Hope Not Enough at Serra Auto Group

“Hope is not a strategy,” says Pete Gerosa of the Serra Automotive Group.

Dealer principal Joe Serra often takes those words to heart when running the organization his father Al founded.

Serra took over the dealership group in 2000. He hired Gerosa in 2006 as his business-acquisitions director when Gerosa retired from General Motors as vice president-sales and service after a 42-year career with the auto maker.

Joe Serra runs one of the country’s top dealership groups based near one of the nation’s most economically battered areas, Flint, MI. Skewing towards GM brands, he currently has 23 outlets and 32 franchises in Michigan, Indiana, Colorado, New Jersey and Tennessee.

Facing internal turmoil as GM went through bankruptcy and government-ordered restructuring in 2009, the Serra group’s fate hung in the balance. Joe Serra tightened up and put a plan in motion, heeding Gerosa’s advice about not relying on hope.

Serra and his top managers went through bankruptcy counseling in a period of intense turmoil. If GM filed bankruptcy and emerged on the downside, “it would be an awful tough scenario,” Serra recalls. “We met with bankruptcy lawyers in case we had to file, too. I wasn’t sure we were going to file, but we had to prepare.”

Not long before, almost 70% of the group’s business volume had been tied to GM products, the domestic auto maker Serra and his father had long been loyal to. That stake later went to about 60%.

Serra didn’t lose any stores when GM consolidated its dealer network by 1,000 outlets. But he lost eight franchises when GM discontinued the Pontiac, Saturn and Hummer brands and sold Saab. Despite best efforts, he lost 10% of his employees, now numbering 1,200.

Serra Auto Group began with Chevy store in 1973.

Today, Serra Automotive ranks among the top privately held auto groups in the country. Al Serra Auto Plaza is No.11 on this year’s WardsAuto Dealer 500 and the group ranks No.24 on WardsAuto Megadealer 100 with 2010 revenue of $881.4 million.

During the GM downturn, Serra describes long days and sleepless nights for himself and many staffers. He gathered employees and told them what he knew. “I told them the truth and what our plan was.”

He wanted to give them confidence that “we could lead our way through it.” Their first task was to focus on “things we could control,” their own performance, and customers, he says.

They survived one of GM’s most tumultuous periods in its history when the auto maker announced in 2009 it would pare several thousand dealers from its ranks.

“That’s a tribute to our employees who met all the sales and (customer-satisfaction index) objectives GM set,” Serra says more than two years later. “We did as well as anyone who was going through that turmoil.”

Joe Serra oversees 22-store dealership group.

In 2009, Serra was the No.1 Hummer seller in the nation. Sales shrank from at least 150 monthly units to 17, and then zero as the brand was eliminated. Pontiac’s demise hit hard, too. Losing two top-selling Saturn franchises (No.1 and No.5 nationally) also hurt.

After learning in June 2008 that GM was reviewing the Hummer brand, “you could tell there was trouble ahead,” Gerosa recalls. By 2009, major cuts were in full swing.

GM franchises at the flagship Al Serra Auto Plaza are Chevrolet, Buick, GMC and Cadillac.

The Serra group also represents Honda, Toyota, Nissan, BMW, Kia, Mercedes-Benz and Porsche. There are four other Cadillac franchises elsewhere. In 2011, new Subaru and Volkswagen points were added. VW of Grand Blanc starts construction next spring.

Al Serra founded the business in 1973 with one dealership, a Chevrolet store in Grand Blanc, a few miles south of Flint, the birthplace of GM.

Peter Gerosa, former GM vice president, now executive at Serra Auto Group.

“I wouldn’t be here if I didn’t have him paving the way,” Joe Serra says of his father, who died in 2006.

The modern Serra group is a decentralized organization. Dealer partners run Serra stores in areas outside of Flint. Joe Serra believes people are more involved if they own a stake.

He doesn’t want to hear sales consultants tell customers, “Wait while I ask my manager” when discussing vehicle pricing. Sales people are accountable to the customer, he says, telling employees, “Our business is not just transportation; it’s a statement of people’s way of life.”

That customer-centered mindset has won him top awards across the country.

Serra is in the mood to buy more properties, but the dealer “sell” market is suddenly quiet. “We’re still out there looking at various brands,” he says, eyeing Ford and Hyundai outlets.

Gerosa says he hasn’t gotten a call in several months from sellers proposing “a good deal.” That’s unusual, “since people know we have the wherewithal to buy,” he says.

The surprise is that lack of interest among sellers is not because of the economy or lack of dealer profits.

Dealers are making more money than most other businesses now, and sitting tight, Serra says. “Dealers are afraid to make a change. They’re very comfortable right now.

“The tough times forced them to make difficult decisions. Business is coming back, and they’re not looking to exit,” he says. “You sell, if you’re concerned.”

Asked why he’s been so loyal to GM: “That’s where our relationships are.”

Of customers, he says: “Before we make any decisions we ask, ‘Is this right for the customer?’ You have to ask yourself that.”

On employees: “Make them feel part of the organization vs. just working for the organization. Engage them in the business decisions. Satisfied employees equal satisfied customers.”

On success: “Surround yourself with great people. You need to understand what’s important to you and what the company is trying to accomplish by doing what’s right, and that’s taking care of the customer. And you lead by example.”

Joe Serra, feeling more optimistic today than a few years ago, forecasts his group will sell more than 33,000 vehicles this year, with revenues totaling $1 billion.