The Secret to Empire Automotive Group’s Rapid Growth
The time when Michael Brown washed cars and ran errands for his father’s Jaguar-Porsche dealership in Huntington, N.Y., seems distant in the rearview mirror of his career journey. But as with real rearview mirrors, things are closer than they appear, and the experience of his youth is always top of mind as he moves down the auto retail road.
Those experiences include graduating from Boston University with an MBA, afterward working at his father’s dealership, then rising through the ranks to general manager. He was employed by Roger Penske and Penske Automotive Group in Connecticut, where he was appointed regional vice president. In that role, Brown managed Inskip Auto Mall in Rhode Island, overseeing operations for the 10-franchise luxury auto retail spot. He then joined Atlantic Automotive Group as a partner.
Brown attributes the mentorship by his father, Roger Penske, and John Staluppi of Atlantic Automotive Group for shaping his business acumen and long-term view of the industry.
Today, Brown owns and operates the Empire Automotive Group, a New York-headquartered company he’s headed since 2019, when he acquired seven dealerships from Atlantic. His leadership brought Empire to 21 dealerships and expanded the company into New Jersey.
Today, it’s on pace to be north of $1 billion in annual sales revenue, with an average profit per unit of $2,000.
“My automotive career began almost 40 years ago when I was just a kid pulling weeds at a local car dealership,” Brown says. “Since then, I have learned about the car business from some of the industry’s best, including Roger Penske and John Staluppi. I have used that experience to build my own automotive enterprise.”
Growth Through Acquisition
Brown credits much of Empire’s success to growth through acquisition.
It’s a long-term vision formed when he worked as partner and co-owner of Atlantic Automotive, which had 12 dealerships when he arrived and grew to 26 over his seven-year tenure.
The acquisitions provided him with a lens to see the benefits of growth. “If you have the people, acquiring dealerships lets you spread your costs over a larger group, because you can centralize things like accounting, call centers, prep and more.”
He has used that knowledge to centralize Empire’s operations. The auto retail company centralized its call center a few years ago to improve customer communications. It then centralized its accounting and automotive prep departments for greater efficiency and developed a reporting system to automate appointment scheduling.
Brown says he believes being part of a larger automotive group that represents multiple brands can offer companies a much-needed cushion during tumultuous times. “You are always going to have brands that are hotter than others, supply chain issues, and economic impacts,” he says. “But larger groups feel these impacts less because they are more stable.”
Having scale, he adds, also reduces costs for everything from media advertising to automotive parts, oil and office supplies.
For all those reasons and more, Brown spends a good portion of his time looking for potential acquisitions because he hopes to continue the auto group’s warp-speed growth.
“The pandemic presented me with an opportunity to look for strategic growth,” he says. “But though we are looking at acquisitions, we will not buy every dealership we look at. We look for businesses that we believe we can make better.”
Brown says he prefers to invest in deals where the group can enhance revenue and elevate the customer experience. He defines opportunity as something that’s not tied to brand, demographic or location.
“It comes down to whether we see the potential to improve operations, or the business is already operating well. What kind of investment will we have to make to get the dealership operating optimally? Will we see a return on that investment?” he says.
Brown says he expects the buy-sell market to present plenty of opportunities to continue Empire’s rapid growth. He points out that profitability in 2023 is not what it was in 2022, that inventories are up but interest rates are volatile.
“Many dealers who have been riding the pandemic wave for the last few years no longer want to be in this dogfight. They see they can get a great return if they sell now, after a couple of years of record profits.”
A lack of succession plans is also driving dealers to sell, he adds. Dealers also may want to exit the industry because of capital investment required by manufacturers for electric-vehicle sales and new showrooms, he says.
Though he plans to take advantage of a heart market, he remains mum on how many dealerships is enough or when he plans to stop. “As long as this strategy keeps working, we will keep doing it.”
People and Processes
Empire abides by a clear and distinct culture and mission that Brown says contributes to its continued success.
“I want our employees to repeatedly ask themselves this question—‘What will it take to ensure that this customer will return to our dealership?’” he says. “Because, if the customer comes back, we’ve won. That means they want to keep having an experience with us.”
A positive customer experience hinges on processes and people, according to Brown. He says Empire aims to develop its people internally and provide growth opportunities.
“Our people make the organization, not me,” he says. “This business isn’t easy, but it’s not complicated. It’s hard work. We hire good people from the get-go and offer them opportunities to train and to grow.”
In 2023, Empire brought on a full-time recruiter to help hire the kinds of people the company wants. The position also tracks hiring, resignations and terminations in order to understand turnover.
“He looks at where we are good and where we are bad. If we have turnover in a specific area, he digs into the reasons,” Brown says. “Maybe it’s happening at one particular store. In that case, are they not interviewing properly? Are they not checking references? You really have to dig deeper when it comes to hiring people.”
The second piece of elevating the customer experience is training, Brown says. He believes a well-trained staff follows consistent processes and treats customers well.
“We want to provide training for the job they are in and the job they may hold in the future,” he says. “We focus on showing them a roadmap to where they can be more successful and climb the ladder. We would rather have people with us for years and promote them through the ranks to salesperson, sales management, finance manager, used-car management, general sales management, and eventually, general manager. We’ve had technicians that couldn’t turn a wrench anymore who went into service management. We always want to provide an avenue for growth.”
The company uses the Blue Chip training program to cultivate star employees. Whenever Empire sees an employee whose runway could be expanded, it places that employee in the programs, which meets every six to eight weeks.
Blue Chip connects participants with peers they can call on for answers and help, and gives them an opportunity to learn from leadership experts. “Sometimes the executive team presents, other times we bring in guest speakers,” he says. “This is a training ground to hire our next executive manager or general manager instead of going outside the company to find them.”
The result is a highly trained staff and low turnover in a country where the average time an employee stays with an employer is 4.1 years, according to the U.S. Bureau of Labor Statistics.
“Our turnover at the general manager level is extremely low,” Brown says. “We’ve had the same guys for years. That is because of how we develop them and the opportunities we provide. Just because you’re washing cars today doesn’t mean you won’t be managing a group of employees here in the future.”
He also attributes the low turnover to treating employees well. “It’s a corporate business—we have 1,200 employees,” he says. “But we still treat employees like family. I want employees to attend to their families. I don’t want them missing their son’s soccer game, anniversary or holiday party because of work. There are ways to cover the schedule so that everyone can get out and do what they have to for their families.”
Community-Focused
Brown says he has three goals: to provide opportunity for himself and others in the community by operating dealerships; to leave a legacy for his three daughters; and to give back to the community that has given him so much.
“I partner with our town to give back as much as I can, and I sit on the board of many foundations,” he says. “I believe it is the responsibility of a business owner to give back as much as we can. It is our responsibility to help.”
He says Empire supports Big Brothers Big Sisters of America, Island Harvest, the Family Service League, the Marty Lyons Foundation, local schools and more. “We just look to do as much as we can, especially to ensure local kids have the things they need.”
The road ahead for Empire includes growth through acquisition with an emphasis on people, training, and customer service. It’s a journey Brown says is working and one he plans to stay on for a long time, guided by the things he sees in the rearview mirror of his career.
ABOUT THE AUTHOR
Ronnie Wendt is an editor at F&I and Showroom.
Originally posted on F&I and Showroom