commercial side, but on the residential side it's hard.

Jim Fitzpatrick:

Yeah, I bet People aren't always home.

Mike Maroone:

We don't necessarily have the parts. There's been parts shortages and delays. It's great conceptually, it's not easy to execute, sure, sure.

Jim Fitzpatrick:

You did an incredible job at AutoNation and for so long was the number one retailer in the country with all of the stores that AutoNation had, and I know that you were personally responsible for a lot of that success. You and Mike Jackson together worked as an incredible team. What's your take on Lithia now taking that top spot? Well, first let me start with AutoNation.

Mike Maroone:

The beauty for AutoNation with me is, in addition to Mike Jackson, who was great, and Wayne Huizenga, there was hundreds, thousands of really talented people, so I learned from all of them and we had a great run and I'm very proud of what we accomplished. As I sit back and watch people do the next step I look at this is the kind of bold acquisition phase that, like what Lithia is doing, which is what Wayne did back in 97. I was at the center, with a number of other people, of doing that, so I admire what they're doing. I think you've got to wait and see what are the results, because rapid acquisition is really hard and I have lived it and it's really hard.

Jim Fitzpatrick:

I bet it is. Yeah, it looks as though if you have the money and you can acquire a good group, okay and just say, okay, just keep running it, Run it the way you were running it. Maybe you're doing this some of your acquisitions. It seems like it wouldn't be that hard if you could just go out and buy a bunch of dealerships and successful ones and you don't have to break it down. Fire everybody, put in your own crew. Am I underestimating that in a very big way?

Mike Maroone:

Yes, you are, Everybody starts with the best of intentions and when you do an acquisition, almost in every case you might have a key person or two. You're bringing in and you're saying I want to work with that workforce. They've had great results. Well, every store is run differently. Everybody's compensated differently.

Mike Maroone:

Running a bigger organization, you've got to get somebody on this. You've got to get all your stores on a basic framework. Yeah, my size with seven stores and on the way to eight, we can provide much more flexibility. We call it a freedom frame. If you think about a picture frame that looks like that, we agree on the frame itself. Those are the rules of the road how we're going to desk deals, what our vacation policies are going to be, all these things. But inside the frame, I want the operator's personality in there. I want to make it a great place to work, a great place to shop, a fun place, and I don't want to stifle that. Well, you can do that with six, seven, eight, ten stores. It's really hard to do that with 100, 200, 300 when you've got shareholders looking at you going.

Mike Maroone:

we want more, that's right.

Jim Fitzpatrick:

So that's the challenge. What has it been like for you now that you're back in the retail business as a private cap dealer versus running a publicly traded company? What are some of the differences there? For me, I now have control of my own schedule versus running a publicly traded company.

Mike Maroone:

What are some of the differences there, you know? For me, it's I now have control of my own schedule. When I was in a bigger job, I was booked out for months. Today, I know where I can go, where I wanna go. I have operating partners in every store, so I have more flexibility. I still work every single day. I still enjoy it. I enjoyed my time in a public company and I'm really every single day. I still enjoy it. I enjoyed my time in a public company and I'm really enjoying this chapter.

Jim Fitzpatrick:

It's a different chapter in life and you're not answering to a stock price every day, whether it goes up or down or what's going on. No, it's the man in the mirror, I mean you just go OK, how am I doing?

Mike Maroone:

And I'm lucky that I've got some great family members, great teammates, great partners, great associates, and every month we've gotten better and gotten better in terms of having the right people.

Jim Fitzpatrick:

I've spoken to a lot of dealers that have been very challenged in the succession plan of their group. You know we've got maybe some kids that are not in the store or not in the business and others that are, and you've got. And then how do you, how do you make sense of all that so that the family doesn't fall apart if, in the event, something should happen to the lead person right.

Mike Maroone:

I think you've got to have a plan first. In my situation, neither of my children wanted to be in auto retail and they both have very successful careers in other businesses. But I've been blessed, got a son-in-law and a couple of nephews that are really good at what they do and, by the way, they're way smarter than I am so I'm trying to transfer some knowledge to them, but in the meantime they're passionate about the business. They're doing a great job, they're providing the leadership, they provide the work ethic. So right now life's really good. But you have to prepare for other chapters and we're doing that. Is it frustrating?

Jim Fitzpatrick:

for somebody like yourself that's built this incredible company and to have two kids that go. I see what you did, Dad, and you followed your father, but we're out, we don't want the garbage.

Mike Maroone:

Honestly, I didn't find it frustrating, because what you really want is you want your kids to be happy and productive and productive not in terms of financial results, but where they've got passion and they dive in. And both my kids work really hard and they're really good people. I was just blessed to have other family members that did love the business, that wanted to be in it, so I think it's the best of both worlds.

Jim Fitzpatrick:

Do you think if you didn't have those family members, you would have gotten back into retail automotive?

Mike Maroone:

I don't think I would have, really no, it's a big challenge and, you know, I think the operating partner model, with equity and having family members, make this a good chapter. Without those two pieces, I don't think I would be doing this Interesting.

Jim Fitzpatrick:

Very interesting? Yeah for sure. So let me ask you in terms of the overall industry. Here we are right now in November, and we're dealing with high interest rates. We're dealing with still high gas prices. Inflation still continues to be an issue. We're going into an election year which could be all over the place. What do you think of 2024? What do you think of the year ahead for us in the industry?

