Dealership Group on Fast Track

The Zeigler Auto Group is a rising star as a megadealer based in an unlikely spot: Kalamazoo, a midsize city in western Michigan.

The group is expanding quickly and may someday reach the ranks of two premier megadealers on the opposite side of the state, Joe Serra of the Al Serra Automotive Group near Flint and David Fischer of the Suburban Auto Group in metro Detroit.

Second-generation dealer Aaron Zeigler has been president of the Zeigler group since 2002.

Its current holdings consist of 17 dealerships and 41 franchises in Michigan, Indiana, Illinois and New York. Other holdings include insurance companies, real estate, warranty firms and Internet-based ventures.

“I love to grow existing brands to get the real synergies going. The trick is to pick the right franchise in the right location,” says Zeigler who successfully has mixed domestic- and import-brand businesses.

The auto group specializes in small and midsize markets.

Current Zeigler operations are in:

Aaron’s father, Harold Zeigler, began as a dealer in 1975, taking over a failing single-point Ford store near Grand Rapids, MI, at Ford’s request. 

Two years later, he sold 1,800 cars from the dealership in Lowell, population 4,000. Ford returned to him in 1979 with another distressed-store offer in Kalamazoo. Three years later, he sold 3,600 cars a year at that Lincoln-Mercury point.

The group posted $600 million in sales in 2012, the younger Zeigler says. That’s up from $170 million when he took the reins 11 years ago. The group has 750 staffers, boosting the employee count 65% compared with five years ago when most of the expansion started.

“I spent a lot of time developing the structure, culture, training, development and systems to grow the organization,” says Aaron Zeigler who used profits to bankroll additional acquisitions. 

Ironically, opportunity knocked when the U.S. auto industry crashed in 2008 and 2009. At the time, he added brands he couldn’t afford otherwise, such as the Chevrolet store in Chicago and Chrysler brands in Michigan and Chicago.

“Over the past five years, we’ve grown almost $300 million in sales and expect that trend to continue,” Aaron Zeigler says.

The way it is going, he thinks the group will soon crack “the $1 billion sales mark.” 

The operation sold 8,843 new vehicles and 17,554 used units in 2012 and projects a 10% increase this year.

Adding several new dealerships this year “should bring us $650 million and $700 million in sales,” Aaron Zeigler says, declining to name the brands he is considering.

In June, the group opened a new Kalamazoo Honda store that was nearly two years in the making. The 26,000-sq.-ft. (2,415-sq-m) facility features a circular atrium, one of the nation’s first dealership’s with the new Honda Gen 3 design.

Another Zeigler Honda facility is opening in Amherst, NY, in March.

“I’m a big believer in having world-class facilities,” Aaron Zeigler says. “We’ve built 12 new dealerships in the past nine years.” 

American Honda representatives say they are excited about teaming up with Zeigler Auto, which replaced a struggling M&M Honda, 26^th in sales in the same market. Ziegler pushed the store to No.2 in Michigan last year. The Kalamazoo dealership did $76 million in sales in 2011 and $91 million in 2012. 

“They’re dedicated, successful with a proven track record and reputation,” says Sean Buda, Honda Midwest zone manager. He also cites the group’s strong community ties.

Zeigler’s Lincoln, BMW, Chrysler and Honda stores pulled in $51.7 million, selling 1,669 new units.

The group ranks No.64 on the WardsAuto Megadealer 100. Joe Serra’s Serra Automotive holds the No.27 spot. Fischer’s Suburban group is No.20.

Aaron Zeigler is confident in the future. At 16, he started working part-time at his father’s Ford dealership. At 18, he was selling cars in the summer, supporting himself as a student at Michigan State University.

Like any promising new employee, he climbed the ladder. After graduating from college, he became used-car manager, then general sales manager and then general manager of a Chrysler dealership.

Turning 28 in 2002, he became president of the group. Ambitious, he made his mark and the franchise-building began.

Aaron Zeigler understands the importance of Internet tools such as online chat, video conferencing, Facebook and Twitter. Technology know-how is another staple in his arsenal. 

“Organizations that understand and embrace technology have progressed and stayed relevant,” he says. “I never dreamed that as a dealer I would employ computer programmers (fulltime). It gives us a competitive edge to develop our own software. ” 

The younger Zeigler credits that as well as a top management team and strong processes as making the difference in managing far-flung operations without face time everywhere. He calls the group’s video conferencing and monitoring system “Skype on steroids.”

Aaron Zeigler runs “a fairly flat organization, in which general managers oversee one store or multiple stores in the same area.” 

Examples: One general manager operates three dealerships in Grand Rapids; another oversees five stores in Kalamazoo and Plainwell. There’s a regional manager in Chicago with four dealerships. A chief operating officer runs the three J.D. Byrider units and loan portfolio.

Brand loyalty still exists, but ever-changing times require dealers to stay ahead of the curve, Aaron Zeigler says. “More customers like to change brands these days, even from domestic to import on their product cycles.

“Domestic and import buyers still have their loyalties, but it isn’t like it was 10 years ago,” he says. “There is a lot of parity in the product, and quality has improved across the board.”

Selling vehicles in today’s competitive climate takes people who “know the product and can help a customer achieve their goals.”

The son says his semi-retired father taught him that exceeding customer expectations fosters return business.

“We also need to exceed employee expectations,” Aaron Zeigler adds.

When the economy tanked in 2008, the father and son took pay cuts, but kept employee pay plans and headcount stable.

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