Article

Managing Multi-Regional Operations: Stewart Management Group Finds Success in Market Diversification

July 2007, Auto Dealer Today - WebXclusive

by John Carroll - Also by this author

It’s 10 a.m. on a Thursday and Gordon Stewart, the head of Stewart Management Group, is on the road, but he isn’t about to say where he’s headed. There is a confidentiality agreement that is keeping him tight-lipped. All he’ll really say is this: “There’s a dealership at the end of the road trip.” It’s one he just might buy and add to the group of dealerships he owns in four far-flung markets: Detroit, Tampa, Jacksonville and Birmingham. “We just want to buy quality dealerships,” said Stewart. “This is strictly about managed growth. If it makes sense, we consider it. We don’t grow for the sake of growth; we’re not ego driven.”

Indeed, there’s little that is egotistical about Stewart’s approach to the car business. “It doesn’t take a genius to run a company with scattered locations,” he said. What it really takes is a lot of good people in the right positions, and it’s his responsibility to place them there. Stewart said, “It’s a people business. You could write a one-word story: People. I can’t stress that enough.”

Running a dispersed group of dealerships in several states offers some strategic economics in management oversight and technology. It also demands plenty of flexibility in deciding on four different local sales and marketing strategies and begs for ways to encourage improved performance by finding ways for his managers to share their experiences.  

There’s also a big payback involved. For a dealer, “multi-regional operations are a common-sense form of insurance against local economic downturns,” said Stewart. With dealerships in Detroit, he has lived through more than his share of economic ups and downs. “We wanted to spread out, get some economic diversity and brand diversity as well,” recalled Stewart about his early days. “Multiple states are not subject to just one economy. Detroit can be very strong, or it can be tough. We had an opportunity to go into Florida, and that’s what started it.”

The strategy only works when you have the right people doing the best work possible. If you’re going to delegate important responsibilities to someone hundreds of miles away, you have to start by trusting their judgment. According to Stewart, it doesn’t matter whether they’re next door or 700 miles apart, it’s all about having the right people. “I manage people and money. That’s basically what my job is. You have to find the right people, nurture them and provide them the right opportunities. Money is easy to come by. That’s not a problem. It’s finding the right people for the right dealership that is the hard part.”

That’s why his expansion deals hinge on the people involved. The first thing he makes sure of is that he has a management team in place—specifically, one key general manager that is ready and willing to move. Stewart must have a qualified, trustworthy general manager in place that can adapt to the group’s policies.

In one way, the recruiting aspect has helped direct his growth strategy. The best new markets to push into are ones he can direct talent toward. If he’s looking in a region that doesn’t stir much excitement in his talent pool, he’s going to find it hard to put the right person in charge. “If nobody wants to move to Tennessee, or wherever, that’s a problem,” said Stewart. “That wouldn’t fall under our managed growth policy.” For a Detroit-based operation, it’s generally easier to get people headed outward bound than inward.

It’s been a successful approach for Stewart, who started in the business back in 1980 with a new car dealership in Detroit that was averaging 110 to 120 new and used car sales a month. Today, his group of five dealerships sells an average of 1,350 to 1,400 new and used vehicles a month, and he’s planning to add a sixth dealership soon.

Stewart learned early in his growth mode that he had to be willing to stay flexible about the business. What works in one market won’t fly somewhere else. You always have to be ready to shift strategies to make a new dealership successful. “We started the one-price selling concept back in 88 in Detroit, and we still have it 19 years later.” It’s been extremely successful, but it didn’t work so well in Tampa.  So, Stewart and his team had to make some changes.

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