By:
B. Grigsby, Special to Automotive Monthly
Photo courtesy of High Voltage Productions. Copyright 2018.
By all accounts, Robert Liotti is not your average automotive operations expert. Liotti is an accomplished musician, actor, writer, director, artist, and business professional with some impressive credits. But, for all his success, he still makes clear that he has an affinity for the automotive business and specifically wants to help dealers thrive and become more successful.
Liotti has earned an impressive (18) ASE certifications through Ford Motor Co. and Northwoods University encompassing nearly 175 courses in addition to other corporate training work under his belt. Moreover, having been given access to his performance numbers over nearly two decades, it is clear that the operations specialist knows how to drive profitability.
It is no mystery - even for the most positive in the auto business - that running a car dealership or an auto group is a tricky business. While there are dealers who are thriving, market changes in inventory, used vehicle availability, vehicle valuation bubbles, and a big change in workforce mentality are formidable challenges for dealers to overcome. The fact is that many dealers and groups do not overcome those changes, and buy-outs abound. The business is precarious at best.
I conducted a lengthy Skype interview with Mr. Liotti to address some specific concerns within the business; some concerns were those of my own, and some were questions from dealers and corporate leaders in the business that I felt to be relevant to our discussion. A synopsis of that conversation follows:
B.G.: Mr. Liotti, I am so happy to have this opportunity to speak with you today. If possible, can you tell me what, in your opinion, is the biggest challenge for dealership success in today's market?
R.L.: My pleasure, Brian. While it may sound generic, dealerships are about two things: people and processes. Right now, dealers are allowing their General Managers to complicate the business with less-than-desirable decisions. An over-dependency upon vendors selling everything from ineffective advertising to apps to lead-generators to over-valued gimmicks are muddying the already complicated waters in search of a magic-bullet or shortcut to success. This mindset is causing irreparable damage to many dealers and groups. I constantly hear of dealers' willingness to "change", but the fact is that while the business has evolved, it hasn't really "changed" much. There is a distinction in terms here.
Put simply: if a dealer does not obtain the right people and employ the right processes, even a strong capitalized position will eventually become distressed due to the lack of driving profitability. And, for many dealers, because they are essentially hands-off in many cases, it is too late when they finally realize that they have allowed a subordinate to fail the business. This is not to say that every GM is without competence, but I am certainly asserting that incompetence is in no short supply in the business. It is simply a hard fact, and many dealers - while having the cash position to finance a dealership operation - may or may not be great businesspeople, or they want to attend to other business and be hand-off. In any case, there is a large margin-for-error in an already tricky business.
B.G.: I have followed you on a couple of public platforms over the past few months and it is apparent that your guidance and professional outlook is not often well-received. I have found this to be very surprising, as it would appear to me that dealers would welcome the advice. What are your thoughts?
R.L.: First, thanks for taking the time to follow. That is much appreciated. Look, hard facts are often met with stiff resistance. The car business is rife with resistance, if not outright refusal much of the time. This is precisely why I only answer to dealer principal's in consulting or training situations. When your name is on the building, and you are the signatory on the checks, you have no agenda. Conversely, any subordinate has a natural agenda to achieve personal success. This fact of human nature is just part of the psychology of doing business. Notwithstanding, I strive to make dealers readily cognizant of the fact that they MUST protect their interests. In my case, I am often the only accountability mechanism between a dealer the individual charged with oversight of the store point(s). That accountability trigger changes everything as it relates to making certain that business is conducted in the interest of the DP, first. I have seen many, many GM's run dealerships into the ground - often without an opportunity for recovery. By the time I get involved, it is too late.
This is where the matter of resistance is important.
Outside involvement with someone like myself is a security-blanket for a dealer, but usually a big obstacle for staff. The DP knows that he/she must initiate change, but many staff members just aren't going to cooperate. My function is to achieve buy-in... My goal is not to disrupt, but to find cohesion and build a platform where all staff members are valued, tasked, and rewarded while driving the business forward for the DP. But, let's face it, the car business is one of the only businesses of its type where employees demand thousands of dollars in compensation, but outside of the business may be lucky to land a $10/HR job. This fact highly affects mindset.
B.G.: I see your point. But, I have seen many people who are clearly supportive of your philosophy, but many others who literally attack you as being 'negative'.
R.L.: Yes, I do see that at times - especially when I make a statement that might imply jeopardy of a person's job. The truth and facts are often construed as 'negative'. That's a failing mindset and should be viewed as an elementary projection to preserve one's refusal to adapt and change if needed. I wrote an article called, "The Car Business Merry-Go-Round" that addresses the human resource challenges in the business. DP's do not insist that their dealership managers be recruiting 100% of the time. Employee retention in the auto business is dismal at best. There is a reason for that...
Vendors have perpetuated much of the negative disruption in the business, frankly, and it should be noted that most of them have never even sold a car or written a repair order. That is not a strong formula for dealer success. DP's allow millions of dollars to be wasted on useless vendors and their products annually. Profitability is equivalent to revenue flow and prudent expensing. Math doesn't lie. However, "Car Math" does.
Lack of control causes dissention. Again, my only vested interest is objective, in that, my function is to protect the interest of the DP. Honestly, everyone from the GM to the maintenance staff is important to me, but it starts from the top.
B.G.: So, if a dealer hires you to assist them, what do you do?
R.L.: Same process for me every time: evaluate, develop, plan, implement, train, and hold accountable. That simple.
B.G.: I found it very interesting that you maintain a "predictions file" that I reviewed. I was shocked with your accuracy with respect to the car business. Can you tell our readers about it?
R.L.: Sure. One thing that any DP or dealer operator values is intuition - at least they should. Basically, if I see a trend in the industry or have my eye on a particular dealership, company, or entity, I will attempt to predict its viability and health. Unfortunately, much of what you read were predictions of the impending future demise of dealerships, dealer groups, and aftermarket service facilities. I will admit that I have not been wrong in those predictions.
B.G.: Not at all, sir. To me, that is not a negative thing, though.
R.L.: I agree. The reality is that if I say to a dealer: "your business is in trouble". It may be advisable to listen, yes. The fact is that most car dealerships in North America operate generally the same way. Thus, they have a strong commonality of problems and challenges. Honestly, it is very likely that I never even have to step into a dealership to resolve their issue. Moreover, I can keep the dealer's cost down in that way. I deliver everything the dealer needs in the most cost-effective fashion possible while garnering the best results.
B.G.: So, you are definitely accessible and available to consult with dealers?
R.L.: Absolutely. I am still involved in the business because of my passion for it. I thrive in developing staff members - from top to bottom - and get a great deal of gratification from helping a dealer turn it around or tweak it. My contention is and always has been that there is no need to excessively waste money on gimmicks. Tools are useful, yes, but the human element is not easily replaced. None of us are perfect, but it is possible to have a happy staff, profitability, and future dealership health by being attentive to the people and processes first.
It is positive to know that professionals like Robert Liotti are out there and available and willing to help dealers succeed. Our conversation gave me a different outlook on the business, and Mr. Liotti's knowledge and insight, as well as his ability to convey his message, was enlightening. The automotive business is challenging without question, and I can, in fact, recommend that the business should definitely pay attention to Mr. Liotti's advice.
END
***Used with permission. Copyright 2018.
