Dealer Group Addresses “Silo Problem” and Sees Greater Success

October 12, 2012

Road to Reinvention Series

A recent Automotive News article highlighted how Flint, Mich.-based dealer Joe Serra has expanded his dealership group to 25 stores in recent years, a “growth tear” that owes to Serra’s efforts to do business in a different way than traditional dealers.

Long-time dealers will recognize Serra as one of the first well-known retailers to embrace no-haggle pricing with customers. The article notes Serra adopted this transparency-driven approach to pricing and negotiation in 1992.

Perhaps more important, though, is Serra’s move in 2000 to create a greater degree of harmony and transparency among employees within his dealerships:  Serra ditched traditional, department-based pay plans for managers at his six-store auto plaza in Flint. Now, all managers are paid collectively on the group’s overall profitability. They get daily reports detailing each department’s performance to spur a greater degree of collaboration and marketplace competitiveness.

The article says Serra adopted this approach after realizing the traditional “to each his own” mentality among department managers hampered his goals for growth and profitability.

My upcoming book, Velocity Overdrive: The Road to Reinvention, addresses how a growing number of velocity dealers are eliminating “department silos” and adopting more collaborative and efficiency-focused business and compensation models to build sales volumes and profitability –much like Serra has deployed at his stores.

I’m convinced this is the way forward for today’s dealers. At a time when profit margins are razor-thin and competition is super-fierce, it’s increasingly critical for dealers to ensure every employee, and every decision, advances a more holistic and market-focused view of the business.