Innovation spurs Serra's growth
Dealership group tests ideas, trains managers at Michigan auto plaza
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GRAND BLANC, Mich. -- Joe Serra, the Michigan dealer who was on the vanguard of no-haggle pricing 20 years ago, has long been an idea man.
For example, he hosts annual one-day meetings with all of his lenders and has linked the pay of 24 of his managers to the net profit of his six-store Al Serra Auto Plaza in this suburb of Flint, Mich. His may be one of the only privately held dealership groups to employ a director of acquisitions -- in this case a retired General Motors corporate vice president.
Now Serra is on a growth tear. Serra Automotive Inc. is up to 25 stores in five states after opening Volkswagen, Kia and Subaru stores this year. And he expects to open a Cadillac dealership and make a four-store acquisition before year end.
"We'll buy or we'll build on an open point -- the only thing we won't do is accept a poor return on investment," Serra says in an interview in the one-story brick headquarters built by his late father, Al, who began by opening a Chevrolet store in Grand Blanc in 1973.
Joe Serra prefers auto malls and dealership clusters, but he also has purchased stand-alone stores: Gold Coast Cadillac in Oakhurst, N.J., and BMW of Schererville in northwest Indiana. And there are other stand-alones throughout Michigan.
"We have no targets, no specific goals except to stay focused and be profitable," Serra says. "We need three things for growth: opportunity, capital and people."
Pete Gerosa, 70, the director of acquisitions, focuses on the opportunities. He was hired in 2007 after retiring as GM's corporate vice president of advertising and marketing. Gerosa scouts for purchases and his factory-guy credentials enhance Serra's bids for open points from manufacturers.
Unofficially, Gerosa also is a sounding board for Serra and his senior managers.
"He doesn't need the job, so he is free to tell me, 'You screwed up on that one,'" Serra says.
Serra's expansion drive is a rebound from the recession. In 2009, the group closed two Saturn and two Hummer stores.
"We lost the No. 1 and No. 5 Hummer stores in the country and the No. 2 and No. 7 Saturn stores," he says.
And while he has added two Cadillac points, the new Kia, Volkswagen and Subaru stores are a deliberate diversification from GM. Serra would like to add Ford and Nissan as well.
The growth strategy helps drive Serra's innovations -- and vice versa. Capital is critical during rapid expansion, so he has initiated an annual meeting with all his lenders.
"Ally, Huntington, Citizens -- we share our financials and tell them where we're going," he says.
Al Serra Auto Plaza is both a test bed of ideas and the cradle of future dealership managers. There, Serra relies on key managers, including Denny Dunfield, plaza general manager; Tony Nichols, comptroller; Dave Wenzel, plaza sales manager; and Paul Householder, fixed operations director.
The plaza, which by December will have seven new-car stores, is where Serra introduced no-haggle pricing in 1992.
He says increasing price transparency has moved the whole auto industry toward his concept. "With the Internet, how can you not price one-price?" he asks.
In 2000, Serra did away with departmental business silos at the plaza in favor of more cooperation. He did that after discovering that a competitor could sell pickup bed liners for less because each Serra department had internal markups. Now all 24 managers are paid monthly bonuses on the net profit of the auto plaza rather than the results of their individual departments.
And all managers get daily online reports and weekly printouts of each department's results.
"It creates harmony among managers, helps them learn all the operations," Dunfield says.
Joe Serra says the cooperative approach stresses profitability while giving young managers insight into how other departments function. And it prepares them to run their own stores.
"You've turned six of my managers into GMs running their own store in the last six years," Dunfield playfully calls out as Joe Serra walks by during an interview. "How about giving one back sometime?"
Walking out of earshot, Serra says softly, "Don't tell Denny, but it's seven we've taken, not six."
Serra is keen to train his managers at the plaza because he relies heavily on his general managers at the outlying locations, giving them wide latitude on operations but demanding a strong return on investment.
He says: "Trust the guy you put in the stores."
The managers appear to trust Serra.
At 52, Serra still has the lean and agile look he had as the shooting guard captain of the 1980-81 Albion (Michigan) College basketball team. The waitress at Little Joe's in downtown Grand Blanc automatically delivers his "usual" lunch, a no-dressing grilled chicken breast salad.
He's approachable by all employees. Spotting Serra passing the double-line Fast Lane at the Buick-GMC store, a worker buttonholes him to explain how rerouting the pneumatic line on a new tool eliminated a tripping hazard. Efficiency counts.
"We get 250 a day" who line up to roll through the line for a $12.95 oil and filter change and lube, Serra says.
Serra also is a prankster. Most plaza employees root for the University of Michigan Wolverines and tease Serra about Albion and his wife's alma mater, Michigan State.
When Appalachian State upset U-M in 2007, Serra recalls: "I bought every T-shirt in the Appalachian State bookstore by phone and passed 'em out like party favors. Man, was I unpopular that week."
Joe Serra's latest innovation is something called the "Answer Team," or "A Team," which provides instruction to customers on auto technology features.
You don't need to be a Serra customer, and it doesn't matter whether the Serra dealerships sell your vehicle brand.
Joe's son Matt, 24, has been heading the new initiative since graduating from Miami University in Ohio in June.
"With all the brands and how much technology each has, this is needed," Matt says. "Even if you do a perfect job on [a new-vehicle] delivery, two weeks later the customer has questions."
The Answer Team is free to anybody who asks for it, but the younger Serra figures it's an excellent if indirect marketing tool for the Serra group.
He says: "It gets them thinking about you."
• Headquarters: Grand Blanc, Mich.
• Group: 25 dealerships, 19 brands
• 2011 new-vehicle sales: 17,122
• 2011 used-vehicle sales: 15,357
• 2011 revenue: $992 million
You can reach Jesse Snyder at jsnyder@crain.com.
