Kalamazoo-based Zeigler Automotive Group ranked as the 62nd largest dealership group in the U.S. with 15,090 new car sales in 2017, according to an annual ranking in Automotive News. Last year, the company generated $1.08 billion in revenue with 23 stores in West Michigan and the Chicago area and one it just sold in New York. Despite projections for slowing auto sales nationally, President Aaron Zeigler said the dealership group has experienced a strong start to 2018 with sales up more than 20 percent in January and February and with business on track for an all-time company record month in March. “It isn’t even close,” he said during a recent interview at the new Zeigler Motorsports store in Comstock Township. He spoke with MiBiz about the car dealer business and his company’s success through an intentional focus on leadership training.
As a small company that started in Lowell and has grown into a more than $1 billion mega dealer, do you ever have to pinch yourself at the success you’ve had?
Yeah. It’s interesting because there was never any grand plan to make this thing what it is today. We had really good people that had a common vision and drive to be able to help our customers out better. As we get more franchises and more inventory and whatnot, it makes it easier for our customers.
How does that larger scale help you when it comes to serving customers?
At any one time, we’ve got about 8,000 cars in stock. A customer can go to our website, and they’re going to find the car that they want. With the technology today, you can slice and dice it anyway you want. If you say, ‘I want a V-6 engine that seats seven passengers, gets 30 miles per gallon, is under $400 a month, and is black,’ it takes our 8,000 cars and says ‘Here’s 15 of them that meet that criteria. Go look at these.’ It makes it really easy from a customer standpoint as well.
How do you replicate your success with the stores you’ve acquired over the last few years?
What we’re doing is we’re taking things that have worked in our current stores. We buy a new store, and we put those systems in place because it works in those as well as it’s worked in the other ones. That allows us to get the consistency in how we run these. Historically, we bought underperforming businesses. You put the right procedures and the right people in place and the right processes, and then they perform really well.
Given the broad area you serve and the franchises you already have, are there any white spaces remaining to be filled?
The three franchises I didn’t have on the domestic side were Buick, GMC and Cadillac, and we got that last month. I’m really happy about that because we’ve done really, really well with the domestics. Lincolnwood (Illinois) — where that store is — is the largest market in the Midwest for those brands. That was exciting. We’re going to build a brand new Cadillac store in that market. Then we’re going to redo the Buick-GMC store to get it up to their standards.
What made Zeigler the successful bidder for that store?
General Motors came to myself. They had an agreement already to buy the dealer out. They came to me and I made a presentation. They liked the presentation. They really liked what we did with our Chevrolet store in Schaumburg (Illinois). They flipped the deal to me. It was their doing. It’s becoming very common.
Do you mean where the automakers are bringing deals to your company?
Yes. I think the last seven deals I’ve done involved it coming through the manufacturer. In this particular case, the manufacturer agreed to a price for the dealer and then the manufacturer went out and had it under contract and brought it to me.
Do you see more opportunity to keep growing in other directions from Chicago?
Possibly, but there’s still so much we could do in Chicago. We could have 25 more dealerships in Chicago and not compete against ourselves.
Over the last few years, automakers have been making a big push to redesign showrooms and bring them up to new brand standards. How is that dynamic continuing to play out?
That push is still there from the manufacturers. Manufacturers are looking at three things: They want dealers to have good market share, good (Customer Satisfaction Index ratings), and a willingness to build buildings. We’ve hit on all three of those things. That’s what has really allowed us to grow and to reinvest in the brands.
Do you ever struggle to justify that upfront investment in buildings?
I’ve always been a big believer in building new facilities, what the manufacturer wants, from the standpoint that there’s a good return on that. Customers like to do business in a nice facility, and employees like to work in a nice facility. It allows us to hire better people and it makes it easier to do that. It allows us to get more customers.
Has that been universally true for Zeigler Auto Group?
Every time I’ve done a new facility, it’s worked out. The last one I did, and we just finished a month ago, was an Infiniti store in Chicago. We built it brand new from the ground up. This is our first month open in the new facility and our volume is going to double, which is better than what I expected. I was looking at like a 25-percent bump. All of a sudden, I’m watching the numbers going up and up. Right now, we’re basically the number one Infiniti store in the Midwest with the new store.
Shifting back to West Michigan, what observations do you have on this market?
Grand Rapids and Kalamazoo are both just on fire. Everywhere you go there’s building and just good things are happening. New businesses are coming out. … The economy is rocking along pretty good right now. Consumer sentiment is high. People are feeling good. … (In March), we’re pacing for our best month in the history of the company by over 400 units.
Do you have any theories about why sales are strong locally?
One of the things that we’re seeing is that people are seeing more money in their paycheck because of this tax break. There’s kind of an unintended consequence, or gift, for us. We’re seeing a lot more people buying cars because of that. It’s almost like it’s found money, or they’re picking up enough money to be able to buy a new car or used car or whatever. That kind of surprised me.
Now that Zeigler Auto Group has surpassed that $1 billion threshold in annual revenues, do you see any point in the company’s future where you’d consider taking it public?
No. I want to keep it private. The challenge with the public companies is that you have to make decisions to make your stock price look good. I don’t want to do that. I like to run a business for the overall long-term health of the business, to be able to make really long-term decisions. For example, in a public company, they don’t own any of their own facilities. They lease them all. They don’t reinvest most of the time in the facilities. As a private company, I can go and invest in facilities. It’s really good long term, even though it’s maybe not as good in the short term. Everything we do is long term. It’s going to stay family-owned.
How have you looked at starting to groom the next generation of leadership?
My kids are really little, so I’ve got nothing going with them right now. Part of our leadership academy is to help develop those next-generation leaders. I also have our Performance Group. I’ve got 10 people in our Performance Group at all times. I’m personally teaching them to run the business as well. We’ve had a lot of success with people coming out of that Performance Group to take on new opportunities. … As one person retires, another person comes in behind them. It just keeps right on going.
How has that focus on leadership helped the company grow?
That’s what’s allowed us to grow. When we grow, it creates opportunities for people internally to be able to grow with us. That’s why our employees are really excited as we’re buying more businesses and whatnot. It allows them to come up. They might go from one dealership to another dealership because there’s an opportunity over there. We do that on a very regular basis.
Are you looking at any other acquisitions this year? Do you expect to add more stores?
Yes, I do. I do expect to do some more stuff this year. We’re actively looking. There’s some ongoing conversations right now. We’re in a good position to be able to grow again. Probably most importantly for me is we’re really strong from a leadership team. When you’re really strong from that standpoint, it makes it a lot easier to grow.