Mike Maroone:

I'm going to start by answering you for 2023. We came into 2023 thinking it was going to be a much more difficult environment and the reality of it is. The first nine months of the year have been great. We're starting to see a little bit of a slowdown now. Some of it's seasonal, some of it is we're not getting the margins we did because there's more product coming in the marketplace. I think 24 is going to have its challenges, but it's a great business. It's a resilient business and we've learned to adapt. Probably more importantly is we've built really good teams and parts and service that I think can help carry some of the overhead and help smooth out some of the ups and downs of the variable side of the business.

Jim Fitzpatrick:

Yeah, yeah. We see some companies out there, such as Scout and others, that are still flirting with the direct-to-consumer sales approach for their products, and then, of course, some cars coming in from Vietnam and other disruptors out there. Obviously, we know Tesla, but Lucid and Rivian and such. What's your take on that? Is that something dealers should be concerned about?

Mike Maroone:

I think you have to watch all changes in the market. So I think you've described two different situations, with people that are going to be shipping cars into America through a franchise dealer network. It's just more of the same. It's like when Toyota, honda, nissan came in when the Koreans came in. That, I don't, is any different, it's just opportunistic. I think the direct sellers are different and they've got to prove that they can do two things.

Mike Maroone:

One, that they can make money doing it and that they can serve guests post-delivery, and I think that's the knock on Tesla. I happen to admire Elon Musk I shake my head and I've read Isaacson's book on him recently and I follow his career and he's got part of it right but part of it's not right, and that's the guest experience post-sale. I'm sure he'll fix it over time but until each one of those direct sellers gets to a level of profitability that they can build out a real parts and service network, it's going to be a heck of a challenge and I like our odds on the franchise dealer side, right?

Jim Fitzpatrick:

So let me ask you this on a personal side, because dealers want to know this. You've been working, working, working, like you said, almost since the age of two, when you followed your dad into the car business. What do you do on your spare time? I mean, what? What motivates you to say, okay, when I'm away from the stores? Here's my love.

Mike Maroone:

My passion is helping people and you and I have shared before. I'm on the enterprise board, which is the global board of the Cleveland Clinic. I'm the chairman of Cleveland Clinic, florida. Helping people with healthcare. It's not about me, it's about the Cleveland Clinic. Helping people with complex healthcare problems really motivates me. Helping people with complex health care problems really motivates me. Helping people that aren't enjoying the same success that our families enjoyed helping those people. So my passion outside of auto retail is trying to help people and it's very fulfilling for me and I think I can make a difference doing that.

Jim Fitzpatrick:

Yeah, yeah, fantastic. You know, I've interviewed, as you know, a number of dealers and they seem to be very focused, like yourself, on giving back. Does that seem to be a common thread among dealer principals, do you think?

Mike Maroone:

My friends that are auto retailers are all givers, yeah, and everybody does it in a different way, you know, to a different scale. But I think we all feel very blessed with the success we've had and we want to share it with our communities. And I think it's one of the obligations you have in business is you've got to give back, and we give back in many ways to many organizations. What we really try and do is get organizations that our people are passionate about Right. So there's sweat equity, not just money, right. You know, one example would be Habitat for Humanity. We've been doing that for military veterans in Colorado Springs and our people will roll up their sleeves and be out in the job sites and raising money beyond our contribution. We do a car care show in our Honda store that raises money for Habitat. Those are the kind of things that really work for us, where we can engage our people and engage with the community.

Jim Fitzpatrick:

If you had a moment to talk to your younger self, let's take you back to, you know, in your, in your 20s, when you're working with your dad. What would you tell yourself about? What would be different? What advice would you?

Mike Maroone:

give yourself. I'm not sure I could say to myself you ought to work harder, because we worked really really, really hard.

Jim Fitzpatrick:

How do you um?

Mike Maroone:

I'd say you put things in a, in a perspective, and we had an expression that I learned from my dad is don't get too high when things are good and don't get too low and they're not. Just stay to your principles and work really hard. I think, as a young person in the business, you get really excited when things are great, and when things are bad it's like the world's coming to an end. After you've been at this for a while, you go. I figured it out before. I have a lot of friends that are trying to figure it out too.

Mike Maroone:

We'll band together and we'll figure out how to solve these problems, whether it's a labor strike, a component shortage, a pandemic Right, we'll join together and figure it out. And one of the blessings I've had is a network of friends in the business, many of whom you know that you've interviewed and we all share very openly. It's not a 20 group. We don't share financials, we share ideas and when someone's in need, whether it's a life transition, all of us will band together and come and help that dealer and I think that's a great trademark for our industry and something that's helped me a lot, yeah yeah for sure.

Jim Fitzpatrick:

I guess it's pretty much the way you wanna be remembered.

Mike Maroone:

I wanna be remembered as a giver, not a taker, and I think you do a pretty good job of that.

Jim Fitzpatrick:

Thank you, Mike Maruni. Thank you so much.

Mike Maroone:

Joe, thanks for having me. This has been a real pleasure. It's an honor to be with you, thank you.

Jim Fitzpatrick:

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